SC asks Centre to frame a policy to shield homebuyers

NEW DELHI: Days after asking the government to devise a plan to hand over Unitech’s unfinished housing projects to other builders, the Supreme Court expanded the ambit of its observations on Tuesday and said the Centre should frame a policy to protect homebuyers cheated by Jaypee and other real estate companies.

Hearing a petition filed by Jaypee Infratech Ltd homebuyers, who sought the court’s intervention to stop the liquidation process of the company, a bench of Justices A M Khanwilkar and Dinesh Maheshwari called for a uniform proposal to address similar grievances.

The court said there are lakhs of homebuyers at the receiving end due to failure of builders to hand over flats with the uncertainty aggravated due to insolvency proceedings against the companies. “You may find some solution. We want suggestions from the Union of India which could be uniform for all such cases,” it said.

‘Thousands of Jaypee buyers left in the lurch’
The bench said a way out needs to be found to protect the interests of homebuyers without disturbing proceedings under the Insolvency and Bankruptcy Code and asked the Centre to think over the vexed issue and report back to the SC on July 11.

Senior advocate Ajit Sinha and lawyer Ashwarya Sinha, appearing for Jaypee homebuyers, told the court that the liquidation of the company would leave thousands of homebuyers in the lurch and without any remedy and pleaded the bench to intervene. They said liquidation will defeat the purpose of safeguarding the interest of 32,000 homebuyers who had paid around 14,000 crore to JIL. “The provision clearly stipulates that in case of distribution of the proceeds, secured creditors will be given preference over an unsecured creditor. However, since no amendment has been brought forth in the definition of secured creditors to include homebuyers, they continued to be regarded as unsecured creditors,” the petition said.

The apex court had in August last year ordered commencement of insolvency proceedings afresh against Jaypee Infratech Ltd before the National Company Law Tribunal, Allahabad, and asked the interim resolution professional to seek fresh bids from other companies to take over the realtor.

Under the Insolvency and Bankruptcy Act, the corporate insolvency resolution process must be completed within 270 days, and if the process fails, the course of liquidation starts.