SC panel takes over subsidiary of Supertech

The Supreme Court has brought Supertech’s wholly owned subsidiary, Supertech Retails (S Retails), under the control of a court-appointed committee overseeing the completion of the stalled Supernova project, removing its existing directors and restraining the company from selling or transferring its assets

The Supreme Court has brought Supertech’s wholly owned subsidiary, Supertech Retails (S Retails), under the control of a court-appointed committee overseeing the completion of the stalled Supernova project, removing its existing directors and restraining the company from selling or transferring its assets.

The court also directed that “status quo” be maintained over S Retails’ assets and that no asset be sold, transferred or otherwise encumbered without the prior written approval of the empowered committee.

A bench headed by Chief Justice of India (CJI) Surya Kant, along with justices Joymalya Bagchi and V Mohana, passed the order on August 11, a copy of which was made available on Tuesday. The order is significant for homebuyers and commercial unit owners in Supernova, as the court has effectively expanded the oversight of the empowered committee beyond Supertech Realtors Pvt Ltd (SRPL), the subsidiary that is undergoing insolvency proceedings.

The court approved a June 30 resolution of the empowered committee, headed by former justice MM Kumar, removing S Retails directors Bijender Singh and Mohammad Tariq. Justice Kumar, Rajeev Mehrotra and Anant Kumar were appointed as directors in their place.

The court also directed that “status quo” be maintained over S Retails’ assets and that no asset be sold, transferred or otherwise encumbered without the prior written approval of the empowered committee. The committee was given powers to manage the company’s projects, finances and other operations.

“We are of the view that S Retails, being a wholly owned subsidiary of SRPL, with its principal asset comprising the Astralis Tower constructed entirely out of funds infused by SRPL, cannot be permitted to function as a vehicle insulated from the oversight of the empowered committee, particularly when the conduct of its erstwhile directors raises serious questions of diversion of SRPL’s assets to the detriment of its creditors and home buyers,” the court said.

Supernova was developed by SRPL, which was admitted to insolvency proceedings over unpaid loans. Supertech Group had argued that the committee’s jurisdiction should be limited to SRPL and that S Retails was a separate running concern not facing insolvency proceedings.

“Status quo shall be maintained with respect to the assets of S Retails, and no alienation of its assets shall take place without the prior written approval of the empowered committee,” said the bench.

The empowered committee, however, flagged concerns about the movement of assets through S Retails following a forensic audit of Supertech Ltd and SRPL. It told the Supreme Court that S Retails was nearly wholly owned by SRPL and sought permission to replace its management and conduct a forensic audit.

In the August 11 order, the apex court described S Retails as an “alter ego” of SRPL and restrained it from selling, transferring, alienating or creating third-party rights over its inventory. The restriction also covers assets sold or transferred after June 12, 2024, when the corporate insolvency resolution process began.

The court has also restrained CFM Asset Reconstruction Company (CFMARC) from taking possession of, auctioning, selling or otherwise creating third-party rights over SRPL assets. CFMARC had initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002, claiming rights over an interest originally assigned to the Indiabulls Group covering 1,239 Supernova flats and an equal number of parking spaces.

The empowered committee argued that allowing such proceedings could prejudice efforts to appoint a new developer and adversely affect homebuyers, lenders and the Noida Authority. SRPL is currently protected by a moratorium under the Insolvency and Bankruptcy Code, as directed by the Supreme Court in January.

The court also ordered status quo on SRPL assets transferred by its erstwhile management during 2023 and 2024.

The committee’s move to take over S Retails had faced resistance from Supertech. Suspended Supertech director RK Arora had argued that the company was neither the corporate debtor nor the parent company and therefore fell outside the empowered committee’s mandate.

Following the order, however, Arora said the group welcomed decisions that would help complete stalled projects. “We always (work) towards the resolution for completion of stalled projects and welcome all such orders which (are) in favour of homebuyers to complete their balance construction and deliveries in a fixed timeline,” he said.

The court has also raised questions over a sub-lease granted by SRPL to S Retails for construction of Astralis Tower. The amicus pointed out that an 8,000-square-metre parcel within SRPL’s leased land was sub-leased to S Retails under a 2018 tripartite agreement involving Noida Authority.

The court has directed Noida Authority to file an affidavit explaining the grant of additional floor area ratio to S Retails under the sub-lease and the basis for approving it without a separate plot number or compliance with applicable building norms.

The matter will next be heard on October 1.