Status as on- 11/08/2020

The Supreme Court, on 6^th August, 2020, transferred to itself all the pending appeals related to debt-ridden firm Jaypee Infratech pending before the NCLAT. A bench led by Justice AM Khanwilkar hearing several homebuyers and NBCC fixed the matter for further hearing on 31^st August, 2020.

Introduction

Jaypee Infratech went into the insolvency process on August, 2017 leaving behind more than 20,000 disgruntled homebuyers. On November 6, 2019, the Supreme Court directed completion of Jaypee Infratech’s insolvency process within 90 days. The court further directed for invitation of revised resolution plan from NBCC and Suraksha Realty among the four shortlisted bidders. NBCC in its resolution plan proposed to complete over 20,000 pending flats in housing projects launched by Jaypee Infratech and admitted claims of Rs. 13,364 crore.

The issue regarding the resolution plan

In December, the Committee of Creditors elected NBCC as the winner of the bid to acquire the company with 97.36% of the votes. Subsequently, NCLT approved the resolution plan by NBCC. However, NCLT allowed objections of ICICI Bank and Yamuna Expressway Industrial Development Authority. The tribunal further directed NBCC to pay the unclaimed Fixed Deposit Holders. 

But, subsequently NBCC challenged the modification made by NCLT in the NCLAT on the ground that NCLT could not intercede the business decision of the Committee of Creditors and has “exceeded its jurisdiction”. On 22^nd April, 2020, NCLAT ordered the NBCC to implement the approved resolution plan. Several aggrieved homebuyers moved to the Supreme Court under Section 62 of IBC against the order of NCLAT for its conditional approval to NBCC.

Concerns of the Homebuyers

Homebuyers have raised certain demands from NBCC including the setup of a monitoring panel consisting of buyers and experts to supervise ongoing work. Their demand was that NBCC should not sell assets of Jaypee Infratech to settle lender’s dues without handing over the units to homebuyers and also to set aside 250 acres of land as security for buyers.

Further, they have also challenged the NCLAT order in favour of Jaiprakash Associates Ltd (parent company of Jaypee Infratech) to control 858 acres of land that belongs to Jaypee Infratech in the Supreme Court. The SC has already issued notice and sought a reply from Jaiprakash Associates for the same, due to be heard on 17th October, 2020. Lastly, the apex court took matters into its own hands and ordered for transfer of cases. Despite the transfer of cases, the interim resolution professional, Anuj Jain, will continue with his role.

Conclusion

Therefore, the above step and earlier decisions of the Supreme Court clearly hints out its inclination and diligence towards the protection of rights and interests of homebuyers. Also, the spontaneous cognizance reflects the undisputed comprehensive jurisdiction of SC over the cases related to IBC. But, the transfer of cases to SC is only a tiny step in this commemorated matter as the further developments are yet to come.

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