The Supreme Court on Tuesday expressed apprehension about the manner in which Centre moved the National Company Law Tribunal (NCLT) to take control of embattled real estate firm Unitech Ltd’s board without seeking its permission. It has decided to continue hearing the matter tomorrow and has also sought government’s views on how to protect the interests of homebuyers.
The Supreme Court asked the Centre why it did not seek its permission to move NCLT for suspension of the company’s directors. It is disturbing to see that the NCLT passed an order when the top court was hearing the Unitech case. It should have taken leave of the apex court before allowing the Centre to take over Unitech Ltd, said the apex court.
Unitech, on its part, argued through its lawyer that NCLT passed a hurried order without hearing it. It said that the Supreme Court had allowed its promoter Sanjay Chandra to negotiate from jail to sell assets to generate funds to pay back buyers and yet the Centre had breached discipline and moved NCLT.
The ministry of corporate affairs has sought time until tomorrow to respond.
Insolvency expert Sumant Batra said, “I am not surprised that Supreme Court expressed disappointment but that is more an issue of propriety rather than the legality of government action.”
On Monday, the Supreme Court bench of Chief Justice Dipak Misra, Justice DY Chandrachud and Justice AM Khanwilkar agreed to hear on Tuesday the plea on behalf of the embattled civil construction and housing development company Unitech Ltd challenging the recent order of the company law tribunal allowing the Centre to take over its management.
Chief Justice Dipak Misra had observed yesterday that “We are more concerned with home buyers (rather than) with the company and fixed deposit holders/investors. Home buyers are not investors.”
Unitech in its appeal had said on Monday that, “Despite clear directions issued by the SC, the tribunal in complete disregard to the said orders proceeded to pass an order which makes the entire process and monitoring being implemented by the apex court a nullity and renders it impossible for the petitioners (Unitech and its directors) to comply with the SC orders.”
Senior advocate Ranjit Kumar, appearing for Unitech Ltd and its jailed promoters, referred to the recent NCLT order and said the takeover of the management of the company by the Centre would make it difficult for them to deposit Rs 750 crore as directed by the apex court to safeguard the interests of homebuyers.
"How do I comply with the Supreme Court order? My bank accounts have been frozen on November 21," the company’s lawyer had said.
The National Company Law Tribunal (NCLT), on December 8, had suspended all the eight directors of the realty firm over allegations of mismanagement and siphoning of funds and had authorised the Centre to appoint its 10 nominees on the board. In its petition filed under section 241 of the Companies Act, 2013, the government had requested the tribunal to remove the eight directors and said that the company has over Rs 6,000 crore debt and over 16,000 undelivered units from a total of nearly 70 projects.
The NCLT, in its order, had also said the government must give the name of its nominees by December 20 and restrained Unitech's eight suspended directors from selling their personal and company properties.
The apex court had on October 30 said jailed businessman Chandra will be granted bail only after the real estate group deposited money with its registry by December end. The top court had earlier directed the jail authorities to facilitate Chandra's meeting with his company officials and lawyers so that he could arrange money to refund the home buyers as well as for completing the ongoing housing projects.
Chandra is seeking interim bail from the apex court after the Delhi High Court on August 11 had rejected the plea in a criminal case lodged in 2015 by 158 home buyers of Unitech projectsWild Flower Country and Anthea Project – both located in Gurgaon.