SC issues notice to govt on Maytas mgmt dispute

The Supreme Court today sought the Centre's stand on pleas by two investment firms SRS Orion and Nimesh Kampani's JM Financial against the handover of the management of scam-hit Maytas Properties to Infrastructure Leasing and Financial Services (IL&FS).

A three-judge Bench headed by Chief Justice SH Kapadia issued notice to the government seeking reply to the pleas challenging its decision to take over the firm's management from Satyam founder B Ramalinga Raju's family and handing over the same to IL&FS.

Rejecting IL&FS' submissions that SRS Orion and other investment firms cannot be a party before the Company Law Board (CLB), the apex court said they have the right to object to the changeover of the Maytas' management.

"If you are passing the management of Maytas to IL&FS, they have the right to object. They have invested Rs 650 crore and that investment makes them a shareholder," the Bench said.

Mauritius-based investment firm SRS Orion and Nimesh Kampani's JM Financial have approached the Supreme Court against a High Court order that stayed CLB's decision to make the two investment firms party to the case.

The two investment firms, which invested around Rs 650 crore in Maytas, are contending that the order to hand over IL&FS' management was passed without even hearing them.

CLB, thereafter, allowed the two investment firms to become party to the suit. Maytas challenged this decision and moved to the Hyderabad High Court, which stayed the CLB order.

On the previous hearing of the case, the apex court had issued notice to Maytas Properties and sought its reply. The Bench had also stayed the proceedings at the CLB and asked the parties to maintain status quo.

The investment firms, in a petition to the CLB, had sought conversion of its Compulsory Convertible Debentures (CCD) held in MPL into shares and appointment of their directors on the board of the real estate company.

The investment firms had submitted to the CLB that it had invested Rs 650 crore in the troubled real estate firm. They had also questioned MPL's revival plan, in which 80% shares were transferred to IL&FS for Rs 20 lakh only.

Under the revival plan, the government-controlled board of MPL transferred the shares to IL&FS.

SRS Orion said it had invested Rs 520 crore in Maytas Properties and claimed that the market value of the investment has gone up to about Rs 1,000 crore — a sharp contrast to the IL&FS’ paying just Rs 20 lakh for the stake.

On January 13, CLB had allowed infrastructure finance company IL&FS to take over Maytas which was promoted by the family members of Raju.