Ask resolution professional to make sure an amount of Rs 4000 crore is deposited in an escrow account to complete ongoing projects latest by December 2019.
Jaypee homebuyers, who have been waiting for years to get their homes, have written to Prime Minister Narendra Modi and Finance Minister Arun Jaitley and another letter to the resolution professional Anuj Jain demanding that their interests in the resolution plan of Jaypee Infratech Limited be protected. They have asked the FM to instruct PSU banks to accord priority to their interest, provide for funding for timely construction of the units and payment of reasonable delay compensation.
They have also demanded the creation of an escrow account in accordance with RERA norms and a deposit of at least Rs 4000 crore for completing ongoing projects and timely possession of housing units.
“With a view to ensure that the IBC process of JIL should not result in punishing the homebuyers, we request you to kindly instruct the PSU lenders to accord priority to the interest of the JIL homebuyers,” says the letter to FM shared with Moneycontrol.
“We request you to ensure that a resolution plan of JIL should necessarily provide for funding of timely construction and possession of flats; and payment of reasonable delay compensation to the homebuyers,” says the letter addressed to the finance minister Arun Jaitley by legal counsels representing nine associations of flat buyers aggregating to a total of 2460 home buyers of Jaypee Infratech Limited (JIL) and Jaiprakash Associates Limited (JAL) who have purchased real estate projects Jaypee Greens Wish Town, Noida.
“The following elements must be necessarily provided in resolution plan of JIL: Deposit of at least INR 4,000 crores or sufficient amount for construction of flats in RERA compliant escrow account(s) prior to payment of any cash to banks/financial creditors,” says the letter.
“If required, PSU Lenders should accept deferment of their dues and/or accept land as settlement of their dues; and payment of reasonable compensation for delay to the JIL Homebuyers,” the letter says.
“As possession of flats in a timely manner is most critical, any upfront cash being brought in by a resolution applicant should be deposited in an escrow account for construction of flats in accordance with the Real Estate (Regulation & Development) Act, 2016 (RERA). Based on a rough estimate, an amount of at least INR 4,000- 5,000 crores may be required for construction of flats sold by JIL,” it reads.
“The JIL homebuyers have suffered average delays of 3- 4 years in the hands of JIL and completion of their projects may take another 2- 3 years. Given this, it is critical that the JIL Homebuyers be paid reasonable compensation for delay. Our Clients strongly believe that any compensation lower than 10 per cent per annum would not be a reasonable compensation for delay and would defeat the purpose of enactment of the RERA and the IBC,” it says.
In a separate letter, homebuyers have asked the resolution professional to place the letter of demands before the members of the committee of creditors (COC) request them to ensure that the following elements are necessarily provided in resolution plan of JIL. Besides the creation of an escrow account as per RERA norms, homebuyers have asked the resolution professional to make sure that the resolution plan provides for timely possession of apartments.
“Based on media reports, we understand that certain resolution applicants are proposing to complete Jaypee Greens Wish Town/ongoing projects by the year 2024. Please note that adoption of any such resolution plan by CoC would be detrimental to the interest of homebuyers and consequently would be out rightly rejected by the homebuyers. As the homebuyers have already suffered average delay of 3-4 years, any further delay in the completion of the flats is unacceptable to the homebuyers. Thus, we hereby reiterate that the resolution plan should provide for completion of Jaypee Greens Wish Town or other ongoing projects at the earliest possible or latest by December 2019,” says the letter.
The letter also stressed that the resolution plan should provide for the payment of reasonable delay compensation to the home buyers. “It is important that they receive reasonable compensation for delay in the insolvency resolution process of JIL. Our Clients strongly believe that any compensation lower than 10% per annum would not be a reasonable compensation for delay and would be contrary to the directions of the Supreme Court in this matter as well contrary to the RERA and the IBC. The interest claimed by Our Clients is also in line with the rulings of National Consumer Dispute Redressal Commission (NCDRC) under the Consumer Protection Act, 1986 (CPA),” says the letter addressed to the RP.
As JIL’s dues to the banks are approximately Rs 9,000 crore, if the banks were to accept land of 2000 acres in lieu of their dues, the banks would recover their dues. Proceeds/cash flows from the remaining land parcels of approx. 1500 acres should be used by the resolution applicant to provide reasonable compensation for delay to the homebuyers as well as to ensure completion of the flats in a timely manner, says the letter.
They have also asked the resolution professional to make sure that the super area of the allotted flats should not be increased at the time of providing possession of these flats to the home buyers; the car parking charges should be repaid to the home buyers; and the service tax collected from the home buyers should be repaid.
