Jaypee Infratech: With clearing of decks, buyers may see light at end of tunnel

Noida: Over 20,000 beleaguered Jaypee Infratech Ltd (JIL) homebuyers, who invested to get their flats nearly a decade back and were waiting to getting possession, and at the same time, gripped under a lawsuit between Jayprakash Associates Ltd and consortium of banks led by IDBI Bank for over two years, may find a ray of hope with the judgment of principal bench of National Company Law Tribunal (NCLT) which was pronounced on March 3.

In a 115-page judgment, the bench begins its findings of lawsuit with an heart healing observation for homebuyers, which read, “Home and man are inseparable from each other. Without home, man’s life is not complete. May be it was cave in the early days, may be, air conditioned flat with all amenities. But, purpose and object is one and the same – to have family and family life. For which, man struggles all along, the same is the struggle in this case.”

The Tribunal gave its nod to state-owned National Buildings Construction Corporation's (NBCC) resolution plan to acquire debt-ridden Jaypee Infratech projects, the proposal which was approved by the Committee of Creditors (CoC) in December last year.

Meanwhile, the bench held the Board of Directors (suspended) of JIL responsible for failing to protect the interest of investors as well as homebuyers who invested in its residential projects in Noida and Greater Noida.

As the tribunal bench observed, JIL has taken up two projects – the Yamuna Expressway, which was laid over a period of time and also it has to develop residential flats with ‘requisite paraphernalia in the land leased out to JIL’.

“In the process, JIL has floated project to develop residential flats and booking of flats were made open and ‘many homebuyers crazily hooked up to buy homes according to their levels, but sad part is, though JIL collected monies from these homebuyers, it has filed to roll out home to the buyers within the times given by it,” the bench said.

Further, the bench chronologically observed, “JIL not only failed to deliver the homes to the buyers, but also defaulted repaying loan installments to consortium of banks led by IDBI Bank, owing to this reason, RBI declared JIL as one among 12 NPAs and recommended for initiating IBC proceeding against them.”

During the hearing in matter, the homebuyers had contended before the court that Rs 750 crore plus interest and a portion of 858 acres of land belongs to JIL and not to its father company JAL, hence it should be handed over to the NBCC to meet the revenue required to complete stalled housing projects.

On this, the court ruled that, “Significant amounts and land banks that were contingent receivables of JIL under the NBCC resolution plan have now been crystallised and being paid or delivered to JIL/ NBCC. This includes the Rs 750 crore plus interest collected by SC from JAL and the 858 acres of prime land that the Supreme Court has held was a fraudulent preference and therefore belongs to JIL”.

The bench also made it clear saying, “There is company called Jayprakash Associates Ltd (JAL) and a subsidiary company to it called Jayprakash Infratech Ltd (JIL). It is also a point to be noted that both are managed by the same promoters.”

The insolvency proceedings against JIL was initiated under Insolvency and Bankruptcy Code (IBC) on the direction of National Company Law Tribunal (NCLT) on a plea of IDBI bank consortium in 2017. On the basis of its findings from the plea, the NLCT had then suspended the Board of Directors of Jaypee Infratech and in the process, had appointed Anuj Jain as Interim Resolution Professional (IRP) to find out a bidder to take over the projects and to protect the interest of its investors with the ambit of Insolvency and Bankruptcy Code (IBC), Act 2016.

The IRP along with the Committee of Creditors (CoC), in the process, invited bidders to come up with their proposal to resolve the problem. After various round of scrutiny, which proceeded under the supervision of the court, e-voting held to decide among two bidders participated – NBCC and Mumbai-based Suraksha Realty. NBCC’s resolution plan was approved by CoC.

A letter to the NBCC by Anuj Jain (IRP) on December 17, 2019, read, “Reference to the Corporate Insolvency Resolution Process of Jaypee Infratech Ltd (JIL), it was informed by IRP that NBCC’s plan was approved by the committee of creditors by majority of vote sharing – 97.36 % on December 17.”

Now, the NCLT has approved NBCC resolution plan with some modifications and the homebuyers may look towards the NBCC’ move in the matter as it has promised to complete over 20,000 pending flats in the next three-and-a-half years.

A homebuyer, who has been following this case, said, “Yes, it's a big relief for us and we are hopeful that NBCC would complete our flats. All hindrance in the way have resolved now, and more importantly, it is very much clear that NBCC has now adequate source of revenue for it.”

But, will it be an end of fight for JIL home-buyers? Mihir Kumar, an advocate practicing in the Supreme Court, said, “See, it is obviously an end of fight for homebuyers after the court made all things clear – from accepting IDBI’s plea to initiate insolvency to appointing IRP and approving NBCC’s resolution plan. But, the law provides ample opportunity to object it. Any party in the case, it may be Suraksha Realty or other can challenge NBCC’s resolution plan before the Appellate bench of NCLT (NCLAT).”