Plea in SC against liquidation of Jaypee Infratech

A home buyer on Tuesday moved the Supreme Court seeking a stay on the liquidation of Jaypee Infratech Limited (JIL) and a complete forensic audit of the company since its incorporation. The application alleged the absence of a resolution plan benefiting the home buyers.

Petitioner Chitra Sharma has moved the court through advocate Ashwarya Sinha. The petitioner urged the apex court to "direct the government upon completion of the period of 270 days for the corporate insolvency resolution process, liquidation of Jaypee Infratech Limited shall not take place", as it will safeguard the interest of the home buyers.

In the absence of an acceptable resolution plan, JIL will automatically go into liquidation, leaving thousands of home buyers in the lurch and without any remedy. 

"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.

Petitioner's lawyers 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 on the admission of the plea in the apex court.

The petitioner apprehends that the real estate company has also diverted the funds for other projects, on even 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 homebuyers without the said diversion being traced to the ultimate beneficiary," contended the application urging the court to pass direction to commence forensic audit, especially to identify fictitious buyers.

The application contended that the natural consequence of failure of the Committee of Creditor to submit a resolution plan before the adjudicating authority will lead to an order of liquidation of the corporate debtor. 

"In the distribution of the proceeds, 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" said the application.

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 Rs 14,000 crore. IANS