Unitech bankruptcy move leaves Kerala investors in the dark

KOCHI: The National Company Law Tribunal’s (NCLT) move to allow the Union Government to take control of Delhi-based real estate company Unitech, and the Supreme Court decision on Wednesday to stay the bankruptcy court’s step are under close watch, far away in Kerala. Investors who put money in the embattled company’s project in Maradu are groping in the dark on what this means for them.

Experts said how the Unitech episode plays out will determine the fate of investors in other projects of north Indian companies in Kerala. For instance, Sahara Group’s Kakkanad apartment project has failed to deliver and several home buyers have been left in the lurch after capital market regulator Sebi found the company guilty of running fraudulent chit fund schemes and after its founder Subrata Roy was put behind bars.

“I don’t know what’s the implication of NCLT move and the ongoing case at the Supreme Court,” said Jaison Anithanam of Kaduthuruthy, an investor who booked 752 sq ft built-up space paying 60 per cent upfront (`54 lakh) at Unitech’s Maradu project. Anithanam said he has closed the case at Ernakulam District Court against Unitech and moved the National Consumer Rights Forum, Delhi, as it gave him a better chance to recover his money. 

Unitech launched a `750-crore shopping mall-cum-hotel project ‘Great India Place’ at an 8-acre plot in Maradu in 2010. The company is yet to start work on the site, putting several investors in deep distress. The project was to be implemented through Unitech’s subsidiary Colossal Projects.The project was sold at a rate of `16,000 per sq ft. As per the plan, the business complex was proposed to be equipped with food courts, restaurants, ATMs, coffee shops, banks, retail outlets etc. It comprised over 4.48 lakh sq ft gross saleable area. It has been more than seven years and still, there’s no response from the company. There are several other investors in Kerala for the Unitech’s Kochi project. 

Investors in Sahara Group’s Kakkanad project are also stuck since 2005. The troubled Sahara Group announced ‘Sahara Grace’, a premium luxury project at Kakkanad, in 2004-05, promising the investors the homes will be handed over from 2007. The Lucknow-based Sahara’s Kochi plans involved four types of towers, ranging from nine to 24-floors comprising residential blocks on about 15-acres of land at Kakkanad. 

A proposed hotel and shopping mall form part of the future expansion plans at Sahara Grace Kochi, the company had announced during the launch. Sahara’s problems began in 2010 when Sebi barred it from raising funds for a bond-scheme it deemed illegal. Not even 25 per cent of the Kakkanad project is complete even after over a decade. 

Former Credai-Kerala chairman Raghuchandran Nair said in bankruptcy cases, investors who booked apartments or commercial space in real estate projects will get their money back only after the court settles PF, ESI, and income tax dues.  “Nobody knows how bankruptcy cases are going to unfurl in India. It’s a new phenomenon. But my sense is the investors will be settled only if there are any funds left after settling other dues including PF and ESI,” Nair said. Going by reports, in Unitech’s case alone, there are 19,000 home buyers, 15,000 small depositors and 7 lakh shareholders across the country.

Unitech says
Responding to an email query from ‘Express’, Puneet Bansal, spokesman for Unitech said the Supreme Court’s order on Wednesday will help the company on its path to complete the projects and to increase the pace of delivery and refunds to customers. “We strongly believe the current management is better equipped to handle the completion of the 74 projects that are in various stages of construction,” Bansal said.

A lawyer said the insolvency code provides the measure to take over and appoint persons like administrators to clear off the debts