The Supreme Court on Tuesday asked the Centre to come up with a “uniform” solution to protect the interests of homebuyers who have failed to get possession of their flats despite paying huge amounts to real estate builders.
A Bench, led by Justice AM Khanwilkar, suggested that the government must step in and consider a uniform proposal to help the stranded homebuyers as the Insolvency and Bankruptcy Code (IBC) was inadequate in serving the purpose.
“Can some other arrangement be suggested by the Union of India (UoI) without disturbing the ongoing process?” the Bench asked additional solicitor general Madhavi Divan.
“We want suggestions from the UoI, which could be uniform for all such cases…this issue will be bothering lakhs of homebuyers. Within the IBC, we cannot do anything. But outside it, you (Centre) can suggest something. We can consider that,” the Bench said, adding that “the policy issue has to be resolved by the UoI.”
The Bench was hearing an application by Chitra Sharma, an aggrieved homebuyer of Jaypee Infratech (JIL), who has sought a direction that the debt-laden company be not sent into liquidation, although the deadline for the corporate insolvency resolution was over in May.
It posted the matter for further hearing on July 11.
Homebuyers have also sought an “independent and thorough forensic audit of JIL” since its incorporation so as to track diversion of funds.
The apex court while resuming the insolvency proceedings against JIL before the National Company Law Tribunal, Allahabad, had also asked resolution professional (RP) Anuj Jain in August last year to seek fresh bids for takeover of its incomplete projects.
According to the application filed through counsel Ashwarya Sinha, the liquidation of JIL will not subserve the interests of homebuyers, who have invested their hard earned money in the residential flats. It also said while the apex court had made a conscious effort to avoid liquidation of JIL, the events subsequently have frustrated the efforts.
“Liquidation of the company will only be in the interest of banks who will be able to recover the money lent by them to the debtor,” the application stated, adding that liquidation would defeat the purpose of safeguarding the interest of 32,000 homebuyers who had paid around Rs 14,000 crore to JIL.
“The provisions stipulate that in case of distribution of the proceeds, secured creditors will be given preference over an unsecured creditor.
“However, since no amendments have been brought forth in the definition of secured creditors to include homebuyers, they continue to be regarded as unsecured creditors,” it said.
Source: Financial Express, July 10, 2019