Want the money you invested in Jaypee back? Here's what home buyers must do

Investment of 32,000 home buyers is stuck because of insolvency proceedings against Jaypee Infratech

Home buyers in the Jaypee Infratech projects can now breathe easy as they will get relief on a claim form. Confusion had arisen over forms because the law makes a distinction between financial creditors, which are banks and operational creditors when it comes to filing an insolvency petition. Now, Insolvency resolution professional (IRP) has decided to accept whichever form Jaypee home buyers' claims are filed in.

The investment of around 32,000 home buyers is stuck because of insolvency proceedings against Jaypee Infratech. According to MoneyControl sources, the Insolvency & Bankruptcy Board of India had erred in deciding on the forms as a situation like the current one was not envisaged. 

Relief for home buyers

• Home buyers can submit any claim form - financial creditors or operational creditors

• No proof of ownership required: IRP has decided not to insist on proof of ownership. "It will be a huge help for many people. There are people who may be abroad or defence personnel who are posted at the borders and may not be in a position to submit the papers immediately," said a lawyer to Times of India.

* However, documents will be required before within 270 days or before the resolution plan is worked out. 

What caused the confusion

The confusion arose because of two pronouncements by the National Company Law Tribunal and the National Company Appellate Tribunal. 

NCLT ruled that homebuyers are not operational creditors.

NCLAT had observed that flat buyers with assured returns from the developers are categorised as financial creditors, which may not be the case with Jaypee Infratech buyers.

Dream turns into nightmare for 'Jaypee Wish Town' home buyers

Last week many angry home buyers of Jaypee Wish Town staged a protest in Noida. While Noida authority promised to protect the interests of the flat owners, they were not pacified.

The protestors demanded that their money be returned first as they fear that if the Jaypee Infratech would be declared insolvent, all their court cases will become ineffective and they will not be able to get possession of their flats and lose their hard-earned money.

However, no new purchases can happen nor buyers can sell, transfer or get possession of their ready to move in or under construction flats. Also, there will be a status quo on the execution of registry of a property because the interim resolution professional has taken control of the Jaypee Infratech.

According to an interim resolution professional of a nationalised bank, future of flats of homebuyers and their investment is uncertain because a committee consisting of financers will later decide what should happen with the housing projects. Homebuyers are worried and confused as they do not know whether they will get their flat or investment back along with the interest once the insolvency proceedings are over.

Jaypee Infratech insolvency case

Jaypee Infratech is among 12 big corporate loan defaulters against whom RBI has ordered initiation of insolvency proceedings. The company had a debt of about Rs 8,000 crore till March 2017.

The company, which is developing about 32,000 flats and plots across various projects in its township project 'Wish Town', has been facing protests and litigation from home buyers due to huge delays in completion of projects.

Jaypee Infratech has 2,500 hectares of land in five parcels of around 500 hectares each. Now, the company is planning to sell some unused land to banks to reduce its debt.

The Allahabad bench of NCLT has admitted the petition filed by IDBI Bank under Section 7 of Insolvency and Bankruptcy Code 2016, Jaypee Infratech had said in a regulatory filing a few days back.

This move caused anxiety among the 32,000 home buyers.