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Chitra Sharma And Others v. Union Of India And Others
Factual and Procedural Background
The Supreme Court is seized of the ongoing insolvency proceedings concerning Jaiprakash Associates Ltd. (JAL) and the interests of its homebuyers. Earlier orders dated 11-9-2017 and 25-10-2017 had required JAL to deposit ₹2,000 crore, but only ₹550 crore has been deposited so far. Eight per cent of homebuyers have opted for a refund of their monies while the remainder prefer possession of their flats. The present order addresses interim measures to secure funds for the refund seekers and to regulate further steps in the corporate insolvency resolution process.
Legal Issues Presented
- Whether, and to what extent, JAL must make additional deposits to comply with the Court’s earlier directions for safeguarding the interests of refund-seeking homebuyers.
- What interim protections should be afforded to homebuyers who have chosen a refund, particularly regarding further payment demands by the developer.
- How the Insolvency Resolution Professional (IRP), the National Company Law Tribunal (NCLT), and the Committee of Creditors should proceed in light of the Supreme Court’s overriding supervisory jurisdiction.
Arguments of the Parties
Counsel for JAL (Mr Anupam Lal Das)
- Informed the Court that JAL has already deposited ₹550 crore with the Registry.
- Submitted that only 8 % of homebuyers seek refunds, implying a lesser immediate financial burden.
- Raised several other contentions which the Court declined to entertain in view of its previous orders.
Amicus Curiae (Mr Pawanshree Agrawal)
- Reported, on the basis of the online portal, that approximately ₹1,300 crore is needed to refund the principal amounts of the buyers who presently seek reimbursement.
- Undertook to prepare a project-wise chart detailing the number of refund claimants and the construction status of each project.
Homebuyers Seeking Refund
- Complained that the developer is still raising monthly instalment demands despite their opting for refunds.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Order dated 11-9-2017 (2018) 18 SCC 611 | Earlier direction requiring JAL to deposit funds to protect homebuyers’ interests. | Relied upon to decline entertaining fresh contentions by JAL and to gauge compliance shortfall. |
| Order dated 25-10-2017 (2018) 18 SCC 615 | Supplementary directions relating to the deposit and treatment of homebuyers’ claims. | Similarly invoked as the operative framework within which the present directions were issued. |
Court's Reasoning and Analysis
The Court observed that its prior mandate to deposit ₹2,000 crore had not been fulfilled, necessitating further coercive directions. Given that only refund-seeking buyers are presently under consideration, the Court focused on securing additional funds and protecting this group from further financial exposure.
Key analytical steps included:
- Ordering JAL to deposit an additional ₹200 crore in two instalments (₹100 crore by 15-4-2018 and another ₹100 crore by 10-5-2018) as an interim measure toward the unmet ₹2,000 crore requirement.
- Mandating the Amicus Curiae to create a project-wise matrix and maintain an online portal limited to existing refund requests to facilitate a pro-rata disbursement scheme.
- Staying any demand notices—current or future—for instalments from buyers who have opted for refunds, thereby insulating them from further pecuniary obligations during pendency of the refund process.
- Allowing the IRP to finalise, but not implement, a resolution plan without prior leave of the Court, ensuring that insolvency proceedings remain subordinate to judicial oversight.
- Clarifying that the NCLT’s adjudication shall remain subject to the Supreme Court’s directions, preserving hierarchical consistency.
- Replacing the earlier counsel before the Committee of Creditors (Mr Shekhar Naphade) with Mr Gaurav Agrawal to continue representation of homebuyers.
Holding and Implications
INTERIM DIRECTIONS ISSUED
JAL must deposit ₹200 crore in two instalments, no further payment demands may be issued to refund-seeking buyers, and detailed project-wise data will be prepared for pro-rata disbursement. The IRP and NCLT are to proceed, but only within the parameters set by this order. The matter is listed for 16-4-2018 to monitor compliance.
Implications: The order provides immediate financial protection to refund-seeking homebuyers and reinforces the Supreme Court’s supervisory role over both the insolvency resolution process and the developer’s obligations. No new precedent is articulated; the decision primarily advances enforcement of the Court’s earlier directives in the same matter.
Order
1. Heard Mr Anupam Lal Das, learned counsel appearing for Respondent 4 Jaiprakash Associates Ltd. (JAL). Though many a contention has been raised by Mr Das, yet, we are not inclined to entertain the same keeping in view our orders dated 11-9-2017 (2018) 18 SCC 611 and 25-10-2017 (2018) 18 SCC 615. We have been told by Mr Das that JAL has deposited a sum of Rs 550 crores before the Registry of this Court. It is submitted by Mr Das that only 8% of the homebuyers/allottees are inclined to take refund whereas others have expressed their inclination to have the flats.
2. We would intend to make it absolutely clear that, for the present, we are only concerned with those homebuyers who intend to have refund. In the next phase, we may consider the grievances, if any, of the homebuyers who intend to have the flats. In that regard, we think it appropriate to hear Mr Parag P. Tripathi, learned Senior Counsel appearing for Interim Resolution Professional (IRP) and Mr Jayant Bhushan and Mr Sanjay Hegde and others, learned Senior Counsel appearing for some Associations of homebuyers who intend to have their flats.
3. As our order for deposit of Rs 2000 crores has not been complied with, we intend to pass the following directions:
3.1. JAL shall deposit a further sum of Rs 200 crores in two instalments, as agreed by the Managing Director who is present in Court today. The first instalment of Rs 100 crores shall be deposited by 15-4-2018 and the second instalment of Rs 100 crores shall be deposited by 10-5-2018;
3.2. It is submitted by Mr Pawanshree Agrawal, learned Amicus Curiae that as per his portal an amount of Rs 1300 crores, at present, is required to be refunded towards the principal sum for those homebuyers who, as of today, seek refund. The figure of Rs 1300 crores is as per the record of JAL.
In view of the aforesaid, we would require Mr Agrawal to prepare a projectwise chart indicating the number of persons in respect of that project and the stage of completion of the respective projects so that appropriate order can be passed for disbursement of the amount on pro rata basis to the homebuyers;
3.3. Mr Agrawal, learned Amicus Curiae shall keep the portal operational. However, the requests of only those persons on the portal who have sought refund, as of today will be considered at this stage;
3.4. The submission of the homebuyers who are seeking refund is that the developer is making demands towards monthly instalments. We direct that no demand towards outstanding or future instalments shall be raised by the developer to the flat buyers who have, as of today, expressed the option to obtain refund. The demands raised by the developer in respect of the homebuyers who have already opted for refund till today, shall remain stayed;
3.5. The IRP may proceed to finalise the resolution plan but the same shall be implemented after taking leave of this Court.
3.6. The National Company Law Tribunal (NCLT) shall decide subject to the directions which we have given hereinabove.
4. Before we fix the next date, we must note that we have been apprised that Mr Shekhar Naphade, learned Senior Counsel who was appointed to espouse the cause of the homebuyers before the Committee of Creditors has expressed his inability to continue as such.
5. In view of the aforesaid, a need has arisen to appoint someone else in place of Mr Shekhar Naphade and accordingly we appoint Mr Gaurav Agrawal, Advocate. It is further clarified that Mr Gaurav Agrawal shall be guided by our previous orders.
6. Let the matter be listed on 16-4-2018 so that this Court can take note of whether the developer has complied with the direction of depositing the first instalment and to pass directions with regard to disbursement of the amount deposited on pro rata basis on the basis of the report submitted by Mr Pawanshree Agrawal.
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