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SC remands Jaypee matter to NCLT leaving homebuyers in an unresolved state

In a setback for the harassed homebuyers in Jaypee's projects, the Supreme Court remanded the matter back to the National Company Law Tribunal (NCLT). While homebuyers are now upset considering no conclusive resolution is in sight, the SC has said that homebuyers should be included in the committee of creditors in line with the amendments made to the Insolvency and Bankruptcy Code, 2016.

The Supreme Court added that JIL or its holding company JAL won’t be able to participate in fresh bids being invited by IRP. Meanwhile, Rs 750 crore, which was deposited by the company to compensate homebuyers has been transferred to the NCLT. 

Last year, the petitions had been filed before the apex court by Chitra Sharma on behalf of thousands of homebuyers in uncertain housing projects of JIL after the NCLT, Allahabad, instituted insolvency proceedings against JIL on August 9, 2017 on a petition filed by IDBI Bank under the Insolvency Code, 2016, under which homebuyers had no say in the liquidation process of a financial distressed company. A recent amendment to the IBC has allowed homebuyers to be part of the committee of creditors in the liquidation proceedings.

The IBC, as it was originally enacted, did not contain an adequate recognition of the interests of home buyers in real estate projects. Home buyers are vital stake holders. The process of corporate insolvency resolution directly impacts upon their rights and interests. Yet the IBC, as initially crafted, did not protect them. The concerns of the home buyers have been sought to be assuaged by the Insolvency and Bankruptcy (Amendment) Ordinance, 2018 which came into force on 6 June 2018. As a result of the Ordinance, home buyers are brought within the purview of financial creditors under the IBC.

However, the question is still remained unanswered that whether home buyers will be considered as unsecured creditors or secured creditors. Sadly for the homebuyers that supreme concern remains unaddressed despite the PIL.

One wishes the SC had done something more substantial for the homebuyer. By using its vast powers under article 142 of the constitution Supreme Court could have deemed the homebuyers as secured creditors instead, it has elevated the homebuyers to the ranks of financial creditors without declaring them a secured or unsecured creditor. Another question left to homebuyers is the identification of who will complete these homes. Hope these concerns of homebuyers get resolved at the earliest so that the aggrieved and hapless homebuyers either could have the possession of flat or refund of money.

 

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