New Delhi: The Supreme Court on Wednesday reserved its orders on the proposal of real estate major Jaypee Group seeking permission to “hive off” its six-lane, 165-kilometre-long Yamuna Expressway for Rs 2,500 cr to generate funds to refund people who had invested in its housing projects.
Senior counsel Kapil Sibal, appearing for Jaypee group, informed the Bench of Chief Justices Dipak Misra and Justices A.M. Kanwilkar and D.Y. Chandrachud that the company had an offer for Rs 2,500 cr and he submitted the proposal to the court in a sealed cover. He said unless this money was realised it would not be possible to deposit Rs 2,000 crores for homebuyers before October 27..
Attorney-General K.K. Venugopal, whose view was sought by the court on Monday, submitted that Jaypee could not be allowed to hive off the project as in terms of the agreement, the Yamuna Expressway is a secured project in favour of consortium of 15 financial institutions. A project, which is under liquidation proceedings, could not be assigned in favour of third parties, that too to a Singapore company.
The Jaypee got this project through a bidding process in a tender in which other bidders also took part. While so one bidder cannot assign the highways to others. The AG also submitted that Jaypee was not the only one executing the project as the UP government and Yamuna Expressway authority are the others who had stakes in the project. Senior counsel Abhishek Singhvi and other counsel for consortium of banks opposed Jaypee’s plea to hive-off the Yamuna expressway and said no part of the properties, which are secured, could be sold to third parties. Senior counsel Parag Tripathi informed the court that Jaypee had failed to hand over about 22,000 flats to homebuyers and another Rs 5,000 cr was needed to complete the remaining 64 projects by March 31, 2021.
Mr Sibal and Mukul Rohatgi said unless Jaypee was allowed to hive off its shares in Yamuna Expressway, the company could not refund the money to homebuyers. They said ‘we are keen on completing the projects and we require money for completing the construction.
The township with parks, schools, colleges, temples and hospital was 70 per cent ready and without money the work could not be completed.
The CJI told the counsel “our primary interest is to protect the interest of 22,000 homebuyers who were on the streets for refund of their money (others out of 30,000 homebuyers wanted their flats). While the lenders are demanding their money, no one is willing to refund money to homebuyers. We will pass our orders.”
The court was hearing petitions from homebuyers who wanted protection of the interests of over 30,000 buyers who invested hard-earned money to book their dream homes in 27 different projects of Jaypee Infratech. On September 11, the court had directed the builder group to deposit Rs 2,000 crore in the Registry by October 27 to cover its liabilities to homebuyers and asked it to take prior approval of the court if it wished to sell any asset or property to raise these funds.
The petitioners who are homebuyers of Jaypee’s Wish Town project at Noida in Uttar Pradesh had challenged the insolvency proceedings initiated against Jaypee Infratech. The court had also restricted the directors of firm from leaving the country. The apex court also revived insolvency proceedings against Jaypee Infratech Ltd and handed over its management control to the Interim Resolution Professional (IRP), appointed by the National Company Law Tribunal.
Flat buyers, said that under the Insolvency and Bankruptcy Code of 2016, do not fall under the category of secured creditors like banks and hence they may get back their money only if something is left after repaying secured and operational creditors. 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.
