With liquidation of Jaypee imminent, home buyer moves SC to safeguard interest

NEW DELHI: With expiry of the statutory period of 270 days, the fear of liquidation on Jaypee Infratech looms large. Considering this, Chitra Sharma, one of the petitioners against Jaypee, has moved an application in the Supreme Court seeking stoppage of liquidation process.

According to the application moved by her advocate Ashwarya Sinha, they also seek an independent forensic audit of Jaypee Infratech from the date of its incorporation till date.

As per Section 12 of the Insolvency and the Bankruptcy Code, the Corporate Insolvency Resolution Process (CIRP) must be completed within a period of 180 days. However upon an application of the Resolution Professional, the Adjudicating Authority can extend the said period by 90 days. Therefore in all the Committee of Creditor has a period of 270 days to complete the CIRP.


SC extended the period of CIRP from August 09 2018, making the likely date of completion of statutory period of 270 days for CIRP to be May 06 2019.

The provision states that the natural consequence of failure of the Committee of Creditor to submit a Resolution Plan will lead to passing of an order of liquidation of the Corporate Debtor.

In case of liquidation and distribution of the proceeds, the Secured Creditors will be given preference over an Unsecured Creditor. 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.

"This is the reason why we have moved the application in SC," said Sinha.

The apex court in its judgement dated August 09 2018 said that the liquidation of JIL is not in the interest of the home buyers, since the same will expose the live savings of more than 20,000 home buyers, who have admittedly deposited more than Rs 14,000 crore.

Till date, only National Buildings Construction Corporation (NBCC) and Suraksha ARC have submitted the bids for Jaypee. While the Suraksha ARC's bid has not been accepted, NBCC on April 10 2019 sought further extension of two weeks for submitting a revised bid. According to a PTI report, NCLAT has now directed representatives of banks, allottees and other stakeholders to appear before it on July 17 to consider how the bid could be tweaked for the benefit of home buyers.