On May 23, the Chairman of Jaiprakash Associates (JAL) Manoj Gaur wrote a letter to the IRP, urging him to consider JAL's settlement offer, which was submitted before the Supreme Court in 2019.
There finally seems to be light at the end of the tunnel for 20,000 homebuyers who invested in projects by Jaypee Infratech and have waited to get possession of their homes for almost 12 years.
On June 23, the financial creditors of Noida-based Jaypee Infratech Ltd. finally chose Suraksha Group of Mumbai over state-owned NBCC to take over the debt-laden developer and complete the unfinished apartments.
Jayashree Swaminathan had booked a 2,100 square foot apartment in Kensington Park Heights in Noida in 2009, hoping her daughter would attend a nearby law school. Today, her daughter has completed her post-graduation in law and her dissertation was on the Jaypee case.
Swaminathan pointed out that the latest round of voting for the resolution plans was a close call, like an India-Pakistan cricket match, and the results resembled the last-ball moment.
“While a majority of homebuyers voted for both the Suraksha Group and NBCC resolution plans as their aim was to get their houses constructed, as many as 1,200 voted for NBCC. Having said that, the Suraksha bid seemed better as they had promised to infuse Rs 300 crore to start construction immediately and complete construction within six to 40 months,” she explained.
Ashish Rustogi, president of the Krescent Homebuyers Association comprising 1,100 homebuyers, said they voted for both NBCC and Suraksha Group this time because they were fed up with the long-winding litigation.
“We need our homes. And this time we are positive that construction will begin soon,” he said.
Chitra Sharma, who was among the first few homebuyers to approach the top court in 2017, told Moneycontrol that “over 20,000 people who had booked their homes way back in 2009 have languished for years. Technically, we have attained a resolution to get a home. Let’s see what happens.”
In absolute terms there is a resolution in place, but how favourable it is for homebuyers, only time will tell.
“Suraksha, after all, is a private developer and we have already been bitten by one in the past,” Sharma said.
Legal experts said with the Suraksha verdict, there is hope that the homes are completed quickly.
“It’s interesting to note that a significant majority of homebuyers voted in favour of NBCC over Suraksha. Having said that, as long as Suraksha can deliver the apartments, this would be a huge step forward to finally putting a lid on the thousands of homebuyers who have been left in the lurch for years,” said Vaibhav Gaggar of Gaggar & Associates.
After approval by the committee of creditors, the National Company Law Tribunal will have to clear Suraksha Group’s offer.
The Suraksha Group received 98.66 percent of the votes compared with NBCC’s 98.54 percent. Voting started on June 14 and ended on June 23. This was the fourth round of bidding to find a buyer for Jaypee.
Jaypee Infratech said in a regulatory filing that Suraksha Group received 41.91 percent of the votes from 12 banks out of their total voting rights of 43.25 percent, while NBCC got 41.79 percent of the votes from institutional financial creditors, which have submitted claims of Rs 9,783 crore.
All banks, barring ICICI Bank which had a 1.34 percent vote, were in favour of Suraksha Group. Two lenders voted against NBCC’s bid – ICICI Bank and Srei Equipment Finance Ltd. (0.12 percent vote share).
Both Suraksha and NBCC received the full 56.62 percent and 0.13 votes of homebuyers and FD holders, respectively. Srei’s vote in favour of Suraksha and against NBCC proved to be decisive in the final decision.
Suraksha Group has offered secured financial creditors 2,552 acres of land in lieu of debt, with a fair value of Rs 6,456 crore and a liquidation value of Rs 4,189 crore, as per the latest offer. Suraksha Group had also promised to immediately infuse Rs 300 crore if its bid was approved by the CoC to ensure construction is not hampered while awaiting the NCLT’s approval of the resolution plan.
Suraksha Group had decided to keep the Yamuna Expressway, which Jaypee had built, connecting Greater Noida and Agra. It had proposed a line of credit of Rs 3,000 crore as working capital for the construction of projects and pledged to meet any shortfall to dissenting creditors.
According to the plan, the Mumbai-based company will complete the homebuyers project over 40 months.
NBCC and Suraksha had been given more time on May 27-28 to submit their revised and final bids. Later, in a June 10 meeting, the CoC decided to put both NBCC and Suraksha bids to vote simultaneously.
Jaypee went into the insolvency process in August 2017 after the NCLT admitted an application by an IDBI Bank-led consortium. In the first round of insolvency proceedings, lenders rejected a Rs 7,350 crore bid of Lakshadweep, a part of the Suraksha Group. The CoC rejected the bids of Suraksha Realty and NBCC in the second round in May-June 2019.
Interim resolution professional Anuj Jain is managing Jaypee and running the bankruptcy proceedings.
The matter reached the National Company Law Appellate Tribunal and then the Supreme Court. In November 2019, the apex court directed that revised bids be invited from only NBCC and Suraksha.
In December 2019, the CoC approved NBCC’s resolution plan with 97.36 percent votes in favour during the third round of bidding. In March 2020, NBCC received the NCLT’s approval to acquire Jaypee but the order was challenged in the NCLAT and later in the Supreme Court, which ordered on March 24 this year that fresh bids should be invited from NBCC and Suraksha.
The Supreme Court also directed that the resolution process should be completed in 45 days, which lapsed on May 8. The interim resolution professional has asked for an extension to July 7, for which the hearing is scheduled on July 1.