New Delhi: The Supreme Court on Wednesday stayed an order of the National Company Law Tribunal (NCLT) that allowed the government to take control of troubled builder Unitech Ltd by suspending its board.

“NCLT should not have passed the order. We direct the stay of the order dated 8 December,” said Chief Justice Dipak Misra.

The court’s direction came on the centre’s admission that it should have taken the apex court’s leave before approaching the company law tribunal since the Supreme Court was already seized of the matter.

“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,” Unitech said in a statement. “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.”

On Tuesday, the court had expressed displeasure over the manner in which the government had approached the NCLT and the tribunal’s order allowing the government to take control of the company.

NCLT’s order of 8 December was opposed by Mukul Rohatgi, the counsel appearing for Unitech, who said a judicial tribunal could not have exercised its power in such a way where no hearing was given to the real estate company.

Unitech moved the apex court on 11 December against an order of the NCLT allowing the government to take control of the real estate company.

On 8 December, NCLT dismissed the board of Unitech while hearing the central government’s plea to take control of the real estate company, and directed the ministry of corporate affairs (MCA) to nominate 10 directors to the board.

The NCLT had observed that there was a prima facie case that the affairs of the company were not being carried out honestly and there were a number of irregularities in the company’s operations.

The ministry had filed a petition 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.

To be sure, insolvency proceedings have been initiated against promoters of many realty firms, including Amrapali Group, after angry customers dragged builders to court.

Last month, the government amended the Insolvency and Bankruptcy Code to include homebuyers as a class of creditors to real estate firms.

Unitech, once the country’s second-largest real estate firm after DLF Ltd, owes over Rs7,800 crore to 16,300 homebuyers in 61 projects, according to data collated by Mint.

The MCA petition, parts of which were seen by Mint, cites the fate of 19,000 homebuyers, 15,000 small depositors and 700,000 shareholders as constituting public interest.

It says the firm has also defaulted on debentures worth Rs 251.78 crore and owes small depositors Rs 596.76 crore.

NCLT also restrained Sanjay Chandra and Ajay Chandra, directors of Unitech, from engaging in transactions related to their personal wealth till an investigation into alleged diversion of money is concluded.

Sanjay and Ajay Chandra, part of the firm’s promoter family, are named in a case of forgery lodged by buyers in a Unitech project in Gurugram.

On 1 April, the Supreme Court had sent both accused to police custody after the prosecution said their custodial interrogation was required to unravel the alleged money trail, beneficiaries of transactions and recovery of project-related documents and other evidence.

On 30 October, the top court had directed Unitech to deposit Rs750 crore by December to secure bail for Sanjay Chandra.

Source: Livemint