SC stays insolvency proceedings against Jaypee Infratech before NCLT

The Supreme Court Monday stayed the insolvency proceedings against Jaypee Infratech, ruling in favour of a petition filed by homebuyers.

It has also issued notice to the Finance Ministry, Jaypee Infratech, Reserve Bank of India and the Uttar Pradesh Government. In addition, a notice has also been sent to the Ministry of Corporate Affairs and IDBI Bank.

IDBI Bank had moved National Company Law Tribunal (NCLT) for insolvency proceedings against Jaypee Infratech for default of a loan of about Rs 526 crore.

A public interest litigation was filed by homebuyers seeking a stay order on  (NCLT) insolvency proceedings against the defaulting company.

The petitioners claimed that around 32,000 homebuyers, who have not yet been given their flats as promised by Jaypee especially in the Delhi NCR region, face uncertainty over their investment in housing projects by the insolvency order.

The apex court will now hear the homebuyers' plea in the case on October 10.

Homebuyers who had invested in Jaypee's residential projects have been put through the grind of late with a number of changes that have been at best confusing. At the heart of their confusion lies the forms which are available for homebuyers to file their claims.  In addition to an earlier form, Insolvency and Bankruptcy Board of India has introduced another form.

Last month, the Allahabad bench of the NCLT passed an order starting insolvency proceedings against Jaypee Infratech, a subsidiary of Jaiprakash Associates.

As per reports, the lawyer on behalf of the petitioners argued that the NCLT order has put the homebuyers in a disadvantaged position as the order required them to fill up certain forms which will stop them from moving consumer courts. The lawyer also said the homebuyers are worried about their investments in the company's projects.

The buyers have also asked for a forensic audit of Jaypee Infra and its holding company Jaiprakash Associates to evaluate the magnitude of their bankruptcy.

Buyers of Jaypee’s flats were thrown off guard by recent developments. To make matters worse, the Insolvency and Bankruptcy Board of India (IBBI) introduced a new form to file claims.