Jaypee promoters can't sell personal assets: SC

Taking cues from the Kingfisher case — where its promoter, liquor baron Vijay Mallya, hid the details of his transaction with a British firm called Diageo when he filed an affidavit in the court, sharing details of all his movable and immovable assets, the Supreme Court on Wednesday barred 13 promoters and directors of real estate giant Jaiprakash Associates Limited (JAL) from selling their properties.

"Neither the independent directors nor the promoter directors shall alienate their personal properties or assets in any manner, and if they do so, they will not only be liable for criminal prosecution but also for contempt of the Court," the bench led by the Chief Justice of India Dipak Misra ruled.

"That apart, we also direct that the properties and assets of their immediate and dependent family members should also not be transferred in any manner, whatsoever," it added.

The court's move is perhaps precautionary since, earlier this year, Mallya was held guilty of contempt for deliberately failing to disclose $40 million he received in February 2016 through sale proceedings from Diageo. "The money was received in violation of various orders and injunctions against him. Dr Mallya deliberately failed to disclose this amount and has transferred the money in a trust set up for his three children," Shyam Divan, representing State Bank of India, had said.

The bench further directed the JAL to deposit Rs 275 crore in two installments by December 31. This amount will be over and above the already existing order of Rs 2,000 crore JAL is expected to deposit with the SC registry — before the next day of hearing in January 2018.

"We have nothing against you. You must give their (home buyers) money back, acche bacche ki tarah paise de do," the bench that also comprised Justices A M Khanwilkar and D Y Chandrachud told company's promoter Manoj Gaur, who along with 12 others had furnished the details of their personal assets.

The top court's order came during the hearing of a plea filed by home buyers who haven't received possession of their flats from the real estate company.

In August, home buyers were left in the lurch after the National Company Law Tribunal (NCLT), Allahabad, admitted IDBI Bank's plea to initiate insolvency proceedings against the debt-ridden company for defaulting on a loan to the tune of Rs 526 crore. According to the Insolvency and Bankruptcy Code (IBC), which was passed by Parliament in 2016, if insolvency proceedings are initiated against a company, all court proceedings attached to it are stayed.

Home buyer Chitra Sharma's plea offers respite to almost 33,000 buyers who invested their money in 27 projects by the real estate firm. In her plea, Sharma alleged that the NCLT would affect home buyers, who are considered as unsecured creditors, would get nothing. The dues of financial institutions, who are secured creditors would be cleared first.

Sharma's plea challenged the validity of the law and sought a response from the Centre and others on the issue that it "shall not curtail the legal statutory and vested rights of the flat owners/buyers as consumers" defined under the Consumer Protection Act.

Sharma suggested that if the insolvency proceedings against the company were unsuccessful, then liquidation proceedings could be initiated. The money raised would then go to secured creditors as opposed to home buyers, some of who have invested their life's saving for their dream flats.

In order to safeguard their interest, Sharma suggested that home buyers be declared as secured creditors, like financial institutions and banks.

The petition alleged that Section 14 of the code, introduced by the Ministries of Finance and Corporate Affairs was "unjust, unfair and unreasonable" and violative of Article 14 (Right to Equality) and 21 (Right to Life) of the Constitution.