Jaypee: Homebuyers’ complaints under Consumer Protection Act maintainable during Insolvency proceedings, Supreme Court

The Supreme Court has upheld the judgment of the National Consumer Disputes Redressal Commission (NCDRC) against Jaiprakash Associate Limited (JAL) on the issue of maintainability of consumer complaints before NCDRC..The NCDRC had held that consumer complaints filed by the aggrieved homebuyers against JAL can be proceeded with before the NCDRC. These proceedings can continue during the pendency of Insolvency proceedings against Jaypee Infratech Limited (Jaypee), the Commission had held. Jaypee is a special purpose vehicle created by its holding company, Jaiprakash Associates Limited (JAL)..The Commission thus placed as many as 300 matters involving over 14500 aggrieved homebuyers before it..This decision was challenged before the Supreme Court by JAL. It was contended by JAL that the Commission’s decision is likely to denude it from pursuing its plea against the claims set up by the complainants, the homebuyers..The Supreme Court Bench of Justices AM Khanwilkar and Ajay Rastogi held that the NCDRC’s judgment was restricted to the point of maintainability of the claim of the complainants before the NCDRC. The Court said,.“[T]he position that the observations in the impugned judgment are for the limited purpose of deciding the preliminary objection taken by the appellant regarding the maintainability of the complaint before the Commission, in particular, against the appellant JAL.”.The Court further stressed that the NCDRC’s judgment has only considered the preliminary objection and is not an opinion on the merits of the pleas of any of the parties. All the contentions available to the Respondents will have to be considered on their own merits, the Court made clear..“[A]ll contentions available to the respondent(s) in the complaint including on the relief of possession and refund against JAL will have to be adjudicated by the Commission on its own merits in accordance with law uninfluenced by the observations made in the impugned judgment.”.The NCDRC’s judgment does not give any directions to the Respondents with respect to their claims and the Commission may do so in its final judgment. This final judgment, however, will be subject to the outcome of the insolvency proceedings against JAL and Jaypee before the National Company Law Tribunal (NCLT), the Court clarified..This judgment comes in the wake of the Supreme Court’s decision in the Chitra Sharma case wherein the Court had sent the matter back to the NCLT for adjudicating on the issue under the Insolvency and Bankruptcy Code (IBC) leaving the aggrieved homebuyers in a lurch..The decision of the NCDRC which has now been upheld by the Supreme Court, validates the maintainability of consumer claims of homebuyers against Jaypee for refunds and damages on account of delayed possession..The homebuyers were represented by Senior Advocate Anand Grover briefed by a team from P&A Law Offices comprising advocates Partner Amit K Mishra, Principal Associate and AOR Shashank Manish and Associate Shivam Pandey along with Advocate Aditya Parolia. Jaypee was represented by Senior Advocates Abhishek Manu Singhvi and Krishnan Venugopal..Read the Order:.Bar & Bench is available on WhatsApp. For real-time updates on stories, Click here to subscribe to our WhatsApp.