The Supreme Court on Thursday ordered recommencement of resolution process against Jaypee Infratech Ltd (JIL) and barred the firm, its holding company and their promoters from participating in fresh bidding process.
In a judgment by a three-judge Bench led by Chief Justice of India Dipak Misra, the court directed the Reserve Bank of India to direct banks to initiate corporate insolvency resolution process (CIRP) against Jaiprakash Associates Ltd (JAL), the holding company of JIL, under the Insolvency and Bankruptcy Code (IBC).
The court held that there was “no manner of doubt” that JAL and JIL lacked the financial capacity and resources to complete unfinished housing projects, in which 21,532 homebuyers have not been given possession of their flats.
The Bench, also comprising Justices A.M. Khanwilkar and D.Y. Chandrachud, said the initial period of 180 days for conclusion of CIRP in respect of JIL will commence from Thursday and that extension of 90 days can be sought from the National Company Law Tribunal (NCLT), Allahabad, under the IBC.
It directed that a committee of creditors (CoC) be constituted afresh in accordance with the provisions of the Insolvency and Bankruptcy (Amendment) Ordinance, 2018. The Ordinance mandates that homebuyers should be included as financial creditors.
The court permitted interim resolution professional (IRP) “to invite fresh expressions of interest for submission of resolution plans by applicants, in addition to the three shortlisted bidders whose bids or, as the case may be, revised bids may also be considered”.
“The amount of ₹750 crore which has been deposited in this court by JAL/JIL shall together with the interest accrued thereon be transferred to the NCLT and continue to remain invested and shall abide by such directions as may be issued by the NCLT,” the Bench said, while disposing the pleas pending before it.
The court noted in its order that during the arguments, there was unanimity of opinion that liquidation of JIL would not subserve the interests of homebuyers.
“Homebuyers have made valuable investments by contributing hard-earned monies in the hope of obtaining a roof over their heads. A home for the family is basic human yearning. In diverse contexts, it has been held by this court to be a part of the right to life, as a fundamental constitutional guarantee,” the Bench noted in its 46-page judgment.
The court referred to Section 29 of the IBC to observe that those responsible for insolvency of corporate debtor should not participate in the resolution process.
It also opposed the direct disbursement of the amount of ₹750 crore deposited in the Supreme Court by JAL/JIL to homebuyers who seek refund, saying such a step “will be manifestly improper and cause injustice to the secured creditors since it will amount to a preferential disbursement to a class of creditors”.
