Supreme Court halts government takeover of Unitech, stays NCLT order
Supreme Court bench stays NCLT’s December 8 order suspending Unitech’s board after Centre apologisesindia Updated: Dec 14, 2017 12:34 IST
The Supreme Court on Wednesday halted a government takeover of embattled real estate company Unitech after the Centre apologised to the apex court for moving the National Company Law Tribunal (NCLT).
A day after Chief Justice Dipak Misra questioned the government for approaching the NCLT despite the top court hearing petitions related to Unitech, Attorney General KK Venugopal said the government should not have approached the tribunal.
“Extremely sorry for what has happened. It should have not happened like this,” the AG told the bench, which then stayed the NCLT’s December 8 order suspending the company’s board. With this, the deadline for government to nominate directors also gets suspended.
“We appreciate the stand taken by the AG. The stay of NCLT order would meet the ends of justice,” the bench said. Unitech’s counsel, senior advocate Mukul Rohatgi, too praised Venugopal for the “fair stand” he took. “Its only because of him that this matter has got sorted,” the counsel said.
Unitech, through its directors Sanjay Chandra and Ajay Chandra had moved the top court against NCLT according permission to the Ministry of Corporate Affairs (MCA) to nominate directors, saying it went against the apex court’s direction to the company to refund buyers of flats in its housing projects. The Supreme Court had allowed Sanjay Chandra to negotiate with suitable buyers from jail and sell assets and generate funds.
“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),” SC had asked additional solicitor general Tushar Mehta, who appeared for the Ministry of Corporate Affairs (MCA), on Tuesday.
“We were never given any time to respond. The tribunal could have not exercised its power in such a way where no hearing was given to us,” Rohatgi had told the court.
Seeking suspension of the NCLT order, he said: “I am aggrieved by the manner in which the order was passed. If a copy was given to us, we would’ve responded.”
“Based on the order of the Honorable Supreme Court we will now work on getting the various accounts and receivables active again which were affected as consequence of the order dated December 8th, 2017. We strongly believe that the current management is better equipped to handle the completion of the 74 projects that are in various stages of construction,” Unitech said in a statement.
On December 8, the ministry had filed a petition in NCLT under section 241 of the Companies Act, 2013, which 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.
NCLT dismissed the board of Unitech while hearing the Centre’s plea and directed the MCA to nominate 10 directors to the board. It observed the affairs of the company were not being carried out honestly and there were a number of irregularities in the company’s operations. NCLT also restrained the Chandra brothers from engaging in transactions related to their personal wealth till an investigation into alleged siphoning and diversion of money is concluded.
Unitech shares fell 13.07% to Rs6.65 on Wednesday.
(With inputs from Mint)