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Jaypee Infratech row: Homebuyers seek government's intervention

In a letter addressed to PM Modi and FM Nirmala Sitharaman, homebuyers have appealed to the government to direct IDBI Bank and NBCC to resolve their differences on the resolution plan.

Vandana Ramnani @vandanaramnani1
 
 
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Stating that they are not seeking infusion of funds, financial package, subsidy from the government but a 'just and equitable resolution of the mess', hundreds of Jaypee homebuyers, who have been waiting for almost a decade to get possession of their homes, have sought the government's intervention to help resolve the issue and save them from ‘continuing injustice and financial stress’.

In a letter addressed to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, homebuyers have appealed to the government to direct IDBI Bank and NBCC to resolve their differences on the resolution plan. They also demanded that the majority vote of homebuyers in the CoC be treated as the vote of the whole voting sub-class of home buyers.

In a separate petition to the housing and urban affairs minister Hardeep Puri, the homebuyers urged him ensure that IDBI is directed to vote in favour of the NBCC resolution plan in the interest of achieving a resolution for JIL.

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In their letter, the homebuyers also said that delaying the insolvency process further for one more bidder or to tweak a clause or two in the NBCC bid is in no one's interest.

"There is a carrying cost running into thousands of crores per annum if the resolution is delayed. We therefore request your good offices to direct IDBI to vote in favour of the NBCC resolution plan in the interest of achieving resolution for JIL," the letter addressed to the PM and FM said.

“We, 26,000 homebuyers of Jaypee Infratech Limited, booked residential apartments way back in and around years 2009 and 2010 having paid 90 percent of the apartment cost to JIL. We are made to run from pillar to post to various authorities including NOIDA Authority, Greater Noida Authority and YEIDA. In addition, in the hope of justice, we are alternating between various courts and have spent huge sums in litigation at the Supreme Court, NCLT, NCLAT, RERA and State and National Consumer forums.

"We believe that your Government has a golden opportunity to resolve this issue as JIL in under Corporate Insolvency Resolution Process (“CIRP”) as per the provisions of the Insolvency and Bankruptcy Code, 2016 and a Government of India Navratna, – NBCC has made a bid to acquire JIL," they said.

“…your intervention would go a long way in achieving resolution for JIL and resolving miseries of thousands of stuck home buyers who are under great financial distress having paid 90% of the apartment cost and are paying EMIs to banks and NBFCs to date,” the letter said.

The letter noted that the banks and homebuyers have together lent around Rs 30,000 crore to JIL and that both parties are ‘desperately looking to salvage their funds.’

"While banks are only concerned about the ~30% haircut they are taking under the NBCC resolution plan, they have been indifferent to almost 40% hair cut home buyers have taken while paying EMIs (considering a 5 year delay in possession) and this burden is increasing by 8% year-on-year," the letter said.

They appealed to the prime minister and the finance minister that majority vote of homebuyers in the committee of creditors be treated as the vote of the whole voting sub-class of homebuyers.

"…it is requested that home buyers be considered as a separate class of creditors, as they have a same goal and similar agenda, thereby forming a homogenous group amongst themselves, and we humbly request to your good offices to ensure, through judicial and the legislative process, that the vote of majority of home buyers shall be treated as the vote of the whole sub-class. We will be grateful if the Government of India tables and approves an amendment to this effect in the current session of the parliament. This would help break the deadlock and achieve resolution for JIL," the letter said.

They also urged the government to order a forensic audit of JIL and JAL from inception.

The construction of the expressway as well as development of the five land parcels by the Jaypee Group, viz., JAL and JIL, was a project for public purpose and the land that was acquired in 3 connection with this Project was not for JIL but for public purpose.1 However, Gaur family and JAL siphoned off huge sums of homebuyer’s and public money lent by lenders of JIL and stripped this public project naked, the letter said.

"The home buyers recently sought forensic audit of the financials of JIL in the CoC, but the same was either disapproved by the public sector banks or they abstained from voting on the agenda. It is noteworthy that approximately 12,000 homebuyers voted in favour of this agenda, but the banks, taking refuge under various loopholes, decided to let such agenda fail," the letter said.

In their letter to the Housing and Urban Affairs minister Hardeep Puri, the homebuyers urged that the ministry work with the ministry of Corporate Affairs and ministry of Finance "so that orders are issued directing forensic audit of JIL and JAL from inception to examine the money trail and disgorgement orders be passed against the wrongdoers. The funds of home buyers that have been siphoned off shall be recovered and then proportionately distributed amongst us home buyers as compensation for the inordinate delay in delivery of our apartments."

The letter also said that completion of land parcels of Jaypee Infratech along the Yamuna Expressway leading to the upcoming Jewar airport would give impetus to the industrial development of the state creating more jobs and help the government achieve Housing for all and increase demand of white goods and services in the region thereby helping the economy.

Hundreds of Jaypee homebuyers, who held a silent protest in the Capital on Sunday (May 23), said that while they were in favour of the state-run NBCC's bid for completing the pending projects of Jaypee, IDBI bank has voted against it, pushing the company towards liquidation.

"For the matter to be resolved, both the bank as well as homebuyers have to be on the same page," they said.

The biggest losers in the CIRP, if liquidation were to arise, would be middle class tax payer homebuyers which is certainly not the objective of the IBC. "This would also lead to a bad precedent for numerous other homebuyers with projects in a similar situation. And would spell the end of investors for upcoming but not ready real estate projects," the homebuyers said.

"A happy ending to the two-year long saga can be achieved if the bid by NBCC is approved in tandem by the home buyers and the financial institution. It is in best interest of every stake holder to bring the CIRP of JIL to its logical and beneficial conclusion of being over-taken by NBCC. Not to mention that more the delays in its resolution process, the burden of carrying costs also increases (approximately Rs 4000-5000 crore per annum) for home buyers and financial institutions," the protesting homebuyers said.

Debt-ridden realty firm Jaypee Infratech's creditors, which include banks and homebuyers, met last week to assess the progress of the ongoing insolvency proceedings and decide the future course of action. According to sources, the Committee of Creditors (CoC) did not take any decision on the way forward.

The decision on whether to consider bids of Adani Group or Jaypee Group would be taken after a hearing in this matter in the National Company Law Appellate Tribunal (NCLAT) on July 2.

This is the second round of bidding process to revive Jaypee Infratech, which went into insolvency in August 2017 after the National Company Law Tribunal (NCLT) admitted an application filed by an IDBI Bank-led consortium.

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 Jun 24, 2019 01:15 pm
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