Supreme Court Halts Government Takeover Of Unitech’s Management
The Unitech case will be heard next on January 12.
The Supreme Court today stayed the National Company Law Tribunal’s order against Unitech Ltd. which allowed the Centre to take over the company’s management.
The real estate company had argued in court yesterday saying that the NCLT passed the order to suspend the board without hearing the company's defence, adding that it should not have passed the order in the first place since the apex court was aware of the case.
The apex court had observed on Dec. 12 that “leave should have been taken from the court as it was seized of the Unitech matter”. The case will be next heard on Jan. 12.
Shares of the troubled real estate developer fell sharply after the order, dropping as much as 16.3 percent to Rs 6.4. That’s the biggest intraday fall since April 3.
Unitech had on Monday approached the apex court challenging the NCLT order of Dec. 8., which suspended all the eight directors of the beleaguered realty firm over allegations of mismanagement and siphoning funds and had authorised the central government to appoint its 10 nominees on the board.
The order had come after the Centre moved the panel with a view to protect the interest of nearly 20,000 homebuyers.
Unitech had approached the NCLT saying that the order must be put in abeyance citing a Supreme Court order, which had said that no coercive action must be taken against the company. The NCLT did not accept the request and did not put the order in abeyance. It, however, added that the directions of the tribunal will be subject to the apex court directions. It also said the new board of directors will also abide by the top court's orders.
What Has Happened So Far
The Supreme Court on Oct. 30 asked Sanjay Chandra, head of the embattled real estate group, to deposit Rs 750 crore with it by December-end to secure bail.
The NCLT, in its order, said the government must give name of its nominees by Dec. 20 and restrained Unitech's eight suspended directors from selling their personal and company properties.
The tribunal's order had come after the government filed a petition arguing that Unitech was a fit case for winding up, but considering the interest of thousands of homebuyers and small depositors, it wanted to take over the company’s management.
Unitech has over Rs 6,000 crore debt and over 16,000 undelivered units from a total of nearly 70 projects. In its petition filed under section 241 of the Companies Act, 2013, the government had requested the tribunal to remove the eight directors.