New Delhi: The Supreme Court on Monday stayed the order of the National Company Law Tribunal (NCLT), initiating insolvency proceedings against Jaypee Infratech, which comes as a relief to almost 32,000 homebuyers who can now pursue legal recourse against the company.
News18 spoke to Markandeya Mishra, a member and treasurer of the Jaypee Wish Town Flats Social Welfare Society, a citizens’ group that looks after the welfare of Jaypee customers.
Q. What is your first reaction to the Supreme Court Order granting a stay on the NCLT’s insolvency proceedings?
A. It’s a good interim relief for homebuyers. The Supreme Court order appears to be in the right direction. Homebuyers were quite hassled as they didn’t have a line of sight on when the houses would be handed over and once Jaypee Infratech slipped into insolvency, they didn’t know if they would at all get the flats or the money back. So, this is a relief. The consumer cases against the company should continue, why should home buyers be made to pay for corporate malfeasance?
Q. Do homebuyers now have an assurance that they will get their flats or their money back?
A. Who will assure them? Do they look up to the company JP Associates/JP Infratech, the Insolvency Resolution Professional (IRP) or the Courts? The IRP is just a professional who was appointed to oversee the insolvency process for 180 days. He would have worked towards finishing the process. Only the government can take punitive action and the courts would not be able to act unless the matter reached them. A PIL was filed in the Supreme Court which resulted in the stay order being passed. So far, this is good, but things are still unclear.
Q. What forums can homebuyers use to pursue their claims?
A. The existing cases of homebuyers against the builder will now continue in the NCLT. Before the Supreme Court stay order, all the claims had been frozen. There will be more responsibility now on the builder to take the claims to their logical conclusion. Homebuyers can also pursue claims under the new Real Estate Regulatory Authority Act.
Q. Have the rights of ‘unsecured creditors’ been recognized now?
A. There was no definition of homebuyers as unsecured creditors. The Ministry of Corporate Affairs uploaded 3 to 4 forms on their website and homebuyers had no clue which form was relevant for them. Collectively, the money put together by 32,000 Jaypee homebuyers would not be less than Rs 15-16,000 crores. Whereas, IDBI Bank’s claim from Jaypee Infratech is Rs 500 crores. How come the banks’ interests come before the homeowners?
Q. Can you briefly explain the role of JP Associates and Jaypee Infratech?
A. JP Associates is the flagship company. They bid for the Yamuna Expressway and got huge land patches from Noida Authority, which they promised to develop and sell. In order to do this, they created another company called Jaypee Infratech (a special purpose vehicle) and transferred all the rights, obligations and assets to the SPV. In the terms and conditions papers signed by the homebuyers, JP Associates is the signing party while Jaypee Infratech is the confirming party.
But when the insolvency process started, Jaypee Infratech was considered to be the ‘bad guy’, the one with a bad balance sheet. The Gaurs withdrew their objections when IDBI bank filed a claim in the NCLT due to which JP Infratech slipped into insolvency. But JP Associates should also be made accountable.
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