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Distressed Jaypee home buyers seek government's intervention
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SME Times News Bureau | 24 Jun, 2019
Home buyers of the bankrupt Jaypee Infratech Ltd (JIL) on Sunday wrote
to Union Finance Minister Nirmala Sitharaman, seeking the government's
intervention in the realty company's ongoing resolution process to
resolve the matter at the earliest.
The home buyers also
approached Union Housing and Urban Development Minister, Hardeep Singh
Puri as they staged a protest at the Jantar Mantar here against the
promoters of Jaypee Infratech and IDBI Bank, its lead lender.
Members
of the home buyers' association said that they would also seek the
intervention of Prime Minister Narendra Modi and Home Minister Amit
Shah.
In the letters to Sitharaman and Puri, the home buyers have
primarily urged the government to direct the IDBI Bank to vote in
favour of the NBCC's resolution plan.
Public sector construction
major NBCC's bid to acquire the insolvent JIL was put to vote from May
31 to June 10 and a majority of the lenders, led by IDBI Bank, voted
against the bid on the grounds that it is conditional.
The
NBCC's bid seeks the cancellation of an estimated income tax liability
of Rs 33,000 crore due over a period of 30 years under the concession
agreement for the transfer of land from the Yamuna Expressway Industrial
Development Authority to JIL.
Home buyers, however, were in
favour of the bid, and have sought that the government "direct IDBI Bank
and NBCC to resolve their differences on the resolution plan" and the
bank to vote for it.
The banks and home buyers together have
given around Rs 30,000 crore to JIL and both parties are desperately
looking to salvage their funds, they said.
"While banks are only
concerned about the 30 per cent haircut they are taking under the NBCC
resolution plan, they have been indifferent to almost 40 per cent hair
cut home buyers have taken while paying EMIs (considering a 5 year delay
in possession) and this burden is increasing by 8 per cent
year-on-year.
"Delaying the insolvency process further for one
more bidder or two to tweak a clause or two in the NBCC bid is in no
one's interest. There is a carrying cost running into thousands of
crores per annum if the resolution is delayed," the letter said.
The
home buyers also urged the government that the votes from home buyers,
whatsoever the percentage, be considered as vote from all the home
buyers.
"It is requested that home buyers be considered as a
separate class of creditors, as they have a same goal and similar
agenda, thereby forming a homogenous group amongst themselves, and we
humbly request to your good offices to ensure, through judicial and the
legislative process, that the vote of majority of home buyers shall be
treated as the vote of the whole sub-class. We will be grateful if the
Government of India tables and approves an amendment to this effect in
the current session of the parliament," the letter said.
A
resolution plan needs 66 per cent votes for acceptance and while the
home buyers have a vote share of 59 per cent, the lenders had 41 per
cent. However, out of the around 22,000 home buyers, only around 12,000
voted in the latest round of online voting for the NBCC's bid, bringing
down votes for the bid way below the required level.
In their
letter, the home buyers attributed the low voting to several factors
including lack of proper understanding or access to the voting
mechanism, some buyers being old and "several thousand ghost buyers who
have not voted at all so far".
They cited the Ministry of
Corporate Affairs' communication to the National Company Law Tribunal as
recommending that "for the purpose of deciding share and manner of
voting by home buyers, the principle of present and voting may be
applied. The resulting majority vote by this manner or mechanism may be
considered as the vote for the whole of the sub-class of the home
buyers".
They also demanded a forensic audit of both JIL and its promoter company, Jaypee Associates.
"The
construction of the expressway as well as development of the five land
parcels by the Jaypee Group, viz, JAL and JIL, was a project for public
purpose and the land that was acquired in connection with this project
was not for JIL but for public purpose. However, the Gaur family and JAL
siphoned off huge sums of home buyers and public money lent by lenders
of JIL and stripped this public project naked.
"We therefore
request your good offices to direct forensic audit of JIL and JAL from
inception to examine the money trail and pass disgorgement orders
against the wrong-doers. The funds of home buyers that have been
siphoned off shall be recovered and then proportionately distributed
amongst us home buyers as compensation for the inordinate delay in
delivery of our apartments."
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