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SC to decide on rights of homebuyers and issue of extension of the resolution process on July 16

Supreme Court had disallowed Jaiprakash Associates to hive off Yamuna Expressway on Friday

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The Supreme Court on Friday refused to allow Jaiprakash Associates to hive off the Yamuna Expressway and said that it will hear homebuyers and JAL’s plea on July 16 to decide on JAL’s ability to repay homebuyers and complete the projects. It is also expected to take up the issue of extension of insolvency resolution process on Monday.

“The Supreme Court on Friday disallowed conditional deposit of Rs 600 crore in lieu of hiving off the Yamuna Expressway.  JAL had deposited post-dated cheques for Rs 600 crore subject to the condition that they be allowed to hive off Yamuna Expressway. This was opposed by homebuyers and banks who said that the Expressway was JIL’s property. The Supreme Court, therefore, did not agree to their suggestion or accept their cheques," said lawyers present at the hearing.

"The disbursement to refund seekers also did not take place. The court will therefore, take up the issue of what to do refund seekers, possession seekers and JAL’s failure to deposit Rs 600 crore ordered by the Supreme Court on Monday. It will also take up the issue of extension of the insolvency resolution process as homebuyers are in favour of a third party promoter taking over the projects,” they said.

At the last hearing on July 4, the apex court had asked the firm to prove its bonafide by coming up with a credible financial plan with a bank and deposit Rs 600 crore for refund of principal amount to homebuyers.

A bench headed by Chief Justice Dipak Misra had on May 16 directed JAL to deposit Rs 1,000 crore with the registry by June 15 and said on submission of the amount, the liquidation proceedings against JIL shall remain stayed. The company had failed to deposit the said amount. This amount was in addition to Rs 750 crore that the company had already deposited with the court’s registry for ensuring refund to homebuyers.

Lawyers had said JAL wants to hive off cement assets for which they have filed an application in NCLT Allahabad. NCLT has not approved the scheme in the context of SC's order last year that restrains JAL from transferring any of its assets without leave of the apex court.

It was in this context that JAL had earlier this month sought permission from SC to transfer those assets so that it could satisfy the deposit Rs 1,000 crore. But the court had not allowed the sale of assets. It had only agreed to reduce the amount and asked the company’s lawyer to seek instructions to pay up at least Rs 600 crore to refund the principal amount to homebuyers, lawyers present at the hearing said.

It has also been reported that Jaiprakash Associates has secured a comfort letter from Deutsche Bank promising a loan facility of Rs 1,000 crore for the troubled real estate developer. The Noida-based company was earlier in talks with Rana Kapoor-promoted Yes Bank as well but finally managed to get the loan commitment from Deutsche only.

Earlier, embattled realtor JAL had filed an application before the SC seeking its approval for a revival plan for its subsidiary Jaypee Infratech Ltd (JIL), including an offer of Rs 1,000 crore credit from an Indian bank.

In an application filed through advocate Anupam Lal Das, JAL had said it has been able to “tie up appropriate financial arrangement and adequate support letter of reputed bank to competently implement resolution/revival of JIL which will inter alia include infusion of Rs 1000 crore and financial arrangement to infuse another Rs 2500 crore (approx.) in JIL as per the requirement by monetizing the revenue toll collection of Yamuna Expressway

Maintaining that it was "fully committed" to construct homes and make payments to home buyers for delay in handing over possession, JAL had also sought the constitution of a committee to consider its proposal for revival of its subsidiary

JAL has also said that in its revival plan for JIL, it would take care of the issue of completion of construction of homes within 42 months from the approval of its plan by the committee.

"The approval of revival/resolution plan by the applicant (JAL) shall enable infusion of funds not only for complying with the order of this court, but also for construction of homes and early delivery of the same to the home buyers who are interested in taking possession of their homes," the plea had said.

JAL had pleaded that it should be allowed to revive JIL as its liquidation will neither be in the interest of creditors, nor in the interest of homebuyers. Homebuyers of JIL had moved the apex court seeking relief in view of significant delays in completion of housing projects.

The plea had further said homebuyers were left in the lurch after the NCLT, on August 10 last year, admitted IDBI Bank’s plea to initiate insolvency proceedings against the JIL for defaulting on a Rs 526-crore loan. While admitting the plea of IDBI Bank, the NCLT had appointed Anuj Jain as Interim Resolution Professional (IRP) to manage the company’s business.

The IRP has also invited bids from investors interested in acquiring JIL and completing the stuck real estate projects in Noida and Greater Noida. Consequently, Lakshadweep -- a joint venture between the Sudhir Valia-led Suraksha Asset Reconstruction Company and Mumbai-based Dosti Realty -- emerged as a front-runner to acquire JIL with Rs 7,350 crore bid.

However, JIL's lenders rejected the Lakshadweep's bid as they found it inadequate.

The lenders did not consider the bid of Jaypee Group promoter Manoj Gaur who made an offer of over Rs 10,000 crore to revive JIL. It also offered 2,000 shares to every home buyers.

On July 2, homebuyers stuck in Jaypee projects for almost a decade had demanded that Jaiprakash Associates Limited should not be allowed to regain control of Jaypee Infratech Limited (JIL) as JAL neither has any intent nor any financial strength to complete construction of remaining flats in the stalled projects.

Allowing JAL to regain control of JIL will go against the spirit of IBC and would open floodgates for other promoters to challenge takeover of their companies by third parties which would result in chaos, they said.

“Jaypee has not been able to complete construction till date nor will it be able to do so in future. A private company such as Suraksha or Kube or a government agency such as NBCC should come forward. They are only waiting for instructions from the government and the Supreme Court to complete the projects so that the projects are handed over in time. There are 20,000 units left out of 35,000 booked. These can be completed in the shortest possible time under the direct supervision of the Supreme Court  and under the monitoring committee formed by the Supreme Court within a timeframe and with the involvement of homebuyers,” homebuyers had told reporters at a conference organised by a consortium of nine associations consisting of around 5,000 buyers.
First Published on Jul 13, 2018 04:55 pm
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