Supreme Court Rejects Jaiprakash Associates’ Plea To Deposit Rs 400 Crore For Homebuyers
The Supreme Court asked Jaiprakash Associates to submit a substantial amount to prove its bonafide.
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The Supreme Court today refused to allow Jaiprakash Associates Ltd. to deposit to Rs 400 crore with its registry as against Rs 2,000 crore directed by it, and asked the real estate firm to submit a substantial amount to prove its bonafide.
The real estate firm which was asked on September 11 to deposit Rs 2,000 crore with the apex court registry by Oct. 27, rushed to the top court, saying no company possessed such a huge amount of ‘liquid’ fund and urged that it should be allowed to deposit Rs 400 crore by Friday.
A bench headed by Chief Justice Dipak Misra said Rs 400 crore was a paltry sum and the firm will have to deposit substantial amount to establish its bonafide.
“Arrange whatever money you can arrange, but it must be a bonafide exercise,” the bench, which also comprised Justices AM Khanwilkar and DY Chandrachud, said when the counsel for the firm said the shareholders’ consent would be needed to sell the group assets. The bench then said that the firm may consider depositing at least Rs 1,000 crore by Nov. 13 with its registry.
The top court had on Sept. 11 directed the Jaypee Associates to deposit Rs 2,000 crore by Oct. 27 and asked the National Company Law Tribunal-appointed interim resolution professional to take over its management and work out a plan to protect the interests of homebuyers and creditors.
It had also restrained the managing director and directors of Jaypee Infratech Ltd. 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 IRP for drafting of a resolution plan indicating protection of interests of over 32,000 hassled homebuyers and creditors. It had 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.
The court had allowed Jaypee Associates to raise Rs 2,000 crore by selling land or properties and deposit them in the apex court registry by Oct. 27.
The court had 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 company began.
Homebuyers including one Chitra Sharma had moved the apex court saying that around 32,000 people had booked their flats and they are now dying and paying the installments.
The top court had on Sept. 4 stayed the insolvency proceedings against the real estate firm at the NCLT.
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, Sharma, in her plea, said.
Hundreds of home buyers have been left in the lurch after the NCLT, on August 10, admitted the IDBI Bank Ltd.’s plea to initiate insolvency proceedings against the debt-ridden realty company for defaulting on a Rs 526 crore loan, the plea said.