Realty mess: Supreme Court stops Jaypee directors from separating assets

Accepts draft for Rs 275 crore; next hearing on January 10

The Supreme Court (SC) on Wednesday again rapped debt-ridden Jaiprakash Associates (JAL), directing the company to repay all dues to buyers of its home properties and warning its directors and promoters from alienating their properties or assets of their kins.

The company also deposited a demand draft for Rs 275 crore at the apex court, in response to earlier orders.

Thousands of homebuyers had petitioned after the National Company Law Tribunal (NCLT) on August 10 admitted IDBI Bank’s plea to initiate insolvency proceedings against the company for defaulting on Rs 526 crore of loan.

Senior advocates Mukul Rohatgi and Ranjit Kumar, who appeared on behalf of the company’s directors, including independent directors and promoters, said they’d filed affidavits in pursuance of an earlier direction for details of personal properties. Kapil Sibal, appearing for the company, said adequate time should be given to arrange the money demanded; else, the firm could go the way of the Sahara group.

Experts believe that the decision of the SC preventing promoter directors and independent directors and their family members from alienating their assets is a welcome move. 

“The personal asses of promoters of defaulting firms are outside the ambit of moratorium under IBC and the decision of the SC is a warning for such directors aiming at moratorium shield for their properties. Independent directors, charging huge amount of commission, are responsible for non-compliances. The decision will lead to objectivity in their approach,” said Shyam Agrawal, president, Institute of Company Secretaries of India (ICSI).

The SC bench has posted the plea of homebuyers for a further hearing on January 10; all the directors are to appear again before it on that date. The court had on November 13 asked the non-institutional directors to appear in person and furnish details of their personal assets.

A mix of throwaway land prices, greed and disregard for law had led to a real estate bust in the National Capital Region, mainly Noida and Greater Noida. Thousands of home buyers in real estate developments of Jaypee Infratech and the Amrapali Group in these areas are being left with few choices, as both entities head for the NCLT. Around 30,000 homebuyers of Jaypee and 40,000 who’d invested in apartments of Amrapali have been hit by the companies’ inability to service loans.  

The courts had earlier restrained the managing director and directors of Jaypee Infratech from travelling abroad without prior permission and asked the parent company, JAL, to deposit the money. The apex 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.

It had then asked the firm to consider depositing at least Rs 1,000 crore by November 13 with its registry. The company had said it would be able to deposit Rs 700 crore. However, the plea was opposed by one of its lenders, ICICI Bank, on the ground that this was not feasible, as loan restructuring was on.

The court had asked Jaypee Infratech to hand over the records on the matter to the Interim Resolution Professional (IRP) appointed by NCLT, to draft a plan on how to protect the interests of at least 32,000 homebuyers, beside the creditors.

It also stayed any proceedings instituted against Jaypee Infratech for any purpose in any other fora, such as consumer courts, as the IRP had been given control of the company’s management. The court had also appointed senior advocate Shekhar Naphade to assist the proceedings of the IRP in this regard.

THE VERDICT

• 32,000 Jaypee homebuyers are affected 

• 40,000 Amarapali residents are affected

• Consumer rights experts say that fears of homebuyers are valid

• The courts had earlier restrained the directors of Jaypee from travelling abroad without permission

• The court had asked Jaypee to hand over the records on the matter to IRP appointed by NCLT