2020 (1) TMI 1185 - SC - Insolvency and Bankruptcy

Removal of existing management of Unitech Limited and appointment of ten nominee directors - HELD THAT - List the matters on 10 February 2020 at 2 pm.

Issues Involved:
1. Proposal of the Union Government for the management of Unitech Limited.
2. Status report and suggestions by the amicus curiae.
3. Representations by the home buyers, asset reconstruction companies, and the management of Unitech Limited.
4. Moratorium and legal proceedings against Unitech Limited.
5. Lease cancellation by NOIDA and its implications.
6. Termination notice by Delhi Development Authority.
7. Refund process for fixed deposit holders.
8. Home buyers of the project 'Vistas' in Gurgaon.
9. Claims of ex-employees of Unitech Limited.
10. Sale of land in Bangalore and Chennai.
11. Sale of Unitech Power Transmission Limited.
12. Payment to JLL Properties Consultants India Private Limited.

Detailed Analysis:

1. Proposal of the Union Government:
The Union government proposed to appoint nominee directors to take over the management of Unitech Limited with several stipulations, including no infusion of funds by the government, a 12-month moratorium, appointment of a retired Supreme Court Judge for supervision, and cooperation from the current management and forensic auditors. The proposal also included the ability to raise funds from home buyers and sell unsold inventory.

2. Status Report and Suggestions by Amicus Curiae:
The amicus curiae suggested that the Ministry of Corporate Affairs should consult the Ministry of Finance to explore the possibility of releasing funds from the stressed assets fund. The resolution framework should be submitted within a time schedule, with Justice S N Dhingra included in the Committee. Forensic auditors expressed willingness to support the new management. Funds from home buyers should be raised only when due, and the Board should be allowed to monetize encumbered assets if feasible. The funds deposited in the Court should not be released until the resolution framework is finalized.

3. Representations by Home Buyers, Asset Reconstruction Companies, and Management:
The management of Unitech Limited, represented by senior counsel, argued for the inclusion of a nominee from the erstwhile management on the new Board. However, the Court rejected this request to ensure independence and professionalism in the new Board to manage the company and fulfill commitments to home buyers.

4. Moratorium and Legal Proceedings:
The Court directed a moratorium against the institution of proceedings against Unitech Limited and its subsidiaries, which also extended to existing proceedings and enforcement of orders. However, this moratorium did not impede ongoing or future investigations or prosecutions against the erstwhile management for criminal wrongdoing. The statutory entitlement of the EPFO to enforce claims for payment of EPF and related dues was not foreclosed.

5. Lease Cancellation by NOIDA:
NOIDA canceled the lease granted to Unitech in Sector 113, Noida, affecting 1625 home buyers. The Court found NOIDA's explanation unacceptable and directed the restoration of the lease to Unitech Limited. NOIDA was expected to seek the Court's permission before initiating coercive action against Unitech Limited.

6. Termination Notice by Delhi Development Authority:
The Delhi Development Authority issued a termination notice for an amusement park cum retail space in Rohini, New Delhi. The Court issued notice to the DDA and directed it to file a response.

7. Refund Process for Fixed Deposit Holders:
The Court directed the continuation of the process for disbursing claims of fixed deposit holders who are senior citizens, aged 60 years and above.

8. Home Buyers of the Project 'Vistas' in Gurgaon:
Home buyers of the 'Vistas' project were allowed to convert their options from refund to possession. Those seeking possession were required to deposit the payable amounts in the Court. Home buyers who had already received refunds but now sought possession were required to deposit the refunds with interest.

9. Claims of Ex-employees:
The Court authorized the amicus curiae to commence pro rata disbursements for outstanding salary, gratuity, pension, provident fund, and superannuation payments to ex-employees. An amount of ?15 crores was earmarked for this purpose.

10. Sale of Land in Bangalore and Chennai:
For the Bangalore land sale, M/s Devas Global LLP was granted an opportunity to deposit the balance amount with interest. For the Chennai land sale, Priadarshini Foundations Pvt Ltd was directed to deposit the balance overdue amount with interest in two tranches.

11. Sale of Unitech Power Transmission Limited:
The Court issued notice to M/s Sterling and Wilson Pvt Ltd for repeated extensions in making payments. The address for service was to be provided by the amicus curiae.

12. Payment to JLL Properties Consultants India Private Limited:
The Court approved the payment of ?58,42,500 to JLL Properties Consultants India Private Ltd for transaction advisory services. The Registry was directed to disburse the amount by demand draft.

Conclusion:
The Court accepted the Union government's proposal for the appointment of nominee directors and issued several directions to ensure the protection of home buyers' interests and the proper management of Unitech Limited. The Court also addressed various issues related to lease cancellations, refund processes, and the sale of assets. The next hearing was scheduled for 10 February 2020.

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