Jaypee homebuyers can sue JAL after SC order

The Supreme Court has declined to stay the apex consumer commission`s order, which held that home buyers in Jaypee Infratech Ltd (JIL) can move the consumer forum against JIL`s parent company, Jaiprakash Associates Ltd. (JAL), for compensation and possession of their respective flats. JIL is undergoing insolvency proceedings. The Life Insurance Corporation declared JIL as a non-performing account (NPA) on September 30, 2015, and other lenders declared it as an NPA on March 31, 2016. On August 9, 2017, the National Company Law Tribunal (NCLT) admitted an application filed by one of JIL`s financial creditors, IDBI Bank Ltd., for initiating insolvency proceedings. A spokesperson for the JAL refused to comment on the SC order.

A bench comprising Justices A.M. Khanwilkar and Ajay Rastogi said: "All contentions available to the respondent (home buyers) in the complaint, including on the relief of possession and refund against JAL, will have to be adjudicated by the Commission on its own merits in accordance with law uninfluenced by the observations made in the impugned judgment."  JAL had moved the apex court challenging the National Consumer Disputes Redressal Commission (NCDRC) order. Last year, NCDRC had dismissed JAL`s argument that the company is acting only as a marketing agent, construction and sale of apartments and plots, for JIL. 

Many home buyers had moved the NCDRC about compensation or a refund with compensation from JIL and JAL. The NCLT appointed an Interim Resolution Professional (IRP), while declaring a moratorium under the Insolvency and Bankruptcy Code. The top court observed that the consumer commission will examine all contentions available to both sides (home buyers and JAL) regarding the rights and obligations of the parties on the merits in accordance with law. 

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The apex consumer commission in its order noted that the home buyers cannot approach the consumer forums against JIL, at this stage, as it is under insolvency proceedings. The court said : "The Commission, however, may give appropriate directions in the final judgement which obviously will be subject to the outcome of the proceedings before the NCLT insofar as JIL is concerned and also subject to the outcome of proceedings against JAL before the NCLT."

Sanjeev Sahani, a home buyer, said: "No home buyer will pay installment until a flat is ready for possession. Each project should be monitored by the home buyers` association. The company should come out with a project-wise, tower-wise completion dates."