The Allahabad High Court has upheld Yamuna Expressway Industrial Development Authority's (YEIDA) decision to cancel the allotment of 1,000 hectares of special development zone land to Jaiprakash Associates Ltd.
A bench of justices Manoj Kumar Gupta and Kshitij Shailendra directed YEIDA to take over all incomplete housing projects on this land parcel and ensure their completion under the terms JAL and homebuyers agreed on. JAL launched 12 housing projects, which have around 4,600 investors. Other developers launched another 13 on land sub-leased to them by JAL. YEIDA had cancelled the allotment on 12 February 2020, citing JAL's dues.
JAL projects within SDZ include Jaypee Greens Bougainvilleas, Jaypee Greens Country Homes I & II, Jaypee Greens Greencrest Homes, Jaypee Greens Krowns, Jaypee Greens Kove, Jaypee Greens Buddh Circuit Studios, Jaypee Greens Kassia I, II, III, Jaypee Greens Sportsville and Jaypee Greens Villa Expanza. None of the projects is complete.
While the HC order directs homebuyers, they will still have to move to the Supreme Court for clarity on the way forward because JAL is in insolvency, and a parallel legal process is on at the National Company Law Tribunal. In its order, HC set strict timelines, asking YEIDA to ensure that at least 75 per cent of complete housing projects are finished within a year, 50 per cent are completed in 18 months, and only 25 per cent are wrapped up in 30 months. The outer limit to complete all other project-related development work is 36 months.
It placed on YEIDA the responsibility to ensure funds are available to complete the projects, regardless of the amount collected from homebuyers and clarified that homebuyers' claims under the Insolvency and Bankruptcy Code (IBC) will remain protected, and their rights in the ongoing NCLT proceedings against JAL will not be affected.
Additionally, HC ordered a monitoring committee established in four weeks to oversee the completion of projects with the principal secretary (housing and industrial development), the chairman of UP-Rera, the CEO of YEIDA or a designated nominee, and an authorised representative (AR) of homebuyers as its members.
The panel will supervise the selection of new developers, resolve the grievances of homebuyers and formulate an exit policy for homebuyers who wish to withdraw and seek a refund.
The court declared the period between 11 February 2020 and the day of the judgment as a 'zero period', which means no interest, penalties, or any other financial charges related to the properties will be levied for this phase. It also directed YEIDA to appoint a nodal officer within four weeks to resolve any dispute related to outstanding payments within four weeks.
HC directed YEIDA to refund within six weeks to the resolution professional all the money deposited by JAL during the litigation process, along with interest calculated at the State Bank of India's prime lending rate (PLR), as well as any other payment made by JAL in proportion to the land resumed under the cancellation order.
Homebuyers said the Allahabad HC order gives back ownership of land to YEIDA, which places them outside the purview of NCLT. However, they plan to move to the Supreme Court for clarification.
Jaypee Sports City Homebuyers Welfare Society, expressed concerns about the High Court's decision, noting that it did not clarify whether the NCLT-appointed AR or a state-appointed representative would advocate for homebuyers' interests.
Additionally, it raised the issue of the Rs 2,000 crore paid by homebuyers to JAL, questioning whether it would be returned to the authority to complete the construction.
