There is some light at the end of the tunnel for the aggrieved homebuyers of Jaypee Infratech Limited (JIL) whose assets are due for liquidation under the Insolvency and Bankruptcy Code (IBC). On Tuesday, the Supreme Court asked the Centre to come up with a proposal to help the homebuyers who otherwise stand to gain nothing if the liquidation process goes through.
Over 20,000 homebuyers of Jaypee projects, who were cheated of nearly Rs 14,000 crore, moved an application in the top court claiming that in the liquidation process, homebuyers were being classified as "unsecured creditors" under the IBC, thereby making them the last to be benefitted. It will be the banks and other secured creditors who will receive the largesse from the liquidation process, the application stated.
Moved by their plight, a bench of Justices AM Khanwilkar and Dinesh Maheshwari asked the Centre to consider bringing out a proposal within two days to provide succor to lakhs of homebuyers facing a similar fate. Posting the matter for hearing on July 11, the Court clarified that this initiative will be independent of the procedure before the authority adjudicating under the IBC.
LAST RAY OF HOPE
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HOMEBUYERS’ PLEA HOPES FOR SUCCOR UNDER IBC
- Over 20,000 homebuyers of Jaypee projects, who were cheated of nearly Rs 14,000 crore, have moved an application in the top court
- They claim that in the liquidation process, homebuyers were classified as “unsecured creditors”, thereby making them the last to be benefitted. It will be the banks and other secured creditors who will receive the largesse of the liquidation
- Bench asks Centre to consider bringing out a
- proposal within two days to provide succor to lakhs of homebuyers facing a similar fate
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Additional Solicitor General (ASG) Madhavi Divan informed the Court that the matter is pending with the interim resolution professionals (IRP) under IBC, but the bench said, "Can the Union of India suggest some arrangement without disturbing the process under IBC? This issue is bothering lakhs of homebuyers. Under IBC, you cannot do anything. But outside it, you can suggest a policy that can be uniform for all such cases."
The Court did not restrict the issue to Jaypee alone, considering the fact that similar fate faces the homebuyers of Amrapali Group and Unitech too. "As a policy, it is for the Union of India to propose. We are keen to know if you have something to suggest," the bench said.
The order by the Court came as a ray of hope for the Jaypee homebuyers, who have approached the Court for the second time now.
On August 9, 2018, the Supreme Court had directed the homebuyers to participate in the IBC proceedings by representing in the Committee of Creditors. However, the order left a window open by suggesting that parties shall be free to adopt appropriate proceedings. Following this, the IBC (Second Amendment) Act, 2018, was passed which widened the term "financial debt" to include investment by homebuyers who invested in real estate projects.
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