The Supreme Court on Monday stayed insolvency proceedings against real estate firm Jaypee Infratech at the National Company Law Tribunal (NCLT), and sought the firm’s response on a plea seeking protection of the interests of hassled home buyers who have neither got homes nor their money back.
A bench headed by Chief Justice of India Dipak Misra also asked Attorney General KK Venugopal to assist it in deciding a batch of petitions opposing the insolvency proceedings, and seeking protection of the home buyers’ interests.
“We will pass a stay order on the proceedings at NCLT (at Allahabad). Issue notice (on pleas of home buyers),” the bench, which also comprised justices AM Khanwilkar and DY Chandrachud, said. Flat buyers are eligible for a refund only after secured and operational creditors — such as banks — are repaid, said one of the pleas filed by some home buyers.
It was alleged by senior advocate Ajit Sinha, appearing for petitioner Chitra Sharma, that around ₹25,000 crore worth of money of flat buyers and others was at stake and that insolvency proceedings were initiated “for a petty sum of ₹500 crore”.
Around 32,000 persons had booked flats in projects promoted by Jaypee Infratech.
Sharma has challenged the constitutional validity of certain provisions of the Insolvency and Bankruptcy Code on various grounds, including that they do not protect customers. Besides seeking a “forensic audit” of Jaypee infratech and one of its sister concerns, the plea has also sought a direction to the Centre to protect home buyers’ interests.
Hundreds of home buyers have been left in the lurch after the NCLT, on August 10, admitted IDBI Bank’s plea to initiate insolvency proceedings against the debt-ridden realty company for defaulting on a ₹526-crore loan, the plea said.