Home buyer moves SC against Jaypee Infratech's liquidation

Last Updated: Wed, Jul 03, 2019 11:53 hrs
A man walks in front of a billboard of Jaypee Infratech in Mumbai

New Delhi: An aggrieved home buyer of Jaypee Infratech Limited (JIL) on Tuesday moved the Supreme Court, seeking a direction to the government not to allow liquidation of the company as it would be against the interest of thousands of home buyers.

Chitra Sharma also urged the top court to order a complete forensic audit of the JIL, since its incorporation, to ascertain how the company has spent funds meant for the housing projects.

The petitioner's advocate Ashwarya Sinha said the apex court has admitted the plea and listed it for hearing next week.

The petition has been moved at a time when the JIL is facing insolvency proceedings because of the huge debts owed to banks.

The petitioner apprehended that if JIL goes into liquidation, then thousands of home buyers would be left in the lurch without any remedy.

The application cited the apex court judgment passed in August 2018, stating that liquidation of JIL is not in the interest of the home buyers, as it will expose the live savings of more than 20,000 home buyers, who have admittedly deposited more than INR 14,000 crores.

"Liquidation of the company will only be in the interest of the banks, as they can recover the money lent by them to the Corporate Debtor. However the ultimate sufferer of the same will be the home buyers," said the petitioner.

The application brought to the court's attention the vulnerability of the home-buyers.

"In the distribution of the proceeds (from the liquidation of JIL), the Secured Creditors will be given preference over an Unsecured Creditor. However, since no amendment has been brought forth in the definition of a Secured Creditor, to include the home buyers, they continue to be regarded as Unsecured Creditor," the petition said.

The application alleges that the real estate company has diverted the funds to other projects, on a larger scale than Amrapali Group of Companies, which is also involved in a legal battle with home-buyers.

"Without a forensic audit, none of the persons responsible for the said diversion will ever be made accountable. Furthermore it will be impossible to bring back the hard earned monies of the home buyers without the said diversion being traced to the ultimate beneficiary," contended the application, urging the court to pass a direction to commence forensic audit, especially to identify fictitious buyers.

The petitioner's lawyer said that the apex court, after an initial hearing on the matter, directed the application to be served on the counsels of the Insolvency Board and the Resolution Professional.

"The application is listed for hearing next week," said Sinha speaking to IANS, claimed that the petition has been admitted in the apex court.