Jaypee homebuyers can sue JAL too, says consumer forum

NEW DELHI: The apex consumer commission,

NCDRC

, has ordered that home buyers in Jaypee Infratech Ltd (JIL) can

approach

consumer forum against its parent Jaiprakash Associates Ltd (JAL) to seek compensation and possession. It dismissed JAL’s argument that the company is only acting as an agent of JIL for marketing, construction and sale of apartments and plots.


While pronouncing the order, single-member bench of V K Jain, however, said that the buyers cannot approach the

consumer forums

against JIL at this stage when the insolvency proceedings against the company was underway.

“Since in my opinion, JAL was a co-service provider along with JIL and not just an agent of JIL, qua the home buyers, I need not examine the contention of the complainants that this commission should lift the corporate veil and hold JAL to be the service provider, on account of its being the promoter and holding company of JIL,” Jain said in the order.

A large number of flat buyers had approached the National Consumer Disputes Redressal Commission (NCDRC) seeking possession with compensation or refund with compensation from JAL and JIL. The National Company Law Tribunal (NCLT) has appointed an Interim Resolution Professional (IRP), while declaring a moratorium under the Insolvency and Bankruptcy Code.

JAL had argued that the leasehold rights on the land continued to vest with JIL.

But the commission referred to the official allotment letters issued to flat buyers to point out how JAL was not just an agent of JIL. “Admittedly, JAL is the holding company of the JIL and as stated in the Red Herring Prospectus issued by JIL, in public domain, it was largely dependent upon its promoter not only for financial support but also for execution expertise. Not only the allotment letters were issued by JAL, the entire residential project was to be planned, executed and marketed by JAL, which also committed a particular time line for delivery of possession to the buyers. Had JAL not promoted JIL and not undertaken the aforesaid obligations including rendering a host of services to the buyers, they might not have booked the apartments / plots in this project. Therefore, JAL cannot be permitted to say, at this stage that the buyers were consumer only of JIL,” the commission said.

Rejecting the other argument of JAL, the commission also said as regards the prohibition contained in the IBC the provision applied only to the corporate debtor, JIL, and has no applicability in the case of JAL.