It’s a great victory for aggrieved home buyers of Jaypee Infratech as Supreme Court has ordered a stay of insolvency proceedings against the real estate baron.
On August 9, 2017, the NCLT has admitted the petition of IDBI Bank to fast track the resolution process of Jaypee Infratech Rs 526.11 crore debt default under the provisions of Insolvency and Bankruptcy Code, 2016.
On account of being unsecured creditors, home buyers were in a bedlam as they would neither get home nor refund of their hard earned money. As per the provisions of insolvency code, the financial interest of the secured creditors takes precedence over that of unsecured creditors. Homebuyers have been tagged under the category of unsecured creditors.
A Public Interest Litigation(PIL) was filed by a homebuyer, Chitra Sharma. It was claimed in the PIL that homebuyers are left remedy less because of the order of NCLT. The plea has sought a direction to the Centre and others that the Insolvency and Bankruptcy Code “shall not curtail the legal statutory and vested rights of the flat owners/buyers as consumers” defined under the Consumer Protection Act.The plea was moved to Supreme Court for seeking protection of the interest of 30,000 buyers who have invested their hard earned money in Jaypee projects.
Ashwarya Sinha, representing homebuyers said that the petitioner was questioning the constitutional validity of the insolvency code since it did not recognise the rights of the homebuyers and sought harmonious construction with other recent laws such as the Real Estate Regulation And Development Act (RERA), which protected the rights of homebuyers.
The bench comprising of Chief Justice Deepak Mishra, and Justice AM Khanwilkar and Justice DY Chandrachud and they ruled in the favour of the homebuyers. This verdict brings a great relief to the homebuyers who were earlier left at the mercy of Insolvency Resolution professional. Now the original board of Jaypee Infratech will be restored and all the consumer and other cases will go as usual against the builder.
Jaypee Infratech is the subsidiary of Jaiprakash Associates is into road construction and real estate business. It has constructed Yamuna Expressway, connecting Delhi to Agra.