SC asks NCLT to deal with Jaypee Infratech insolvency proceedings

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In a setback to the Jaypee group, the Supreme Court on Thursday asked the National Company Law Tribunal (NCLT), Allahabad, to deal with the insolvency proceedings against Jaypee Infratech Ltd (JIL) and barred the group or its promoters from participating in the fresh bidding process.

A bench headed by Chief Justice Dipak Misra said the limitation period of 180 days to conclude the insolvency proceedings will commence from today.

The bench, also comprising Justices A M Khanwilkar and D Y Chandrachud, said the Rs 7.5 billion deposited by the JIL in the apex court shall be transferred to NCLT Allahabad.

The top court also allowed the Reserve Bank of India (RBI) to direct the banks to initiate separate insolvency proceedings against JIL's holding company Jaiprakash Associate Limited (JAL).

The bench said homebuyers should be included in the committee of creditors in accordance with the amendments made in the Insolvency and Bankruptcy Code (IBC).

The bench disposed of all the petitions and applications pending before it.

The apex court had earlier reserved its order on "interim reliefs" sought by various stakeholders, including the homebuyers of JIL, JAL, banks and financial institutions and the Insolvency Resolution Professional (IRP).

IDBI bank had moved the Corporate Insolvency Resolution application before the NCLT against the debt-ridden realty firm, JIL, after it allegedly defaulted in paying back a loan of Rs 5.26 billion.

The ASG had earlier said that, according to the amended IBC, now homebuyers are financial creditors in a firm. Hence, the committee of creditors, which usually included banks and FIs, will have to consider the views of homebuyers while deciding the resolution plan of a company.

Lawyers, representing the homebuyers, opposed the submission that JAL be allowed to complete the housing projects, saying that it was barred under the law to do so.

Taking note of the enormity of the situation, the bench said it was thought that the liability of the firm was to the tune Rs 20 billion and it has now gone beyond Rs 300 billion.

Earlier, JAL had said it would deposit Rs 6 billion more to refund the home buyers if it was allowed to dispose of its identified assets, including a cement plant at Rewa in Madhya Pradesh.

JAL had said Rs 7.5 billion has been deposited by it with the apex court's registry and Rs 6 billion more would be required for paying the principal sum to the home buyers.

The homebuyers had moved the apex court stating that around 32,000 people had booked flats and were now paying instalments.