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Relief for Buyers as Supreme Court stays Insolvency Proceedings Against Jaypee

Here is some relief for home buyers of Jaypee Infratech as the Supreme Court on September 4th, 2017 stayed the insolvency proceedings against Jaypee Infratech after the judgment passed by National Company Law Tribunal, Allahabad at the instance of IDBI Bank Limited. Being unsecured creditors as opposed to “financial creditors” like IDBI who are secured creditors, thousands of homebuyers were left in the lurch by the National Company Law Tribunal (NCLT) judgment which prompted insolvency proceedings against Jaypee Infratech.

The aggrieved homebuyers then filed a PIL seeking a stay order on NCLT insolvency proceedings against the defaulting company where the homebuyers have stated that they will be left without any remedy once the insolvency proceedings are initiated. The petition was heard by a bench comprising of Chief Justice Deepak Mishra and Justice AM Khanwilkar and Justice DY Chandrachud and they ruled in the favour of the homebuyers. 

Supreme Court Order

Much to the relief of 32,000 home buyers, the Supreme Court stayed the insolvency proceedings against real estate firm Jaypee Infratech, judgment passed by Allahabad National Company Law Tribunal (NCLT) until further notice.

The  Stay Order had been passed by the Hon’ble Supreme Court to provide some interim protection to the homebuyers thereby giving the 30,000 homebuyers a slight ray of hope. However, the effect of same is yet to be seen as the Insolvency and Bankruptcy Code is silent on the specification of the category of creditors under which the homebuyers would fall.  

However, on 11th September, 2017, a Bench of Chief Justice Dipak Misra and Justice AM Khanwilkar and DY Chandrachud modified its earlier order of 4th September and directed to appoint an amicus to participate in the meetings of creditors to advocate the cause of the homebuyers. From a homebuyers’ perspective, the Hon’ble Supreme Court has appointed an amicus to ‘espouse the cause of the homebuyers and protect their interests’ during creditor meetings. The amicus so appointed would help in collection of the claims of the homebuyers, forwarding the same to the IRP for his consideration.

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