The Supreme Court said on Friday that it would settle grey areas in the insolvency and bankruptcy code (IBC) to see what role homebuyers could play in liquidation proceedings. The code gives preference to large creditors like banks and financial institutions.
The lack of say for individual homebuyers in resolution proceedings pertaining to financially distressed real estate companies caught the attention of a bench of CJI Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud during the proceedings relating to Jaypee Infratech.
The case, where the firm has been unable to refund money to thousands of homebuyers, has proved vexed with the committee of creditors rejecting the bid of Lakshadweep, the highest bidder for the company, to take over the distressed JIL.
As homebuyers cried foul over a range of reasons, the bench fixed the hearing for May 16 and said it would hear arguments from all parties to settle the law with regard to IBC and determine what role individual investors could play in the liquidation process.
On May 9, lenders to the bankrupt JIL had rejected a Rs 7,350-crore bid by Lakshadweep as they found it inadequate. A panel of over a dozen lenders, who have to recover nearly Rs 9,800 crore from JIL, met here over the last two days to decide on Lakshadweep’s bid which was ranked higher than the one presented by Adani Group.
Appearing for Lakshadweep, senior advocate Vikas Singh said its bid was the highest and most lucrative. But Anupam Lal Das, counsel for Jaiprakash Associates Ltd, JIL’s holding company, said a company whose offer had been rejected could not be given a chance to speak in these proceedings before the apex court.
Representing homebuyers, senior advocates Jayant Bhushan and Ajit Kumar Sinha said their interest must be protected. They said the committee of creditors was attempting to protect the interest of big lenders whereas thousands of homebuyers, whose money was being played around by the realtor, were given no say in the entire proceedings under IBC.
The bench was informed by amicus curiae Pawan Shree Agrawal that the court had initially directed JAL to deposit Rs 2,000 crore to meet refund demands but till date JAL has deposited only Rs 750 crore. Das said the court had promised JAL that it would get a chance to argue its case to be given an opportunity to construct the flats and gradually allot it to homebuyers once it deposited Rs 750 crore.
JAL’s counsel said the company had proved its bona fide by depositing Rs 750 crore and simultaneously continuing with construction of houses. It said till March 2018, it had constructed 10,789 flats. “The proposal submitted by JAL should be scrutinised by the court or a person nominated by it to arrive at a fruitful resolution plan for JIL as well as ensure that homebuyers are not left in the lurch,” he said.