SC bars Jaiprakash Associates directors, promoters from transferring personal assets

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New Delhi: The Supreme Court on Wednesday restrained the independent directors and promoters of Jaiprakash Associates Ltd (parent company of Jaypee Infratech) and their family members from transferring any personal assets or property without the court’s permission in order to safeguard the homebuyers’ interests.

They will be held for criminal prosecution or contempt of the courts order if found in violation, the court held.

Eight independent directors and five promoters of Jaiprakash Associates were personally present in court on Wednesday.

“You have gone up at the cost of home buyers,” said chief justice Dipak Misra as he addressed the directors and promoters. A bench headed by CJI Misra also allowed Jaiprakash Associates to furnish the due amount of Rs2,000 crore in instalments.

An amount of Rs275 crore was deposited by the company with the court registry on Wednesday. After this, the company’s liability stands at Rs1,725 crore. The court has directed that Rs150 crore be deposited by 14 December and another Rs125 crore by the end of December.

At the last hearing, Jaiprakash Associates’s offer to deposit Rs400 crore towards the due amount of Rs2,000 crore had been rejected by the court.

Pawan Shree Agrawal, amicus curiae (friend of the court) in the matter, has also been asked to set up a website that would help maintain a detailed account of the money owed to homebuyers and aid the refund process. Similar websites have been set up under the court’s orders in cases of default by real estate companies like Unitech and Supertech.

On 4 September, the apex court had stayed an order passed in August by the Allahabad bench of the National Company Law Tribunal (NCLT), which initiated insolvency proceedings against Jaypee Infratech. A day later, IDBI Bank approached the court seeking restoration of insolvency proceedings against Jaypee Infratech.

The court was hearing a public interest litigation (PIL) by Delhi resident Chitra Sharma, who has booked a home in a Jaypee Infratech project.

Homebuyers in Jaypee Infratech projects were required to fill up forms to register claims in the corporate insolvency resolution process against the firm by 31 August.

In a 9 August order passed by the Allahabad bench of NCLT, liquidation proceedings against Jaypee Infratech were initiated under the Insolvency and Bankruptcy Code of India (IBC), 2016. Jaypee Infratech has defaulted on Rs526.11 crore of loans outstanding to IDBI Bank.

Sharma’s plea sought a stay on the NCLT order, and urged the court to conduct a forensic audit of Jaypee Infratech and Jaiprakash Associates. The petition submitted that such an order was forcing homebuyers to submit themselves to the jurisdiction of the IBC, even though it does not cater to their interests.

Jaypee Infratech was among the 12 companies, against whom the Reserve Bank of India (RBI), through its 13 June directive, had asked banks to file insolvency petitions.

The matter will be heard next on 10 January, when the 13 independent directors and promoters will also be present.