Waiting for a roof over their heads, thousands of Jaypee home buyers neither got a refund or possession of their flat from the Supreme Court, which on Thursday said that one class of secured creditors cannot get "preferential disbursement" over another class of creditors.
With the latest amendment carried out to the Insolvency and Bankruptcy Code that makes homebuyers as creditors, the court directed the homebuyers to await the result of the proceedings pending before the National Company law Tribunal, Allahabad.
The bench of Chief Justice Dipak Misra, Justices AM Khanwilkar and DY Chandrachud, however directed that the Committee of Creditors should be reconstituted with homebuyers on the board and the Committee must invite fresh bids for finishing the projects of Jaypee group. In addition, the Court directed the amount of Rs 750 crore collected from Jaypee to be deposited with NClT.
In a setback to Jaypee, the bench barred both the Jaypee Infratrech limited (JIl) and Jaiprakash Associates limited (JAl) from participating in the fresh bidding as the Court said there was "no manner of doubt" that these firms lacked financial capital for finishing the unfinished projects.
The Court also allowed Reserve Bank of India (RBI) to direct banks to initiate corporate insolvency resolution proceedings (CIRP) against JAl, the holding company of JIl.
Although homebuyers were hopeful of receiving refund out of the Rs 750 corpus collected by the Court, the bench noted that out of 21532 homebuyers, only eight per cent of home buyers have sought a refund while 92 per cent preferred possession of homes. "Directing disbursement of the amount of Rs 750 crore to the home buyers who seek refund would be manifestly improper and cause injustice to the secured creditors since it would amount to a preferential disbursement to a class of creditors," the bench said in its 46-page judgment.
"Once we have taken recourse to the discipline of the IBC, it is necessary that its statutory provisions be followed to facilitate the conclusion of the resolution process," the court said. It said that court should follow the "discipline of the IBC" which has been enacted by Parliament specifically to streamline the resolution of corporate insolvencies.
The Court also held that the initial period of 180 days for the conclusion of CIRP in respect of JIl would commence from Thursday and if necessary, NClT could extend further by 90 days. JIl figured in the list of top 12 defaulters published by RBI in June 2017. The total financial debt against JIl as on August 9 last year stood at Rs 9,984.70 crore. IDBI Bank had moved NClT against JIl for defaulting on its loan of Rs 526 crore.