Supreme court halts government takeover of management of realty firm Unitech

The Supreme Court halted a government takeover of the management of top realty firm Unitech Ltd on Wednesday, saying the court is already seized of the matter.

The National Company Law Tribunal (NCLT) last week allowed the government to name new directors on the board of the debt-ridden firm, a rare intervention that the government said was to protect the public interest.

A bench comprising Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud considered the statement of Attorney General K K Venugopal that the government should not have moved the National Company Law Tribunal (NCLT) when the apex court was seized of the matter.

“When the matter is already pending in the Supreme Court the Centre should not move the NCLT. The order of the NCLT is stayed ,” said Supreme Court Chief Justice Dipak Misra.

The Supreme Court had, on Tuesday, expressed displeasure over the manner in which the NCLT entertained government’s plea to let it take control of embattled real estate company Unitech and even questioned the Centre for not taking its approval before making such a move.

“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),” a bench led by Chief Justice Dipak Misra asked additional solicitor general Tushar Mehta, who appeared for the Ministry of Corporate Affairs (MCA), on Tuesday.

Unitech is before the SC against NCLT’s December 8 order, giving control of the company to the government. The company’s counsel, senior advocate Mukul Rohatgi said the tribunal’s order was in the teeth of the top court’s direction to the company to pay back the flat buyers. It said the SC 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.

Unitech alleged that the takeover of the management of the company by the Centre would make it difficult for them to deposit Rs 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 — in this case, homebuyers, shareholders and depositors.

Unitech, once the country’s second largest real estate firm after DLF Ltd, owes a total of over Rs7,800 crore to 16,300 home buyers in 61 projects, according to data collated by Mint. The MCA petition cites the fate of 19,000 home buyers, 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.

(With inputs from PTI, Reuters)