Calling the NCLT's recent ruling on Unitech "disturbing", the Supreme Court on Tuesday slammed the National Company Law Tribunal (NCLT) for directing the government to form 10-member nominee board to initiate the takeover process at a time when the SC is hearing the case. The apex court, approached by Unitech against the NCLT order, said when "we are hearing this matter how can NCLT pass orders. It is disturbing". The top court said the government should have sought its permission before approaching the tribunal for the company takeover and suspension of its board of directors. With the SC observation coming out contrary to the tribunal's order, it remains to be seen how the government and the NCLT will react to the issue. The top court has now asked the government to come up with suggestions on protecting interests of home buyers' who had invested their money with the debt-ridden realtor.
The Principal Bench of the NCLT on Friday allowed the government to appoint 10-nominee directors by December 20 to take over the Unitech management on its directions as the Corporate Affairs Ministry moved the tribunal against real estate firm over mismanagement, siphoning of funds, and its failure to complete construction of projects in time. The tribunal also restrained its eight suspended directors from selling personal or company properties. The tribunal was told that since the company had not protected the buyers' interests, its board of directors and chief financial officer should be suspended under the Companies Act, 2013.
With a total debt of over Rs 6,000 crore, the company has not been able to deliver over 16,000 units from its 70 housing projects spread in different parts of the country. The realtor owes over Rs 723 crore to its 20,000 home buyers and 51,000 depositors. The "overambitious" Unitech, which once boasted big plans for its pan-India presence, has suffered a fall from grace, with over Rs 16,000-crore market value in 2010 to Rs 1,900 crore in December 2017. Market observers say the company couldn't sense the slump in the real estate sector globally.
Senior advocate Ranjit Kumar, appearing for Unitech and its jailed promoters, referred to the recent NCLT order of company takeover, saying with the tribunal asking the government to take over the company, it's very difficult for them to deposit Rs 750 crore as directed by the SC. The apex court on October 30 asked the real estate group to deposit Rs 750 crore by December end to protect the buyers' money. "How do I comply with the Supreme Court order? My bank accounts have been frozen on November 21," the lawyer said, reported PTI. "The nominated Directors (of the government) shall have to comply with the orders of the Supreme Court," the bench said, adding that for it, the interests of homebuyers were paramount and they cannot be equated with the investors. "We are more concerned for the homebuyers and not for the company and not for the fixed depositors. Homebuyers are not investors or fixed depositors," the bench said, the agency added.
Earlier, the Supreme Court had asked the authorities to arrange a meeting between Unitech's jailed promoter Sanjay Chandra and the company officials so that they could come up with a plan to raise Rs 750 crore. Chandra's bail was rejected by the Delhi high court on August 11 in a criminal case lodged against him in 2015 on a complaint by buyers of the company's housing projects - 'Wild Flower Country' and 'Anthea Project'- Gurugram.