ALSO READGovt moves to take control of Unitech; NCLT supersedes board Unwise move Govt wants to take over Unitech over mismanagement & diversion of funds From NSEL to Unitech: Govt uses Companies Act to defend 'public interest' Govt to seek court approval to take control of realty major Unitech: Report
The Supreme Court has expressed its unhappiness over the National Company Law Tribunal (NCLT) passing an order against realty major Unitech, putting at risk the court’s efforts to provide relief to homebuyers. The apex court said the NCLT should have taken its leave before allowing the government to take over Unitech’s management. Last week, the tribunal ordered the supersession of Unitech’s board after the government filed a company law petition alleging mismanagement. The move had come amid the apex court’s efforts, since September, to find a solution for thousands of homebuyers, a majority of them in the National Capital Region (NCR), who have been awaiting the delivery of their flats for years despite paying lakhs of rupees. “It is disturbing,” Chief Justice Dipak Misra observed while hearing a special leave petition filed by Unitech challenging the move. “We are hearing the matter. The NCLT is passing the order. Whether leave should be taken from us or not?” Misra asked. To this, government lawyers said the NCLT had clarified that its order was subject to the Supreme Court’s directions, and sought a day’s time to take instructions. The bench, which also comprised Justice AM Khanwilkar and Justice DY Chandrachud, wanted to know from the government what plans it had for homebuyers. It posted the matter for hearing on Wednesday. Earlier, moving the petition, senior advocate Mukul Rohatgi said the government petition and the NCLT order were in breach of earlier Supreme Court orders. He also argued that the move fell short of principles of natural justice as no hearing was given. Referring to the group promoter, Sanjay Chandra, who is in jail, Rohatgi said, “I am in jail and have been negotiating with people (for sale of assets to raise money for homebuyers) and a petition is filed to replace the entire board. There is no notice, and there is a false statement that the company has refused service (of notice).” He added that the apex court had prohibited any coercive steps while the negotiations were on. ALSO READ: Edit: Unwise move The bench wanted to know whether any application was filed or permission sought to serve the notice in jail. On Friday, the NCLT had allowed the government takeover of the company’s board under Section 241 of the Companies Act. It removed eight incumbents and asked the Ministry of Company Affairs (MCA) to name 10 nominee directors. The government is expected to give the names by December 20, the next date of the hearing in the NCLT. In a statement after the NCLT order, Unitech had assured that it was taking all efforts to arrange funds to complete projects and refund dues. “We have not been able to meet timelines and provide possession in some of our projects to various consumers in the past couple of years because of very tough market conditions in the real estate sector.
We are, however, not the only company facing such a situation. Other large residential developers across the country are in a similar position and have not been able to meet timelines.”It added, “Notwithstanding that our managing directors are in judicial custody having extremely limited facilities, they are still striving hard to secure financing so that construction can continue to complete various projects. The company has been successful in raising some finance in the past few months and is confident that it will, over a period of time, complete all its projects. It would not be out of place to mention that the current management of the Company has been with the company since its inception and is much better equipped to raise funds. Any interference in the working of the current management would be detrimental to the cause of all stakeholders.” In October, while hearing a bail petition of Chandra, the same bench had said the bail would be granted only after the group deposits Rs 750 crore with its registry by December-end. The next hearing in the matter was in January. Meanwhile, the top court had directed the jail authorities to facilitate Chandra’s meeting with his company officials and lawyers so that he could arrange money for refunding the homebuyers as well as for completing the ongoing housing projects. The court had ordered that a portal be created to enable homebuyers to file their claims. The amicus curiae had informed the court that around 9,390 homebuyers, of the total of around 16,000, had responded on the issue of either seeking refund from the builder or getting possession of flats. Around 4,700 buyers wanted refund of their money. A total of Rs 1,865 crore is estimated to be required to refund the homebuyers who do not want possession of flats. Chandra and brother Ajay Chandra were arrested by the Economic Offence Wing (EOW) of the Delhi Police in April for allegedly not developing a project despite receiving funds from homebuyers. The Chandra brothers had moved the top court after the Delhi High Court refused to grant interim bail to them in August. Unitech shares fell 4.59 per cent to close at Rs 7.69 on the BSE.