IDBI moves Apex Court to restore liquidation process against Jaypee Infratech

Team SoOLEGAL 5 Sep 2017 5:08pm

IDBI moves Apex Court to restore liquidation process against Jaypee Infratech

IDBI bank urgently moves Supreme Court a day after it stayed an NCLT order to initiate insolvency proceedings against heavily indebted real estate company Jaypee Infratech. The Court today agreed to hear a plea filed by Financial creditor IDBI bank seeking cancellation of its yesterday’s order staying liquidation proceedings against the company under the Insolvency and Bankruptcy Code, 2016.

A bench headed by Chief Justice of India Dipak Misra, also comprising Justices Amitava Roy and A M Khanwilkar heard the arguments of the bank which stated that suspending the NCLT (Allahabad) order of conducting insolvency proceedings had reversed the position and, as a consequence, the company had gone back to defaulting promoters. The bank on Tuesday, sought the Court to restore insolvency proceedings against Jaypee.

The Allahabad bench of NCLT, passed an order of liquidation proceedings against Jaypee Infratech on August 9 under the Insolvency and Bankruptcy Code 2016.

The stay order on Liquidation process will unintentionally benefit Jaypee and the Homebuyers will get no remedy, argued Singhvi, learned counsel appearing for IDBI.

The IDBI filed an insolvency plea after Jaypee defaulted on a loan of around Rs. 8,500 crores, although the bank claimed that it has seized most of the assets adequate to cover the loan.

The Supreme Court is hearing a Public Interest Litigation (PIL) filed by Chitra Sharma, who booked a flat in a project by Jaypee Builders. Instead, the dreams of home buyers turned into a nightmare as they had invested their lifelong savings and yet didn’t receive possession of their homes. As a reputed real estate company, around 32,000 home buyers invested in 27 different home projects of the company but only disappointment is what they possess at this moment. 

Sharma’s plea sought a stay on the NCLT order, on the ground that being unsecured creditors, home buyers will get nothing from insolvency proceedings and IDBI bank as a secured creditor will be cleared first. She requested the Court to conduct a forensic audit of Jaypee Infratech and Jaiprakash Associates. Jaypee Infratech is a subsidiary of Jaiprakash Associates.

Home buyers of Jaypee project were needed to submit forms to register claim in the corporate insolvency resolution against the company before August 31.

Appearing for one of the homebuyers, Senior Advocate K V Vishwanathan expressed that the home buyers slept peacefully after the Apex Court’s stay order on insolvency process.      

The Court asked the IDBI to file an application formally and the hearing will be continued on Monday.

Tagged: Supreme Court   Chief Justice of India Dipak Misra   Jaypee   homebuyers  
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