NCLT Delhi Appoints Expert Panel To Audit Jaypee Infratech Project Progress; Seeks Independent Report On Homebuyers’ Grievances

NCLT Delhi Appoints Expert Panel To Audit Jaypee Infratech Project Progress; Seeks Independent Report On Homebuyers’ Grievances

Introduction

The National Company Law Tribunal (NCLT), New Delhi Bench, has appointed a two-member expert committee to assess the progress of construction of projects undertaken by Jaypee Infratech Limited (JIL) pursuant to the approved resolution plan dated 7 March 2023. The direction was issued while hearing multiple applications highlighting delays and grievances raised by homebuyers.

Factual Background

Jaypee Infratech Limited (JIL), a real estate developer engaged in residential and commercial projects, was admitted into Corporate Insolvency Resolution Process (CIRP) in August 2017 on a petition filed by IDBI Bank. Jaiprakash Associates Limited (JAL) is the holding company of JIL.

During the pendency of proceedings, homebuyers approached the Supreme Court seeking relief. By an interim order, the Supreme Court directed JAL to deposit ₹2,000 crore. Pursuant thereto, JAL deposited ₹750 crore. In August 2018, the Supreme Court further directed that the said amount, along with accrued interest, be transferred to the NCLT and remain invested subject to its directions.

In March 2023, the NCLT approved the resolution plan submitted by Suraksha Realty Ltd, which envisaged completion of stalled projects and delivery of flats to homebuyers. The approval of the plan was subsequently upheld by the National Company Law Appellate Tribunal (NCLAT).

Despite approval of the plan, various applications were filed before the NCLT raising concerns regarding delays in construction and grievances of homebuyers.

Procedural Background

While hearing the applications, the NCLT observed that several contentions had been raised regarding the status of construction and implementation of the resolution plan. In order to address the anguish of homebuyers and to obtain an independent assessment of the progress of projects, the Tribunal considered it appropriate to appoint an expert committee.

The Tribunal clarified that the appointment was without prejudice to the contentions raised in the pending applications and related reports and affidavits.

Issues

1. Whether an independent assessment of the progress of construction under the approved resolution plan was warranted.

2. Whether appointment of an expert committee was necessary to address homebuyers’ grievances.

3. What mechanism should be adopted to ensure effective monitoring of the resolution plan’s implementation.

Contentions of the Parties

Applicants representing homebuyers submitted that there were delays in execution of projects and sought monitoring of the implementation of the resolution plan. Concerns were raised regarding the pace of construction and compliance with commitments made under the plan.

The Successful Resolution Applicant (SRA) and other respondents addressed the Tribunal regarding steps undertaken for project completion.

Reasoning and Analysis

The NCLT noted the anguish expressed by homebuyers and the need for an objective assessment of the status of projects in light of the approved resolution plan. The Bench observed that, in the interregnum and without prejudicing the rights of parties, an independent evaluation would facilitate transparency and clarity regarding the progress of construction.

Accordingly, the Tribunal appointed former NCLT Members Shri P.K. Mohanty and Dr. Deepti Mukesh as members of a two-member expert committee. The committee has been tasked with undertaking an exercise to assess the progress of construction of the projects in relation to the approved resolution plan dated 7 March 2023 and to submit a comprehensive report detailing the status of projects and any grievances.

The Tribunal further directed that an honorarium of ₹2,50,000 per month be paid to each committee member until further orders.

Decision

The NCLT, New Delhi Bench, appointed a two-member expert committee comprising Shri P.K. Mohanty and Dr. Deepti Mukesh to assess and report on the progress of construction under the approved resolution plan of Jaypee Infratech Limited. The committee is to submit a comprehensive report on the status of projects and grievances, if any. The matter remains pending for further consideration based on the committee’s findings.

In this case the applicant was represented by Aishvary Vikram, Lucky Sharma, Navya Bhagat, Abhindra Maheshwari, Amisha Ray, Rajesh Rai and Rohan Rai, Aishwarya Sinha, Aditya Malhotra and Sankalp Mahindrew, Advocates.