[Guest post by Abhishek Dubey, a corporate lawyer based out of Delhi NCR. This document is merely a guidance for fellow flat buyers of Jaypee Wishtown and not legal advice. Flat buyers may consult their own legal counsel before taking any action. Views are personal.
Some of the background to the legal issues arising in this post are available here.]
Thousands of flat buyers stuck in the Jaypee Wishtown, Noida real estate project are seeking clarity on the Claim Form that has to be filed under the Insolvency and Bankruptcy Code, 2016 (“Code”) with the Interim Resolution Professional of Jaypee Infratech Limited (“JIL”), Mr. Anuj Jain (“IRP”). This post seeks to provide answers to the questions of such flat buyers and provides a descriptive sample of Form C that could be used by flat buyers for filing with the IRP.
On 9 August 2017, the NCLT Allahabad admitted the insolvency petition of the financial creditor of JIL and appointed Mr. Anuj Jain as an IRP for carrying out the functions stated in the Code. The order of NCLT can be accessed here.
As per the process in the Code and the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2017 (“Regulations”), the creditors of JIL are required to file their claims by August 24, 2017. The Regulations prescribe different forms for different classes of creditors. In my opinion home buyers should file Form C – which is a form for financial creditors. The flat buyers have to claim that the amount due to them because of the failure / delay in delivery of the flat qualifies as “financial debt” which was disbursed against the consideration for time value of money. Every flat was to be delivered within a specific time period and there is an interest that the builder has to pay to the buyer for every month of delay in delivery.
Form C v. Form F
The Insolvency and Bankruptcy Board of India (“IBBI”) issued a press release on 16 August 2017 introducing a new Form F for filing of claims by persons who are neither financial nor operational creditors. The IBBI has amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 to introduce this new Form F. While the press release for the amendment regulations do not state this specifically, it is implied that this Form F was proposed for the flat buyers. The IRP Anuj Jain has also communicated the same in his emails and through the FAQ posted on the website of JIL.
However, the issue is that if the flat buyers file Form F instead of Form C, it will be a prima facie admission that the flat buyers are unsecured creditors. Therefore, Form C should be filed and home buyers shall collectively make a representation to the IRP that they be considered as financial creditors.
This leads us to the obvious question as to what difference it would make if one files Form C or Form F. The difference will be in the treatment of the claims. A financial creditor whose Form C is accepted will have the right to be part of the committee of creditors which decides the resolution plan for JIL; given the state of affairs at JIL and Jaypee group companies, this is very important from the point of the flat buyers. In addition, the claims of the financial creditors whose Form C is accepted will take priority over the claims of the employees (who are not workmen), unsecured creditors, government taxes, and preference and equity shareholders. If the resolution plan fails and JIL were to go for liquidation, there may be a scenario where the unsecured creditors (who filed Form F) may obtain only a fraction of their investment or may not obtain anything.
Therefore, the flat buyers should file Form C and then, after August 24, 2017, make a representation to the IRP that flat buyers should be categorised as financial creditors. The IRP will evaluate the claims based on the supporting documents and will categorise all the claims. Your claim will not be disqualified even if you have not filed the claim in the correct form.
Buyers who do not agree with my view should file Form F and can follow the Form C guide which I have provided below – both the Forms are not very different in terms of content. But every flat buyer who has not got possession of flat must file a claim form (Form C or Form F) to protect her/his interest.
Guidance on Preparing Form C?
Set forth below is a copy of Form C with explanation on how to fill each column. Please note that column 4, where you have to state your financial claim, is the most important.
All figures, details and dates in this sample form and the affidavit are illustrative only.
PROOF OF CLAIM BY FINANCIAL CREDITORS
[Under Regulation 8 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016]
18 August 2017
The Interim Resolution Professional
Mr. Anuj Jain,
M/S BSRR & CO., Chartered Accountants,
8th Floor, Building No. 10-Cybercity, Gurgaon-122002
Email: [email protected]
[Add your current address]
Subject: Submission of proof of claim.
I, Abhishek Dubey, hereby submit this proof of claim in respect of the corporate insolvency resolution process in the case of Jaypee Infratech Limited. The details for the same are set out below:
Note: All figures and dates in this sample form are illustrative.
NAME OF FINANCIAL CREDITOR
IDENTIFICATION NUMBER OF FINANCIAL CREDITOR
(IF AN INCORPORATED BODY PROVIDE IDENTIFICATION NUMBER AND PROOF OF INCORPORATION. IF A PARTNERSHIP OR INDIVIDUAL PROVIDE IDENTIFICATION RECORDS* OF ALL THE PARTNERS OR THE INDIVIDUAL)
PAN No OR Aadhaar No. OR Election Commission Identification: [XXXX]
ADDRESS AND EMAIL ADDRESS OF FINANCIAL CREDITOR FOR CORRESPONDENCE.
[Add your current address.]
Email: [email protected]
TOTAL AMOUNT OF CLAIM
(INCLUDING ANY INTEREST AS AT THE INSOLVENCY COMMENCEMENT DATE)
A. Amount paid to JIL till date: Rs. 50,00,000
B. Interest for delay in possession – the flat was to be delivered in April, 2013 according to the PAL (i.e. 36 months from date of PAL):
50,00,000 x 18* x 4.25 years (i.e. total delay till August 9, 2017)
= Rs. 38,25,000
Total Claim (A+B) = Rs. 88,25,000
The above financial claim is without prejudice to my right for possession of my Unit Number [XXXX] in ‘Kosmos – Jaypee Wishtown Noida’ allotted to me in accordance with Provisional Allotment Letter Dated 1 April 2010 and my rights and remedies under the laws of India.
*The 18% interest rate is deduction from the principle enshrined in RERA that a flat buyer gets compensation at the same rate that builder charges to the buyer if there is delay in payments from the buyer.
DETAILS OF DOCUMENTS BY REFERENCE TO WHICH THE DEBT CAN BE SUBSTANTIATED
1. Provisional Allotment Letter (Attached as Annexure-I).
2. Statement of Account (SOA) dated 1 September 2016 issued by Jaypee Infratech Limited (Attached as Annexure-II).
DETAILS OF HOW AND WHEN DEBT INCURRED
Unit Number [XXXX] in Kosmos – WishTown, Noida was allotted to me on 1 April 2010 and possession was promised within 36 months from such date which obligation has not been fulfilled yet.
DETAILS OF ANY MUTUAL CREDIT, MUTUAL DEBTS, OR OTHER MUTUAL DEALINGS BETWEEN THE CORPORATE DEBTOR AND THE CREDITOR WHICH MAY BE SET-OFF AGAINST THE CLAIM
DETAILS OF ANY SECURITY HELD, THE VALUE OF THE SECURITY, AND THE DATE IT WAS GIVEN
My security interest in the property was created on the date on which I was issued the Provisional Allotment Letter which is attached hereto as Annexure I.
DETAILS OF THE BANK ACCOUNT TO WHICH THE AMOUNT OF THE CLAIM OR ANY PART THEREOF CAN BE TRANSFERRED PURSUANT TO A RESOLUTION PLAN
Beneficiary Name: Abhishek Dubey
Bank: HDFC Bank
Bank Account Number: XXXX
IFSC Code: XXXX
LIST OF DOCUMENTS ATTACHED TO THIS PROOF OF CLAIM IN ORDER TO PROVE THE EXISTENCE AND NONPAYMENT OF CLAIM DUE TO THE FINANCIAL CREDITOR
1. Provisional Allotment Letter dated 1 April 2010 (Attached as Annexure-I).
2. Statement of Account dated 1 September 2016 (Attached as Annexure-II)
Signature of financial creditor (In case of co-applicants, both applicants to sign) / Power of Attorney Holder
Name in BLOCK LETTERS: ABHISHEK DUBEY
Position with or in relation to creditor
Address of person signing
I, Abhishek Dubey, currently residing at [insert address] do solemnly affirm and state as follows:
- Jaypee Infratech Limited, the corporate debtor was, at the insolvency commencement date, being the 9th day of August 2017 justly and truly indebted to me for an amount of Rs. 88,25,000. This is without prejudice to my right for possession of my Unit Number [XXXX] in ‘Kosmos – Jaypee Wishtown Noida’ allotted to me in accordance with Provisional Allotment Letter Dated 1 April 2010.
- In respect of my claim of the said sum or any part thereof, I have relied on the documents specified below:
- a) Provisional Allotment Letter dated 1 April 2010 (Attached as Annexure-I).
- b) Statement of Account dated 1 September 2016 issued by Jaypee Infratech Limited (Attached as Annexure-II)
- The said documents are true, valid and genuine to the best of my knowledge, information and belief.
- In respect of the said sum or any part thereof, I have not nor has any person, by my order, to my knowledge or belief, for my use, had or received any manner of satisfaction or security whatsoever.
- I am hereby submitting my claim without prejudice to my rights and remedies under the laws of India including but not limited to the Consumer Protection Act, 1986 and the Real Estate (Regulation and Development) Act, 2016 or any other law for the time being in force.
- I further expressly reserve my rights to initiate any and/or all kinds of civil and/or criminal proceedings under any law against Jaiprakash Associates Limited or any other related person or entity as per my contract with such entity. I am also expressly reserving my right to claim the property and am not relinquishing or diluting any of my rights against the property as per my contract with Jaiprakash Associates Limited and Jaypee Infratech Limited.
Solemnly, affirmed at [New Delhi] on 18th day of August 2017
Notary / Oath Commissioner
I, Abhishek Dubey, the Deponent hereinabove, do hereby verify and affirm that the contents of paragraph 1 to 6 of this affidavit are true and correct to my knowledge and belief and no material facts have been concealed therefrom.
Verified at New Delhi on this 18th day of August 2017
List of Annexures to Form C
The following documents have to be attached with Form C:
- Annexure 1 – Provisional Allotment Letter
- Annexure 2 – Statement of Account
- Copy of any one identification proof – PAN / Aadhaar Card / Election Commission ID
- In case the Power of Attorney holder is signing, please attach copy of the Power of Attorney.
- Form C has be filed electronically only at [email protected]. There is no requirement to submit the physical copy.
- The Affidavit has to be notarized but not the Form or the supporting documents.
- If you stay out of India, the Affidavit has to be notarized or apostilled in the country where you live.
- The IRP has done away with the requirement of paying stamp duty on the Affidavit.
- In case of co-applicants, two separate affidavits are required for the first and the second co-applicant. But file single Form C. Follow the simple rule – one Form C per apartment. And one affidavit for each flat applicant / co-applicant.
- Lastly, please file your claim form on time. The deadline of August 24, 2017 cannot be extended.
- Please refer to this FAQ from the IRP for further guidance: http://www.jaypeeinfratech.com/communication/2017/FAQ.pdf
– Abhishek Dubey