India's top court halts govt takeover of Unitech management (updated)

Unitech

13/12/2017 10:48

(Adds details, background) 
    NEW DELHI, Dec 13 (Reuters) - India's Supreme Court halted 
on Wednesday a government takeover of the management of realty 
firm Unitech Ltd  UNTE.NS , while it was dealing with dozens of 
petitions over the company's failure to deliver apartments and 
honour its deposits.  
     The National Company Law Tribunal (NCLT), which deals with 
insolvency and company disputes, last week allowed the 
government to name new directors on the board of the debt-ridden 
firm, a rare intervention that the government said was meant to 
protect the public interest.  urn:newsml:reuters.com:*:nL3N1O83SZ 
    Unitech's shares that had shot up last week on hopes that a 
new management would help resolve the firm's problems fell as 
much as 17 percent on Wednesday on the Supreme Court decision.  
    "When the matter is already pending in the Supreme Court the 
center (the federal government) should not move the NCLT. The 
order of the NCLT is stayed," said Supreme Court Chief Justice 
Dipak Misra. 
    A lawyer for Unitech declined to comment after the court 
verdict. 
    Unitech's two managing directors, Sanjay Chandra and Ajay 
Chandra, who are also the firm's owners, were arrested earlier 
this year for failing to deliver the apartments and the Supreme 
Court demanded they deposit funds to secure bail. 
    The court has also banned Unitech's existing directors from 
selling assets or raising loans on their personal and company 
assets. 
    The government, citing mismanagement and siphoning of funds 
by Unitech, had sought permission from NCLT to replace the 
existing 10 directors because it wanted to prevent the company 
from becoming insolvent and protect 19,000 home buyers who have 
yet to be handed apartments they had bought. 
    Unitech also owes about 7.24 billion rupees ($112.37 
million) to 51,000 depositors who had placed funds with the 
company to earn higher interest rates than typically available 
in banks, government lawyers said. 
    India's companies law allows the federal government to make 
a case before the companies tribunal to take over a company if 
the firm is found to be acting against the public interest. 
    Shares of Unitech ended lower by about 14 percent in a weak 
Mumbai market that closed 0.5 percent lower. 
($1 = 64.4325 Indian rupees) 
 
 (Reporting by Suchitra Mohanty; Writing by Nidhi Verma; Editing 
by Sanjeev Miglani and Muralikumar Anantharaman) 
 ((nidhi.verma@thomsonreuters.com; +91 11 49548031; Reuters 
Messaging: nidhi.verma.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA UNITECH/