Supreme Court stays NCLT order of Unitech takeover

The Asian Age.  | J Venkatesan

Business, In Other News

The NCLT had allowed the government to name new directors on the board of the debt-ridden firm to protect the interest of homebuyers.

Supreme Court of India (Photo: PTI)

New Delhi: The Supreme Court on Wednesday stayed an order of the National Company Law Tribunal (NCLT) directing government takeover of the management of Unitech Ltd, which owes thousands of crores of rupees to homebuyers.

A three-judge Bench of Chief Justice Dipak Misra and Justices A.M. kanwilkar and D.Y. Chandrachud stayed the December 8 order of the NCLT on a petition filed by Unitech challenging the same. The NCLT had allowed the government to name new directors on the board of the debt-ridden firm to protect the interest of homebuyers.

The Bench granted the stay after Attorney-General K.K. Venugopal submitted that the government should not have moved the NCLT when this court was seized of the matter. In a brief order the Bench said “When the matter is already pending in the Supreme Court the Centre should not have moved the NCLT. The order of the NCLT is stayed.”

Unitech alleged that the takeover of the management of the company by the Centre would make it difficult for them to deposit `750 crore as directed by the apex court to safeguard the interests of homebuyers.

The ministry of corporate affairs (MCA) has filed a petition under section 241 of the Companies Act, 2013 that allows the government to apply to the tribunal if it feels that a company is operating in a manner prejudicial to public interest, viz. homebuyers, shareholders and depositors.

Unitech owes a total of over Rs 7,800 crore to 16,300 homebuyers in 61 projects, according to data collated by Mint. The MCA petition cited the fate of 19,000 homebuyers, 15000 small depositors and 7 lakh shareholders as being of public interest. It said the firm has also defaulted on debentures worth Rs 251.78 crore and owes small depositors Rs 596.76 crore.

On Tuesday, the apex court had expressed displeasure over the manner in which the NCLT entertained government’s plea to let it take control of the company.

 The CJI pointed out that the Centre had not taken its approval before filing the petition. The CJI had observed, “It’s disturbing. We are hearing the matter and the NCLT passes an order. Shouldn’t you (Centre) have come to us and taken leave of this court before filing an application there (NCLT).”

Senior counsel Mukul Rohatgi appearing for Unitech submitted that this court had allowed Unitech promoter Sanjay Chandra to negotiate from jail to sell assets and generate funds.

Yet, the Centre moved the NCLT, in breach of the SC order, he said. On October 30 the court said Unitech chief Sanjay Chandra would be granted bail only after the company deposited money with its registry by December end.

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