Homebuyers want Jaypee Infra to deposit funds in escrow

Around 2,300 home buyers of Jaypee Infratech's Wish Town project in Noida moved the Supreme Court on Friday requesting it to ensure that the builder deposited the money needed to complete the project with the court or in an escrow account before it allowed resumption of insolvency proceedings against the company.

They also want the company to pay compensation for the delay caused so far with an 18 per cent interest.

The plea, filed by a group of nine home buyers' associations, come after IDBI Bank moved the apex court on Thursday for lifting the stay.

The home buyers want the interest of flat buyers to be protected by the court. According to their application, filed through law firm Trilegal, the insolvency code does not provide for a suitable framework to protect the home buyers.

Making the buyers a test case for the insolvency code would result in grave injustice to them, it added.

The petition also demanded a forensic audit of the accounts of Jaypee Infratech and its holding company, Jaiprakash Associates by an appropriate authority.

Ramakant Rai of Trilegal declined to comment on the petition to The Economic Times as the matter is in court.

About 32,000 home buyers were left in the lurch after the Allahabad bench of the National Company Law Tribunal classified Jaypee Infratech as insolvent on 9 August, in response to a petition filed by IDBI Bank.

The company had defaulted on a Rs526 crore loan taken from the state-run bank.

Home buyers allege that the Jaypee Group and IDBI Bank colluded in initiating the insolvency proceedings against Jaypee Infratech to defeat the principles of equity and justice and the interest of the flat buyers.

According to their application, IDBI Bank had not invoked a personal guarantee provided by Jaypee Infratech promoter Manoj Gaur against the loan.

It argued that IDBI Bank, being a public funded entity, was obliged to take all measures to recover its loan, including invoking personal guarantees.