The Supreme Court today revived the insolvency proceedings against real estate major Jaypee Infratech Ltd and gave its management control to the Interim Resolution Professional (IRP), appointed by the National Company Law Tribunal, with immediate effect.
The apex court restrained the managing director and directors of the company from travelling abroad without its permission and asked its parent company, Jaypee Associates, to deposit Rs 2000 crore with the registry to safeguard the interest of the home buyers.
The top court asked Jaypee Infratech to hand over the records to the IRP for drafting a resolution plan indicating protection of interests of over 32,000 hassled home buyers and creditors.
It also stayed any other proceedings instituted against Jaypee Infratech for any purpose in any forum like the consumer commission, as IRP has been given control of the company's management.
"We are not concerned about the interest of company. We are only concerned about the home buyers, who are mostly of lower and middle-class strata. Home buyers needs to be protected. It's our duty and they should either get the money back or the flat," a bench of Chief Justice Dipak Misra said.
The bench, which also comprised Justices A M Khanwilkar and D Y Chandrachud, allowed Jaypee Associates to raise Rs 2000 crore by selling land or properties and depositing it in the apex court registry by October 27.
The court posted the matter for hearing on November 13.
The apex court also appointed senior advocate Shekhar Naphade as amicus curiae to assist the proceedings of the IRP, which will submit a resolution plan indicating how to safeguard the interest of home buyers and secured creditors.
It also restrained any person, who was part of the company when the Insolvency and Bankruptcy Code (IBC) started from travelling abroad, except for the representatives of IDBI, ICICI and SBI who were creditors of company.
At the outset, Attorney General K K Venugopal, who was asked by the apex court to assist it in deciding a batch of petitions opposing the insolvency proceedings and seeking protection of the home buyers' interests, said the stay on the insolvency proceedings be vacated.
He also showed concern for the interest of home buyers and said the IRP would get time to formulate the preliminary resolution plan.
Senior advocate P S Patwalia, appearing for Jaypee Infratech, said it was committed to safeguard the interest of home buyers.
Additional Solicitor General Tushar Mehta, appearing for Insolvency and Bankruptcy Board, said that 627 units have been delivered to home buyers since the proceedings against the company began.
"The company Jaypee Infratech has premium properties and a foreign company may take over. But for that the proceedings against it may be allowed to continue. Ministry of Corporate Affairs is also in contact," he said.
Senior advocate Abhishek Manu Singhvi, appearing for the IDBI, said once the insolvency proceedings begin, the company cannot be liquidated for 180 days.
He said the company has a debt of Rs 10,000 crore of which Rs 4000 crore is of IDBI bank and in these 180 days, the IRP will take over the control and come up with a plan.
The bench then asked IRP to submit a resolution plan on how the money can be given back to home buyers.
It said the main issue was that money or flat should be given to the home buyers and for that purpose, it can even attach the company's properties.
Senior advocate Ajit Sinha, appearing for the petitioner Chitra Sharma and other home buyers, said it was a matter of 32,000 people who are now dying and paying the installments for their flats.
He said the court can attach the properties of company like it did in the Sahara case and money should be realised and given to the home buyers.
The bench initially observed that it would direct Jaypee Infratech and Jaypee Associates not to alienate any property or create any third party rights.
Patwalia said that Jaypee Infratech was not like any other company and they have debt of only Rs 9000 crore and assets worth Rs 17,000 crore and, even in distress, the properties would cost Rs 15,000.
The bench said the company can give as many certificates to itself but at present it is only concerned with the home buyers' interest.
Flat buyers, under the Insolvency and Bankruptcy Code of 2016, do not fall in the category of secured creditors like banks and hence they can get back their money only if something is left after repaying the secured and operational creditors, one of the pleas filed by some home buyers said.
Hundreds of home buyers have been left in the lurch after the NCLT, on August 10, admitted the IDBI Bank's plea to initiate insolvency proceedings against the debt-ridden realty company for defaulting on a Rs 526 crore loan, the plea said.