Cornered by Friday’s National Company Law Tribunal (NCLT) order suspending all its nine directors and letting the government take over its management control with its 10 nominees, embattled real estate firm Unitech on Monday made a bid to escape the process by pleading to the Supreme Court in vehement terms that the tribunal went contrary to the SC’s earlier directions in a criminal case. A bench led by Chief Justice Dipak Misra posted the matter for hearing on Tuesday, but not before Misra observed, “We are more concerned with home buyers (rather than) with the company and fixed deposit holders/investors. Home buyers are not investors.”
The Unitech stock, which rose 19.9% on Friday following the NCLT order, climbed another 10.6% on the BSE on Monday. Unitech in its appeal said, “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.”
While observing that the ministry of corporate affairs has made out a prima facie case of mismanagement against the real estate firm under Section 241(2) of the Companies Act, a two-member NCLT bench led by justice MM Kumar had suspended its nine directors and asked the government to suggest names of its nominees to be appointed on the board by December 20, the next date of hearing.
Section 241 (2) allows the government to apply to the tribunal if it feels that a company is operating in a manner “prejudicial to public interest”.
On behalf of the government, additional solicitor general Sanjay Jain had told the NCLT that Unitech owed `723 crore to 51,000 fixed deposit holders that it was in no position to repay. It added that the company and its subsidiaries have even failed to deliver 19,000 flats to home buyers and their future was in limbo as construction activities had come to a standstill. “We want to avoid insolvency of this company, otherwise the 19,000 home buyers will be left high and dry,” Jain had said.
Unitech’s senior counsel Ranjit Kumar on Monday told the apex court that “all the efforts made by the petitioners in the last few months (to remedy the situation) has now come to a standstill because of the tribunal order… The construction activities which had picked up pace will come to a standstill. Expected deliveries of around 500 flats by December-end are now in jeopardy.”
The SC had asked Unitech to deposit Rs 750 crore to secure bail of two promoters, Sanjay Chandra and Ajay Chandra, who are behind bars. Besides, the company also cited the apex court’s order that asked different fora not to take any “coercive steps” for executing their orders.
Unitech submitted that within a time span of one month, it was able to secure working capital from two major finance companies and was in advanced negotiations for sale of unencumbered assets. “We are wanting to deposit…,” Kumar said.
