Jaypee Infra insolvency case: The deadline for the corporate insolvency resolution process is over

The Supreme Court will hear next week a plea seeking that Jaypee Infratech Ltd is not sent into liquidation although the deadline for the corporate insolvency resolution process is over, as it would cause "irreparable loss" to thousands of home buyers.

The top court had on August 9 last year ordered re-commencement of the resolution process against JIL and barred the firm, its holding company and promoters from participating in the fresh bidding process.

It had also allowed the Reserve Bank of India to direct banks to initiate corporate insolvency resolution proceedings (CIRP) against Jaiprakash Associates Ltd (JAL), the holding company of JIL, under the Insolvency and Bankruptcy Code (IBC).

It said there was "no manner of doubt" that JAL and JIL lacked financial capacity and resources to complete unfinished housing projects in which over 21,000 home buyers had not been given the possession of their flats till then.

A fresh application in the matter came up for hearing on Tuesday before a bench comprising Justices A M Khanwilkar and Dinesh Maheshwari.

The plea, filed by one of the home buyers through advocate Ashwarya Sinha, sought direction that an "independent and thorough forensic audit" of JIL should be conducted from the date of its incorporation.

Referring to the top court's last year order, the plea said, "The court had made a conscious effort to avoid liquidation of Jaypee Infratech Limited. However, the events as have unfolded subsequent to the passing of the judgment have frustrated the efforts as made by the court."

As per top court's direction, the 270 days for completion of CIRP have concluded on May 6, it said.

"Till date only two serious bids have been received by the Committee of Creditors. One bid has been submitted by National Buildings Construction Corporation Limited, whereas the other has been submitted by Suraksha ARC. None of the said bids have been accepted by the Committee of Creditors till date," the plea said, claiming that "threat" of JIL going into liquidation is "turning into a reality with each passing day".

It said if no resolution plan is accepted till May 6, JIL would "automatically go into liquidation", leaving thousands of home buyers in lurch and without any remedy.

"Liquidation of the company will only be in the interest of the banks who will be able to recover the money lent by them to the corporate debtor," it said, adding, "However, the ultimate sufferer of the same will be the home buyers."

Seeking forensic audit of JIL, the plea alleged that "diversion of funds in the present case is on an even larger scale than that of projects developed by Amrapali Group of Companies."

"However, without a forensic audit none of the persons responsible for the said diversion will ever be made accountable. Furthermore it will be impossible to bring back the hard earned monies of the home buyers without the said diversion being traced to the ultimate beneficiary," it said.