Supreme Court allows new board of Unitech to appoint PMCs for completion of stalled projects

By: |
October 28, 2021 8:02 PM

A bench of Justices DY Chandrachud and M R Shah said that the new board of management can proceed ahead with the appointment of PMCs for completion of the stalled projects.

Supreme Court allows new board of Unitech to appoint PMCs for completion of stalled projectsOn October 21, the top court had asked the new board of management of Unitech Group to take a pragmatic approach and hold negotiations with Suraksha Asset Reconstruction Company (ARC) to resolve their dispute over outstanding claims.

In a boost for completion of the stalled project of Unitech Group, the Supreme Court on Thursday gave its nod to the new management of the real estate company to appoint Project Management Consultants (PMC).

A bench of Justices DY Chandrachud and M R Shah said that the new board of management can proceed ahead with the appointment of PMCs for completion of the stalled projects.

The bench said that work can be awarded to the PMCs in part A projects and also fixed a fee for their work.

The top court also took note of the Action Taken Report (ATR) filed by the new board of management about the settlement of claims with Suraksha ARC saying no resolution has been found yet.

The bench said that it is giving one last opportunity to the counsel of Suraksha ARC to seek instruction and find a way for resolution of the claims with the Unitech.

The bench told its senior advocate Parag Tripathi that looking at the transaction of Suraksha between the erstwhile management of Unitech it appears that there is a need for a probe into money laundering by the Enforcement Directorate.

The top court noted in its order that the ATR of new management has made some averment concerning the agreement of Suraksha with ICICI bank and erstwhile management of Unitech.

The bench posted the matter for further hearing after the Diwali break.

On October 21, the top court had asked the new board of management of Unitech Group to take a pragmatic approach and hold negotiations with Suraksha Asset Reconstruction Company (ARC) to resolve their dispute over outstanding claims.

It had said that the management of Suraksha ARC has to revise its approach and will have to take a substantial haircut otherwise if it goes under the Insolvency and Bankruptcy Code, they may get nothing.

The top court was hearing a plea of the new board of Unitech seeking its permission for the appointment of Project Management Consultant (PMC) construction of the stalled projects. The Unitech Group had said that they needed permission for the appointment of PMCs to provide relief to the home buyers by delivering them flat as per the new schedule.

On August 25, the top court had allowed the new board of management of Unitech Group to hold negotiations with three ARCs, which are assigned around 8000 out of the 15,000 total flats for one-time settlement of the mutually agreed dues.

It had been said that a sub-committee of four directors constituted by the new board of management will hold negotiations with Suraksha ARC, JM Financial ARC, and Edelweiss ARC, about the outstanding dues and the settlement agreement.

The top court had also permitted the sub-committee to hold negotiations with Noida and Greater Noida authorities, which has raised objections to the resolution plan presented by the new board, about the dues and the amount payable by the Unitech Group.

The new board of Unitech has earlier told the court currently there are 74 (residential) and 10 (Commercial) under-construction projects wherein possession of about 15,000 units has to be delivered to homebuyers.

It has been said that the construction and completion of the unsold stock of about 4000 units have to be taken up simultaneously and out of the total, 35 projects (comprising 5,918 sold units of which possession has to be given and another 2090 unsold units) have been assigned to the ARCs.

“For complete development of all the projects and delivery to homebuyers, it is imperative that the new Management is given permission for engagement of the PMCs, and for the award of contracts, for all projects, including those assigned to the ARCs” it had said.

In its resolution plan, the new board of management has said that construction of 15,000 units has to be done for delivery of possession to homebuyers in three to four years and at current price levels, the estimated cost of construction is Rs. 5,500-6,000 crores.

It had said that if construction is not done, then the refund claims of these homebuyers will be approximately Rs 11,100 crores.

On January 20 last year, in a respite to over 15,000 hassled home buyers of Unitech, the top court had allowed the Centre to take total management control of the realty firm and appoint a new board of nominee directors.

The apex court had approved the name of retired Haryana cadre IAS officer Yudvir Singh Malik as chairman and managing director (CMD) of the new board and directed that the existing board of directors of the company would stand superseded.

In 2018, the top court had directed a forensic audit of Unitech Ltd and its sister concerns and subsidiaries by Samir Paranjpe, Partner, Forensic and Investigation Services in Grant Thornton India.

The forensic auditors had submitted their report which said that Unitech Ltd received around Rs 14,270 crore from 29,800 home buyers from 2006-2014 and around Rs 1,805 crore from six financial institutions for the construction of 74 projects.

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