Thirteen Years On, Jaypee’s Homebuyers Still Waiting

Around 2 p.m. on Wednesday, a group of about 40 homebuyers of Jaypee Infratech Ltd. congregated near the courtroom of the principal bench of the National Company Law Tribunal in Delhi. The tribunal was to hear arguments relating to the resolution of Jaypee Infratech, admitted under the Insolvency & Bankruptcy Code in August 2017.

The homebuyers came to protest continuing judicial delays that have unfolded in this case, putting off completion of residential properties in Noida, Uttar Pradesh. But they were informed that the hearing was cancelled due to technical issues at the courtroom.

“We insisted that we meet the president of the principal bench, Mr. (Ramalingam) Sudhakar, which we were able to do. We told him about the stress that homeowners are going through with so much delay in the resolution of Jaypee Infratech,” said Pramod Rawat, a 50-year-old software professional and a Jaypee homebuyer.

Rawat had decided to buy a flat in Jaypee Kensington Boulevard building in 2010, which was to be delivered to him in 2013. His wait, however, continues.

“So many aggrieved homebuyers have passed away in the last few years because they were old. Others are continuing to pay their monthly instalments, without receiving possession of their house for about 13 years. Still, there is no clarity how long these hearings will go on. It cannot be unending,” Rawat said.

The next hearing is scheduled for Thursday.

This is not the first time that the hearings have been delayed. Jaypee Infratech was one of the 12 large companies referred for insolvency proceedings by the Reserve Bank of India in 2017. It took the financial creditors four years and a failed liquidation plan to find a winning bidder. However, since the financial creditors approved Suraksha Asset Reconstruction Co.’s plan in June 2021, there have now been 59 court dates assigned for this case at the principal bench of the NCLT.

In this time, the tribunal has heard explanations regarding pertinent legal questions, as well as objections from parties against the implementation of the resolution plan. There also have been hearings where nothing could be heard because of resource issues at the tribunal itself.

“...more than 20 members of the NCLT have demitted office. Therefore, there has been a disruption in the sitting of the benches, and as a consequence, member technical had to take up more than one bench,” the principal bench said in an order dated July 20.

Currently, there are 16 benches of the NCLT spread across different cities in India, with 33 members hearing cases, including its president. As of March 2022, of the 5,258 cases admitted at various NCLT benches, 1,852 cases are still ongoing.

“Apart from the IBC matters, the NCLT is also required to hear matters involving the Companies Act, which were earlier under the jurisdiction of the high courts. We need to see if there is a need to unburden the NCLTs from these large workloads and if some of these matters can be moved to other courts or tribunals,” said Rajat Sethi, partner at S&R Associates.

Legal Stumbles Continue

The two main legal challenges against Suraksha ARC’s plan are from ICICI Bank Ltd. and Yamuna Expressway Industrial Development Authority.

ICICI Bank, a dissenting creditor against the resolution plan, has sought that it be repaid its dues in cash, as opposed to land parcels it was slotted to receive against its claims of Rs 304 crore.

The YEIDA has claimed Rs 6,112 crore worth dues to be paid to farmers in exchange for land that was acquired for the development of the Yamuna Expressway and adjoining infrastructure. The resolution professional, however, had only admitted Rs 461 crore worth of claims. The state government entity has challenged this and is seeking full repayment of these dues. Suraksha ARC, in its plan has accorded no payments to operational creditors, including the YEIDA.

On its part, Suraksha ARC has been arguing that repayment of YEIDA’s dues would make the resolution plan unsustainable. Moreover, since statutory dues are ranked lower than financial creditors, the bid is not required to provide for them, a person with direct knowledge of the matter said.

As such, these challenges are still only being heard at the NCLT right now. Once a decision is arrived at, it is likely that a challenge will be made either at National Company Law Appellate Tribunal or the Supreme Court. In which case, there will be further delays in closing the issues.

Suraksha ARC and the creditors of Jaypee Infratech are expecting to see the legal issues end only by December, which will prolong the construction work, the person quoted above said.

Calls and messages to Aalok Dave, CEO of Suraksha ARC, were not answered. Jaypee Infratech’s resolution professional Anuj Jain declined to comment.

It’s not like there is no construction happening at Jaypee Infratech. Of the nearly 25,000-30,000 affected homebuyers, about 8,000 have received control of their houses since insolvency was invoked in 2017.

According to a second person in the know, the resolution professional and the team set up to monitor the construction work has been delivering 80-100 residential units a month to homebuyers. The construction work is being funded through internal accruals for now. While the pace of completion may not be as expected, there is some movement, this person said.

Rawat said, “Some homebuyers have received possession, but you also need to see what has been given to them. The construction quality is poor and there are water and electricity issues in all these houses. This is not what we paid money for.”

According to Sethi of S&R Associates, when the IBC was envisaged, the needs of homebuyers were not considered and there were later improvisations to the IBC to provide a redressal mechanism for them. There is a need to see if the current arrangement is serving the needs of these homebuyers and if an alternative more efficacious mechanism needs to created for them, he said.