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Supreme Court Stayed on JayPee Insolvency Proceedings, reliefs Home-Buyers

The Supreme Court judgment reliefs Home-Buyers on 4th September 2017 over the PIL (public Interest litigation) filed against the Insolvency Proceedings of JayPee Infratech.It has a remarkable step of Supreme Court after The Ram Rahim verdict. The Apex court of India is setting everyday a new example of justice to protect the interest of an individual. Supreme Court stayed on the Insolvency Proceedings of Jay Pee Infratech by National Company Law Tribunal (NCLT).

Why Insolvency Proceedings of Jay Pee took place?

Jay Pee Infratech Pvt Ltd, a subsidiary of Jaiprakash Associates faces the insolvency issue after the IDBI outstanding loan default amount to Rs. 526.11 Crores. For recovery of the amount the IDBI bank approached the National Company Law Tribunal (NCLT) for the Insolvency Proceedings of Jay Pee Infratech. The Allahabad bench of the NCLT initiated the Insolvency proceedings against Jay Pee Infratech.

Why Home-Buyers filed PIL against the Insolvency Proceedings of NCLT?

After approaching IDBI, the NCLT makes different forms to claim the credit against the Jay Pee Infratech. As per NCLT, it is mandatory for all home-buyers to submit B and C form issued by IRP (Insolvency Resolution Professional). The forms have some points which are against the protection of home-buyers. As per this, the claim comes from insolvency proceedings first credit to IDBI Bank as the Financial Institutions such as IDBI is a secure creditor. The home-buyers here are being treated as unsecured creditors and the claim proceeds will be paid later after the FI’s. As per NCLT movement, the buyers put themselves before to the jurisdiction of Insolvency and Bankruptcy code of conduct and even there is no option for them to go to a consumer court. This leads to the PIL (Public Interest Litigation) filing.
The PIL was filing by Ms. Chitra Sharma, one of home-buyers who booked home under Jay Pee Infrastructure group, on behalf of around 35000 home-buyers to protect those interest of buying on the basis of following Key points:

  1. The plea filed against the Insolvency Proceedings urge Supreme court to a structured audit of Jay Pee Infrastructure and Jayprakash associates which is the group company of Jay Pee Infrastructure to know the flow of money invested.
  2. The plea said the home-buyers are treated as the unsecured creditors and may be they will get nothing out of the insolvency proceedings as IDBI as a secured creditor would be cleared first.
  3. The plea also said that such action violates Article 14 (Right to Equality) and Article 21 (Right to Life) of the Fundamental Rights of Indian Constitution and hence the intervention of Jurisdiction should take place to protect their Fundamental Rights.
  4. The plea also said the home-buyers are forcing to submit forms which pertain to financial creditors and by submitting these forms they put themselves to the jurisdiction of IBC and even though it does not cater their interest to go to a consumer court.

Supreme Court Judgment:

To protect the home-buyers interest SC made the following key decisions over the PIL filed:

  1. First Supreme Court put an stay over the Insolvency Proceedings and the final hearing will be on 10th October 2017.
  2. Supreme Court also issued notice to Finance Ministry, Ministry of Corporate affairs, IDBI Bank, JayPee Infratech, RBI & UP Government.
  3. Supreme Court has said the Fundamental Rights are the basic Rights to an individual and the Insolvency Proceedings are against the Fundamental Rights.
  4. Also the structured audit report must be required from JayPee Infratech and its Group company Jaiprakash associates.
  5. Also Supreme Court put a stay to all companies which are projecting themselves as insolvent and such insolvency proceeds benefit only to Financial Institutions. Like the case of Amrapali Insolvency in which Bank of Baroda dues are more than 55 Crores.

Thus we should believe in our jurisdiction system which are at least protecting us such as home-buyers interest from the builders like JayPee Infratech or Amrapali Infrastructure. Also RERA Act 2016 protects the Home-buyers interest by its regulation as only 30% of their invested value would be invested by builders and the rest 70% of the invested value should be maintained with an Escrow account which keep all the tracks of money flow.

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