Left In The Lurch?
6,500 of the 32,000 flats purchased were delivered at Jaypee Wish Town
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Is there hope for thousands of home buyers who feel they have been left in the lurch, after Jaypee Infratech Limited was declared insolvent? On 10 August, the Allahabad bench of the National Company Law Tribunal (NCLT) admitted insolvency proceedings against Jaypee Infratech by accepting the IDBI Bank’s plea and classified Jaypee Infratech as insolvent or bankrupt. Jaypee Infratech is among the 12 accounts that had been identified for insolvency proceedings by the Reserve Bank of India (RBI).
Now there is panic and confusion among home-buyers of Jaypee projects. “We want the interim resolution professional (IRP) to see that the unfinished projects are completed and handed over to the buyers. Else, we should get our money back,” says an agitated consumer.
At Jaypee Wish Town, where the builder has to deliver 32,000 flats, only 6,500 have been handed over. Even those who have moved in, are complaining of inadequate infrastructure. Panic is growing among homebuyers of other Jaypee projects as well, most of whom are seeking refunds from the local authorities.
The interim orders of the NCLT and NCLAT only call for repayment/recovery of money to lenders like the IDBI and not to the home buyers. Some aggrieved homebuyers in Jaypee Infratech projects will move the NCLT against the company in the hope of convincing it that the delivery of projects must be the “priority regardless of the outcome of the insolvency proceedings”.
Legal experts are offering a two-pronged solution to the imbroglio. They suggest time-bound completion of unfinished projects and handing over of dwellings to homebuyers, where more than 90 per cent of the money has been paid. Should the first option not be possible, the experts suggest complete refund to homebuyers, along with interest. “Nothing short of one of the two options will pacify the worried homebuyers. And one of the two solutions will set the tone for many such instances that are beginning to crop up elsewhere in the Noida/Greater Noida region,” says a senior lawyer who is assisting a group of aggrieved homebuyers.
Incidentally, only Jaypee Infratech has been declared insolvent and not the other companies that operate under the Jaypee Group banner and are worth thousands of crores in assets. But here is the catch.
The housing units that are already completed and handed over in some of these projects are valued at between Rs 6,900 and Rs 7,450 per square feet as opposed to Rs 3,850- Rs 4,150 per sq feet for unfinished ones. Refund, though, will only be available at the rate at which the builder had originally sold these flats,ie.less than Rs 3,500 per sq feet. Which frustrated homebuyer would want that?