Jaypee Associates directors face SC heat

The Supreme Court on Monday directed the non-institutional directors of infrastructure firm Jaiprakash Associates (or Jaypee Associates) to appear in person before it next week and furnish details of their personal assets. The court’s direction came in the wake of its September 11 directive to the firm to deposit Rs 2,000 crore by October 27 to protect the interests of homebuyers and creditors.

The court had on November 6 refused to allow the company to deposit Rs 400 crore with its registry as against Rs 2,000 crore as directed earlier.
 

A Bench of Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud asked the directors to appear on November 22. It also appointed advocate Pawan Shree Agrawal as amicus curiae, and ordered setting up a website in order to enable homebuyers to register their grievances.
 

The counsel for Jaypee Associates informed the court that it was willing to deposit Rs 700 crore.

The counsel for ICICI bank, with whom the firm has its account, opposed the statement of the group saying the process of debt reconstruction of the firm was going on and it would not be feasible to release the amount.

The Bench had asked the firm to consider depositing at least Rs 1,000 crore by Monday with its registry. It had also restrained the managing director and the directors of Jaypee Infratech from travelling abroad without its permission and asked the parent company, Jaypee Associates, to deposit the money. The top court had asked Jaypee Infratech to hand over the records to the International Registration Plan (IRP) for drafting of a resolution plan indicating protection of interests of over 32,000 homebuyers and creditors. It also stayed any proceedings instituted against Jaypee Infratech for any purpose in any forum like the consumer commission, as IRP has been given control of the firm’s management. 

 

Under Scrutiny

• SC’s direction came in the wake of its Sept 11 order to Jaypee to deposit Rs 2k cr 
• SC had on Nov 6 refused to allow Jaypee to deposit Rs 400 cr as against Rs 2k cr
• The counsel for Jaypee informed SC it was willing to deposit Rs 700 crore
• The Bench asked the firm to consider depositing at least Rs 1,000 cr by Monday
• SC had allowed Jaypee to raise Rs 2k cr by selling land or properties

The court had allowed Jaypee Associates to raise Rs 2,000 crore by selling land or properties and deposit them in the SC registry by October 27. The court had 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 homebuyers and secured creditors. Additional Solicitor General Tushar Mehta, appearing for Insolvency and Bankruptcy Board, had said that 627 units have been delivered to homebuyers since the proceedings against the firm began. 

Homebuyers including one Chitra Sharma had moved the SC saying that around 32,000 people had booked their flats and they are now dying and paying the installments. 

The SC had on September 4 stayed the insolvency proceedings against the firm at National Company Law Tribunal (NCLT). Flat buyers, under the IBC, 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, Sharma, in her plea, said. 

Hundreds of homebuyers 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 firm for defaulting on a Rs 526 crore loan, the plea said.