Jaypee home buyers will not have to fill up any claim forms

Over 40,000 home buyers stuck in incomplete projects floated by Jaypee Infra against which the National Company Law Tribunal has recently started insolvency proceedings will now not have to fill up any claim forms by August 24, 2017.

In a meeting attended by  Jaypee Infratech MD Manoj Gaur, the NCLT appointed insolvency professional Anuj Jain and CEO of Jaypee Infratech, corporate affairs ministry officials and home buyers, it was decided that home buyers will not have to submit any documents.

“We are much relieved as we do not have to file any claim forms by August 24 now. Jaypee Infratech will obtain statements of accounts of payments made by home buyers from its records and send these to each home buyer to check for any discrepancy,” said  SK Nagrath, a retired army official and president of Jaypee Aman Flat Buyers' Association.

Arvind Jain, president of Developers Township Property Owners Welfare Society said, "Asking home buyers to fill up a claim form was a needless exercise right from the beginning as this was leading to confusion over interest payments due from the company. The buyers' data should have been sourced from the company records."

Forms had emerged as a major area of concern for Jaypee home buyers. Last week the Insolvency and Bankruptcy Board of India (IBBI) added a new form to enable home buyers, such as those who have invested in Jaypee projects, to make their claims, recognising the problem that the existing forms were meant only for banks, creditors and employees.

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There were earlier three categories of claimants and three separate forms: Form B for operational creditors, Form C for financial creditors and Form D for workmen and employees of Jaypee Infratech that were to be filled.

Most of the companies in the NCLT's defaulter list are either power or steel companies. Jaypee Infratech’s case should not be treated at par with them as thousands of home buyers have invested their life-long earnings in it. Interests of home buyers have to be protected, home buyers who have invested their life savings in Jaypee projects had said.

“We are neither operational or financial creditors but lenders and should be treated at par with banks,” home buyers had said.

The National Company Law Tribunal (NCLT), through a public notice earlier had advised home buyers, employees and those falling under other categories of creditors in projects of the Jaypee Group to file their claims on or before August 24 with the Interim Resolution Professional (IPR).

On August 9, the Allahabad bench of National Company Law Tribunal (NCLT) admitted an insolvency plea of IDBI Bank relating to a default of Rs 526.11 crore loan by Jaypee Infratech in its Wishtown project in Noida. The NCLT has asked the home buyers to file their claims by August 24.

Industry body ASSOCHAM on Saturday urged the government, National Company Law Tribunal (NCLT) and the insolvency and bankruptcy board of India (IBBI) to treat home buyers in real estate projects at par with banks in real estate projects.

The body also requested that if need be, the government should look at issuing a Presidential ordinance to amend the insolvency and bankruptcy code (IBC) to protect the rights and interest of home buyers in log-jammed projects.

Jaypee officials refused to comment on the development.

Legal position undetermined

The legal position is undetermined, senior lawyers said they need to understand how this will impact home buyers. Yudhist Narain Singh, Kochhar & Co, said: “By declaring that the aggrieved home buyers do not have to fill in forms as creditors, they have once again created ambiguity whether homebuyers would be treated as creditors, and if so, whether they would qualify as financial, operational or unsecured creditors.”

Also, the little confidence that was restored by the release of Form F has been removed. “Simply cross-verifying financial data of what has been already been paid by the buyers does not really help in this instance. The insolvency code provides a very clear and structured mechanism for insolvency proceedings which may result in the aggrieved home buyers not being treated as financial creditors. Therefore, in the greater interest of the welfare of these people the NCLT may intervene and provide clarity on how the buyers should be categorised during these insolvency proceedings,” he says.

“In one stroke, Jaypee ensures the validation of its interest and late payment charges while annihilating the interest payment or delay charges of the customers,” says Vivek Kohli senior partner and co-founder of ZEUS Law.

Some questions still remain unanswered

There are some questions that remain unanswered. Experts say that this may seem to be a relief, but buyers now have to ask themselves what is their status in this insolvency case?

They now fall under no bucket of creditor - financial/ operational / or unsecured creditors. And why has this step been taken when Insolvency and Bankruptcy Board of India had just recently introduced a separate form for JP Infra buyers…. Form F, recognizing them as a separate, important form of creditor entity, they ask.

The decision was taken today also involves - Jaypee Infratech verifying its own balance sheet and then sending each buyer an account of the statement. There is a possibility that they can now freely slap interest payments on buyers for even a small delay of a month or two in payments by the buyer and perhaps completely gloss over the fact that the company has delayed project delivery by three to five years. How will buyers the contest each of the discrepancies in account reconciliations?

The National Company Law Tribunal (NCLT) admitted IDBI’s plea for initiating insolvency proceedings against Jaypee Infratech for defaulting on a Rs 526-crore loan. NCLT appointed insolvency professional Anuj Jain as CEO of Jaypee Infratech. As of now the board of directors of the company have been suspended. Jain will now sit with Jaypee’s creditors to see if a resolution of the company’s debt is possible. He will be given six months to revive the company. This period can be extendable by another three months. In the meantime, home buyers have been given two weeks (until August 24) to raise claims related to their investment in the Jaypee projects.

vandana.ramnani@nw18.com