Jaypee homebuyers have written to the reinstated Insolvency Resolution Professional (IRP) Anuj Jain and demanded that an amount of Rs 10,000 crore be set aside to complete projects in Wishtown and pay compensation for delay to buyers at the rate of 18 percent. They have demanded that Jaypee Group should not be permitted to act as a resolution applicant or provide a plan for the revival of the project and that NBCC and L&T or reputed developers such as Godrej and Tata be given the task to complete it by December 31, 2018.

They have also demanded that all future instalments to be paid by them should be set aside in an escrow account.

The letter written to the IRP through the legal firm Trilegal, approximately 2200 members of nine associations formed by home buyers and 144 individuals, have demanded mandatory inclusion of certain essential elements in the interim resolution plan to be prepared by the IRP within 45 days.

It makes it clear that that being middle-class individuals have invested their entire life savings in projects of JP Associates Ltd (JAL) and Jaypee Infratech Ltd (JIL), homebuyers will not be in a position to compromise their interest or take any haircut.

After completion of the project, the homebuyers should be paid the monies awarded to them as compensation by NCDRC and also compensation for the delay at the rate of 18 percent per annum irrespective of whether the buyers have filed a claim for compensation or not.

Besides setting aside Rs 10,000 crore for completion of the Wishtown project, buyers have also asked for a provision of a bank guarantee of at least Rs 5,000 crore to be provided by Jaiprakash Associates Limited (JAL) to take care of any cost overruns or similar events in relation to the completion of Wish Town.

The letter estimates that an amount of Rs 10,000 crore will be required to complete the project and to discharge the claims of homebuyers. This is around 60 percent of the amount contributed by homebuyers, it says.

How should Rs 10,000 crore be arranged?

For arranging Rs 10,000 crore, it recommends that assets along Yamuna Expressway, land banks of Jaypee Infratech should be monetized. IDBI Bank Limited can give a loan or JAL/JIL/IDBI Bank Limited can arrange a loan; and/or equity investment from developers/real estate players/EPC players/FIs/NBFCs/PE funds/stressed assets fund. In case of a shortfall, JAL should provide the shortfall amount and in case the amount is short, the lending banks/financial institutions should recover their monies from the personal guarantee of Manoj Gaur, the letter says.

Lenders/banks/NBFCs should be identified to infuse funds to make sure that project timelines do not suffer due to the process under the IBC and the premise of “going concern basis” is maintained both in letter and spirit.

It notes that the JIL assets are valued at Rs 17,000 crore as per IDBI bank.

Joint project monitoring mechanism should be set up

They have also called for setting up of a joint project monitoring mechanism of lenders, builder, contractor and home buyers to monitor and control the quality and costs of the project on an ongoing basis.

IRP plan must be taken into account rights of buyers under RERA

The resolution plan of the IRP should also take into account the rights of homebuyers under RERA. “The projects in which our clients have invested are registered under the provisions of the RERA and JIL is registered as the “promoter” of the projects under the provisions of RERA,” it notes.

Section 18 of RERA provides that if the promoter fails to give possession of an apartment, plot or building in accordance with the terms of agreement for sale or allotment letter for any reason, the promoter shall be liable on demand and at the option of the allottees (as defined under RERA, which includes homebuyers) to return the amount received by the promoter along with interest, says the letter.

Also, under RERA if the allottees decide not to withdraw from a real estate project and seek construction of their flats/apartments/plots, the promoter is liable to pay the interest for every month of the delay till the handing over of possession. Homebuyers also have a right under Section 19(4) of RERA to seek compensation for every month of delay, till the handing over of possession.

The Supreme Court last week directed Jaypee Associates, parent of Jaypee Infratech, to deposit Rs 2000 crore by October 27 and that the insolvency professional must submit an interim resolution plan within 45 days. The next hearing is set for November 13. It also stayed all other proceedings against the loan defaulter company, Jaypee Infratech, until further orders and restrained the former CEO and Managing Director Manoj Gaur of Jaypee Infratech from leaving the country.

The court also ordered that an expert participate in the meetings of the IRP and support the cause of home buyers Shekhar Naphade, learned senior counsel along with Shubhangi Tuli, advocate-on-record, have been appointed by the court to participate in the meetings of the committee of creditors under Section 21 of the Insolvency and Bankruptcy Code, 2016 (IBC) to espouse the cause of and protect the interests of the home buyers.