Homebuyers in decade-long ‘vanvas’ as Jaypee case turns a messy tangle

Thousands pin their hopes on NBCC, a public sector company, which is now mandated to complete the project left midway by Jaypee

NBCC has worked out a ‘resolution plan’ that proposes completion of the project in next three-and-half-years from the time it gets a nod from the National Company Law Appellate Tribunal. Photo: iStock

Pankaj Gupta, a Delhi resident, booked a house in Jaypee’s Greater Noida project when his daughter was a toddler. Now, the girl is 11 years old, but his ordeal is far from over. If all goes well, he may get the keys of his apartment three years from now.

The hopes of Pankaj and hundreds of other investors rest on NBCC, a public sector construction company, which is now mandated to complete the project left midway by Jaypee Infratech, a private developer, following a Supreme Court order. NBCC has worked out a ‘resolution plan’ that proposes completion of the project in next three-and-half-years from the time it gets a nod from the National Company Law Appellate Tribunal (NCLAT).

The objective of the ‘resolution plan’ is to deliver houses to 21,000 investors who were failed by Jaypee, one of north India’s largest developers. Besides, the builder had defaulted on payments to banks. 

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In 2017, when Reserve Bank of India (RBI) came out with a list of non-performing assets that had to be taken to insolvency, Jaypee Infratech figured in the list as the only real-estate firm. The company went into insolvency in August 2017, after the National Company Law Tribunal (NCLT) admitted an application filed by an IDBI Bank-led consortium. IDBI Bank had moved the NCLT against the developer for non-payment of a ₹526-crore loan.

This is one of the longest-running insolvency cases in India. It is also a first-of-its-kind case where the government has amended the definition of a financial creditor by adding homebuyers. The government has also amended the Insolvency and Bankruptcy Code (IBC) to specify the minimum threshold for homebuyers to take any real estate company to National Company Law Tribunal (NCLT) under the IBC.

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When the case was admitted for resolution under the IBC, homebuyers approached the Supreme Court opposing the move. After a series of petitions, the government was directed to give adequate representation to the aggrieved homebuyers. The result was the amendment of the code to give homebuyers the status of financial creditors on par with banks and non-banking finance corporations. 

Gupta is one of the homebuyers who has been attending some of the ‘Committee of Creditors’ meetings in the case. The ups and downs in the case over the years has not only shaped Gupta’s personal life, but also his professional one. He wakes up every morning praying that he must “retain his job” so that he can pay EMIs for his flat which works about ₹60,000 a month.

Despite the intervention of the Supreme Court, Pankaj says no law can really help homebuyers. “I have learnt many lessons in the past decade, the most important one is that it is best to get a ready-to-move flat, rather than going for an under-construction project,” he says.

Ishwar Kewalramani, just like Pankaj Gupta, is waiting to get his house in Jaypee’s Wish Town. Agreeing with Pankaj, he says, “the IBC was supposed to give a resolution within 180 days as mandated by law. But it is now caught in legal issues. This case has gone all the way to Supreme Court and now after a ‘resolution plan’ was approved by NCLT, parties have gone appealing against it to NCLAT,” he says.

Such cases cannot be dealt with by the IBC because the law is very technical in nature and the common homebuyers don’t understand all this, says Ishwar.

Apart from NBCC, even homebuyers have moved NCLAT, seeking compensation for the delay in delivering their houses. Ishwar is determined to keep pursuing the case until he gets hold of his 4BHK flat for which he has paid close to ₹60 lakh a decade ago. 

Ishwar and other homebuyers are now writing to NBCC asking the company to begin construction. “We are pinning our hopes on NBCC to end our Vanvaas,” says Ishwar, drawing a comparison with Lord Rama, who had to wait 14 long years in the jungles before he returned to Ayodhya.

What went wrong with Jaypee Infratech’s case?

The IBC was brought in to deal with corporate cases without involvement of consumers and perhaps no-one imagined the complications that may arise during the process of finding a ‘resolution plan’, says a resolution professional who refused to be named.

He believes the code was not ready to cater to the needs of consumers. “We tried to apply a commercial law to a situation where people’s saving and investment was at stake. When the government realised this, they went on to amend the code,” says this source who has been part of the insolvency process right from the beginning.

Diwakar Maheshwari, dispute resolution partner at Khaitan & co, says this was a first-of-its-kind case with the IBC. While several stakeholders were involved in the case there was no precedence to support a way forward, he said.

Sonam Chandwani, a lawyer specialising in insolvency and partner at KS Legal says, “the creditors should have invoked section 52 of the IBC and sold the mortgaged property. The amount they would have got from this sale could have been distributed among all the creditors. Since there was land available with Jaypee, all that required from a creditor was to write to the resolution professional,” she says.


Thousands of homebuyers across India are stuck after booking houses and not getting possessions. So far close to 3,000 such aggrieved homebuyers are a part of the Forum for People’s Collective Efforts. The homebuyers feel that the Real Estate Regulatory Authority (RERA) and IBC need to go hand-in-hand so that aggrieved homebuyers can benefit.

M S Shankar, the national secretary of the People’s Collective, is of the opinion that while RERA may order a builder to complete the project, the IBC could help homebuyers get compensation for the delay and also enforcing the RERA. “Right now builders are scared of IBC. They are afraid that they will lose control of their company if they are dragged before NCLT under IBC. The government should not have stopped taking IBC cases,” he says.

In March this year, the government amended the IBC saying 100 homebuyers or 10 per cent of total homebuyers were required to take a real estate company to the NCLT under the IBC. Under RERA, even a single homebuyer can move the regulator seeking completion of the project.

So what are the key takeaways for homebuyers embroiled in cases with other builders? Ashutosh Kumar, who had bought a house in Amrapali’s project in Delhi-NCR, feels that investors must get the builder to finish the project under the supervision of the courts, instead of allowing it to drag on for eternity. Amrapali’s case is before the SC, but outside the ambit of the IBC. 

Legal opinion

Lawyers specialising in IBC cases say that it can’t be determined whether the IBC will work for the real estate cases. Diwakar Maheshwari says, “though the ‘resolution plan’ for Jaypee is approved by the NCLT, it is now before the NCLAT. It has been challenged by NBCC and other parties. Given the stakes involved and conflicting interest, the possibility of this matter approaching the apex court once again cannot be ruled out.”

Manmeet Singh, a partner, L&L Partners says, “given the weak real estate market, there may not be many resolution applicants in the future.”

In 2018, a joint venture, led by Suraksha and Dosti Realty, was selected to acquire Jaypee Infratech. Following this, a second round of bids were invited where NBCC’s ‘resolution plan’ was accepted by the creditors. Fresh insolvency proceedings began following a Supreme Court ruling.

At present, there are appeals pending before the appellate tribunal. Meanwhile, a monitoring group has been set up to keep an eye on NBCC’s construction progress.

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