Why Justice Dipak Misra is a ray of hope for thousands of distressed home-buyers

Justice Dipak Misra (now the Chief Justice of India) is turning out to be a saviour for distressed home-buyers who have been left in the lurch by the powerful builders, rapacious banks and an indifferent government. The decision by a bench headed by him on September 11 in the Jaypee WishTown case is in line with his earlier decisions in the cases involving other big builders like Supertech and Unitech who had left many home-buyers running for cover till the Apex Court came to their rescue.

In September last year, exactly a year ago, a Justice Dipak Mishra-led bench had asked the Supertech owners to refund the aggrieved home-buyers their invested money with interest. Earlier this year, in February, again a three-judge bench headed by Justice Misra gave an option to the Unitech promoters - either refund money to the flat-buyers with interest or remain in jail.

Jaypee's had become a hopeless case, from the point of view of the home-buyer, as the Insolvency and Bankruptcy Code (IBC) has been enacted by the Parliament last year and the National Corporate Law Tribunal (NCLT) has been set up this year by the government of India to protect the interests of the banks.

When the IDBI moved the NCLT to recover Rs 500-odd crore from the Jaypee and other banks impleaded themselves to recover their lending amount from the builder, the NCLT, on August 9, set up an Interim Resolution Professional (IRP) to find a means to repay the dues that Jaypee owed to the banks. The NCLT was least concerned with the home-buyers who had paid 90 per cent of their dues to Jaypee and were waiting for the flat for years while paying the EMIs for their loans as well as rent for their current accommodation. The Tribunal was supposed to be, as per law, only concerned with the interest of the banks.

The bank officials, on their part, turned out to be equally indifferent to the plight of the home-buyers. The SBI MD went on record to say that the home-buyers had taken a risk by investing in under-construction projects and they must be ready to suffer the consequences.

To add insult to the injury, the country's Finance Minister, Arun Jaitley, made a casual remark that he could only express sympathy for the plight of the home-buyers and do nothing else. And the country's Prime Minister, Narendra Modi, remained, as usual, tight-lipped as the harried home-buyers ran from pillar to post.

Many home-buyer associations had moved the National Consumer Disputes Redressal Commission (NCDRC) over the years seeking refund of their money with interest and the cases were in different stages of adjudication. But all such cases suddenly came to a halt with the NCLT setting up the IRP to find a resolution.

In the IRP mechanism, the home-buyer was the last priority. In the eventuality of a revival of the WishTown project by an external agency not working out – which was the most likely outcome given the mess it was in – the IRP was supposed to make moves for the liquidation of the assets of the Jaypee promoters and first pay back the dues to the banks (financial creditors) and then vendors, contractors, workmen, employees etc (operational creditors). If any money would be left thereafter, then that was to be distributed among 32,000 home-buyers who had invested in the WishTown project, as, in the IBC framework, home-buyers had not been included either in the financial creditor or operational creditor category and their claim came last in the priority.

When the distressed home-buyers were awaiting with bated breath the outcome of the NCLT-mandated resolution process after nine months (the maximum time-limit for a resolution process to take effect under the IBC), a few home-buyers, hoping against hope, tried their hand to seek the intervention of the Supreme Court. There was little hope because such cases usually meandered their way through the lower courts – from NCDRC to the high court and, finally, the Supreme Court.

But Chief Justice Dipak Misra treated this case as a Public Interest Litigation (PIL) and, on September 4, stayed the proceedings of the NCLT, restored the Jaypee promoters in the management and asked them to come up with a plan to resurrect the NOIDA project in its next hearing on October 10.

The IDBI, which had originally lodged the case with the NCLT, moved the Supreme Court last week seeking a review of the order by making the following observation: if the interest of the home-buyers was the prime concern of the apex bank, then the IRP, instead of the wayward Jaypee owners, was the best instrument to serve the purpose. The Supreme Court saw merit in the argument and posted the matter for September 11.

In a landmark interim order on September 11, the SC bench headed by the CJI, reversed its earlier decision and re-empowered the IRP to take the resolution process ahead. But it shortened its timeline – from 180 days as scheduled by the IBC to just 45 days for presenting the interim framework of resolution.

From the point of view of the home-buyer, two things were important: the Apex Court explicitly ordered that the interest of the home-buyers must get primacy in the resolution process. In order to give it operational effect, the Court appointed an amicus curiae to represent the interest of the home-buyers in the IRP board. That is not all; on the plea of the home-buyers, the SC bench asked the Jaypee promoters to deposit ₹2000 crore with the Court within 45 days. The Court wanted to set aside this money to enable the home-buyers to be compensated for the delay in receiving their flats.

With this September 11 ruling - though the final decision is awaited - the Supreme Court has brought smiles on the faces of thousands of home-buyers who have been the victims of the politician-bureaucrat-bank-builder nexus. Justice Dipak Misra deserves all the accolades for making this happen.