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Centre informs Supreme Court that it is working on proposal to address homebuyers' issues

Supreme Court has deferred the hearing on the Jaypee matter for July 18 after the Centre told the court that NCLAT will hear the case on July 17

Vandana Ramnani @vandanaramnani1

The Centre on July 11 told the Supreme Court that it is working on an uniform proposal to address the grievances of homebuyers who are stuck with incomplete projects for almost a decade.

It apprised the apex court that since NCLAT is endeavouring to come up with a workable mechanism by seeking the personal appearance of the banks, NBCC and homebuyers before it on July 17, it would be better to await its outcome.

A bench of Justices AM Khanwilkar and Dinesh Maheshwari deferred the hearing for July 18 after the Centre told the court that NCLAT will hear the matter on July 17, sources said.

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Additional Solicitor General Madhvi Diwan, appearing for the Centre, informed the court that Centre is working on a uniform proposal to address various grievances of aggrieved homebuyers and it will be submitted in the pending Unitech case by July 23, as per the direction of the apex court in that matter.

She apprised the court about the events at NCLAT. She stated that NCLAT is endeavouring to come up with a workable mechanism by seeking personal appearance of the Banks, NBCC and the home buyers before it on July 17, 2019. She then requested that the matter should be taken up after July 17, 2019 as there exists a possibility that the matter can be reasonably be resolved at NCLAT, sources said.

The counsel appearing for the homebuyers said that they apprehend that Jaypee Infratech Ltd (JIL) may be sent for liquidation to which the apex court observed that it may use its plenary power under Article 142 of the Constitution to protect the interest of around 23,000 homebuyers in the Jaypee Infratech case, if their grievances are not addressed.

The counsel then referred to the Unitech homebuyers' case where the government has indicated that it may take over the stalled projects and said that similar relief can be granted in the Jaypee case.

Fali S Nariman, representing Jaypee Associated Limted (JAL), submitted that if at all a workable resolution can be meted out in this case, it can only be done by the Supreme Court. After stating so, he requested that any solution/mechanism being contemplated by the government should be submitted to this court and the proceedings before NCLT/NCLAT should be stayed. To such a suggestion, Jaideep Gupta, representing Kube, objected by stating that it is nevertheless possible that a solution can be arrived by NCLAT.

The top court had on July 9 asked the Centre to come out with an "uniform" proposal for all cases to resolve the difficulties being faced by lakhs of home buyers who have not yet got possession of flats despite paying huge amounts of money to real estate builders.

"This issue will be bothering lakhs of home buyers. Within the IBC (Insolvency and Bankruptcy Code), we cannot do anything. But outside it, you (Centre) can suggest something. We can consider that," the court had said.

The court's observation had come during the hearing of a plea filed by Chitra Sharma and other homebuyers which has sought that JIL be not sent into liquidation, although the 270-day deadline for the corporate insolvency resolution process is over, as it would cause "irreparable loss" to thousands of homebuyers.

The fresh plea filed in the top court has also sought a direction that an "independent and thorough forensic audit" of JIL should be conducted from the date of its incorporation.

Sharma was among the first few homebuyers who had moved the apex court in 2017 stating that around 23,000 people had booked flats and were now paying instalments, but their homes were not ready.

"Till date only two serious bids have been received by the Committee of Creditors. One bid has been submitted by National Buildings Construction Corporation Limited, whereas the other has been submitted by Suraksha ARC. None of the said bids have been accepted by the Committee of Creditors till date," the plea filed through advocate Ashwarya Sinha lawyer said.

It said if no resolution plan is accepted till May 6, JIL would "automatically go into liquidation", leaving thousands of home buyers in lurch and without any solution.

"Liquidation of the company will only be in the interest of the banks who will be able to recover the money lent by them to the corporate debtor," it said, adding, "However, the ultimate sufferer of the same will be the home buyers."

The apex court had on August 9 last year ordered re-commencement of the resolution process against JIL and allowed the Reserve Bank of India to direct banks to initiate corporate insolvency resolution proceedings (CIRP) against Jaiprakash Associates Ltd (JAL), the holding company of JIL, under the Insolvency and Bankruptcy Code (IBC).

NCLAT had earlier this month directed representatives of banks, allottees and other stakeholders to appear before it on July 17 to consider how the NBCC resolution plan could be amended for the benefit of homebuyers.

The appellate tribunal said its priority was to take care of the interest of the home buyers and asked the representatives of various stakeholders involved to appear before it in the next hearing on July 17 to find how NBCC's plans could be altered for the benefit of all, specially the home buyers. The bench said NBCC is a government company and one can rely on it, adding that it knows "the pain of allottees" and wants to do justice for them.

NBCC had in its revised bid agreed to reduce the value of unsold inventories offered to lenders by around 25 percent. The public sector firm has proposed that it would reduce the value of unsold inventories offered to lenders to Rs 1,300 crore from earlier Rs 1,750 crore.

Banks had been reluctant to acquire over 2000 unsold flats as proposed by NBCC in its revised offer.

However, NBCC did not dilute other conditions in its offer, including exemption from future tax liability, mentioned in its bid.  In its revised offer, NBCC had proposed infusion of Rs 200 crore equity capital, transfer of 950 acres of land worth Rs 5,000 crore to banks and completing construction of flats by July 2023 to settle an outstanding claim of Rs 23,723 crore of financial creditors.

But it had put several conditions for the implementation of its plan, including a demand to extinguish an estimated income-tax liability of Rs 33,000 crore over a period of 30 years arising out of the transfer of land parcels from Yamuna Expressway Industrial Development Authority (YEIDA) to Jaypee Group and seeking permission from YEIDA for any business transfer.

On this bid, lenders had reservations on certain relief and concessions sought by NBCC and  sought clarifications from the firm. Clarifications from the NBCC were sought in the wake of IRP Anuj Jain flagging to the lenders that the state-owned firm's bid was conditional and non-binding because of the two conditions.

Business conglomerate Adani group had also last month made an unsolicited and non-binding bid to acquire Jaypee Infratech and is ready to infuse up to Rs 1,700 crore to expedite the construction of stuck housing projects of the debt-laden realty firm and deliver flats to home buyers.

As many as 13 banks and over 23,000 homebuyers have voting rights in the committee of creditors (CoC). Buyers have nearly 60 percent votes. For the bid to be approved, 66 percent voters should be in favour of the deal.

Earlier in May creditors, including banks and homebuyers, rejected a bid by Mumbai-based Suraksha Realty through a voting process, following which the CoC decided to consider NBCC's offer.

Jaypee Infratech went into insolvency process in 2017 after the NCLT admitted an application by an IDBI Bank-led consortium seeking resolution of the realty firm. In the first round of insolvency proceedings, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. Later in October 2018, the Interim Resolution Professional (IRP) started the second round of bidding process to revive Jaypee Infratech on the direction of NCLT.

vandana.ramnani@nw18.com
First Published on Jul 11, 2019 09:24 pm
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