Distressed JIL home buyers write to PM for Centre's intervention

Last Updated: Tue, Jun 25, 2019 11:02 hrs
Narendra Modi (Image Courtesy: Twitter)

New Delhi: Taking forward their campaign for early resolution of the Jaypee Infratech (JIL) insolvecy process and completion of the stalled projects, the home buyers of Jaypee have written to Prime Minister Narendera Modi seeking goverment's intervention in the matter.

This after the home buyers wrote to the Finance Minister and the Minister of Housing and Urban Development on Sunday. They also staged a protest on Sunday at Jantar Mantar in the national capital.

The home buyers have urged the government to direct the IDBI Bank to vote in favour of the NBCC's resolution plan.

Public sector construction major NBCC's bid to acquire the insolvent JIL was put to vote from May 31 to June 10 and a majority of the lenders, led by IDBI Bank, voted against the bid on the grounds that it is conditional.

The NBCC's bid seeks the cancellation of an estimated income tax liability of Rs 33,000 crore due over a period of 30 years under the concession agreement for the transfer of land from the Yamuna Expressway Industrial Development Authority to JIL.

Home buyers, however, were in favour of the bid, and have sought that the government "direct IDBI Bank and NBCC to resolve their differences on the resolution plan" and the bank to vote for it.

The banks and home buyers together have given around Rs 30,000 crore to JIL and both parties are desperately looking to salvage their funds, they said.

"While banks are only concerned about the 30 per cent haircut they are taking under the NBCC resolution plan, they have been indifferent to almost 40 per cent hair cut home buyers have taken while paying EMIs (considering a 5 year delay in possession) and this burden is increasing by 8 per cent year-on-year.

"Delaying the insolvency process further for one more bidder or two to tweak a clause or two in the NBCC bid is in no one's interest. There is a carrying cost running into thousands of crores per annum if the resolution is delayed," the letter said.

The home buyers also urged the government that the votes from home buyers, whatsoever the percentage, be considered as vote from all the home buyers.

"It is requested that home buyers be considered as a separate class of creditors, as they have a same goal and similar agenda, thereby forming a homogenous group amongst themselves, and we humbly request to your good offices to ensure, through judicial and the legislative process, that the vote of majority of home buyers shall be treated as the vote of the whole sub-class. We will be grateful if the Government of India tables and approves an amendment to this effect in the current session of the parliament," the letter said.

A resolution plan needs 66 per cent votes for acceptance and while the home buyers have a vote share of 59 per cent, the lenders had 41 per cent. However, out of the around 22,000 home buyers, only around 12,000 voted in the latest round of online voting for the NBCC's bid, bringing down votes for the bid way below the required level.

In their letter, the home buyers attributed the low voting to several factors including lack of proper understanding or access to the voting mechanism, some buyers being old and "several thousand ghost buyers who have not voted at all so far".

They cited the Ministry of Corporate Affairs' communication to the National Company Law Tribunal as recommending that "for the purpose of deciding share and manner of voting by home buyers, the principle of present and voting may be applied. The resulting majority vote by this manner or mechanism may be considered as the vote for the whole of the sub-class of the home buyers".

They also demanded a forensic audit of JIL, its promoter company, Jaypee Associates, for allegedly siphoning off huge sums of home buyers and public money lent by lenders of JIL.