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SC stalls Centre’s takeover of Unitech

The Supreme Court on Wednesday stayed an NCLT order suspending real estate major Unitech’s directors and allowing the Centre to appoint its nominees in their place.

A bench of Chief Justice Dipak Misra, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud stayed the December 8 order of the National Company Law Tribunal by which it had suspended nine directors of the Unitech and allowed the government to appoint its nominee directors.

At the outset of the hearing, Attorney General K.K. Venugopal regretted the government’s moving the tribunal without first approaching the top court.

In view of Venugopal’s statement, the Chief Justice in a brief order said: “We direct the stay of the December 8 order of NCLT…”

The apex court was told by Unitech on Tuesday that the NCLT could not have passed the December 8 order in view of the Supreme Court’s October 30 order that said “no coercive steps would be taken against Unitech”.

The top court by its October 30 order had directed Unitech’s promoter Sanjay Chandra to deposit Rs 750 crore by December end – a condition for his release from jail.

By the same order, the top court had also refused to interfere with other proceedings going on before other judicial forums with a rider that no coercive action would be taken against him for the execution of orders passed by them.

The principal bench of the NCLT by its December 8 order had suspended eight directors of the Unitech and restrained them from functioning.

It had further restrained them from “alienating, mortgaging, creating charge, or lien, or interest in the properties owned by them personally or that of the company till the conclusion of investigation as ordered by it on October 6, 2016.

The government had moved the NCLT under Section 241(2) of the Companies Act, 2013 for taking over the management of the Unitech in public interest.

Section 241(2) of the Companies Act says: “(2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter.”

This is the second occasion when the government has taken recourse to the Section 241(2) for taking over the management of an embattled company.

Chandra and his brother Ajay were arrested in April after investors, who did not get flats in the company projects as promised, filed complaints of cheating against them.

They were sent in judicial custody after the trial court refused to extend the three-month interim bail granted to them in April.

The Delhi High Court too, refused to extend the interim bail that ended on August 10.