SC asks Unitech Group, Suraksha ARC to sit and resolve dispute over claims

The Supreme Court on Thursday asked the new board of management of Unitech Group to take a pragmatic approach and hold negotiations with Suraksha Asset Reconstruction Company (ARC) to resolve their dispute over outstanding claims.

A bench of Justices DY Chandrachud and M R Shah said that the management of Suraksha ARC has to revise its approach and will have to take a substantial haircut otherwise if it goes under Insolvency and Bankruptcy Code, they may get nothing.

We are not satisfied with the way the dispute over Suraksha ARC claims is not being resolved. Management of the ARC should be cautious that they have to take a substantial haircutwe also impress upon the Unitech Board to take a pragmatic approach to resolve the dispute, the bench said.

It asked both parties to hold discussions from Saturday onwards from 10 am to 5 pm and try to resolve the dispute.

Both parties will hold the discussions from Saturday onwards till the issue is resolved; the bench said and listed the matter for further hearing on October 27.

The top court was hearing a plea of the new board of Unitech seeking its permission for the appointment of Project Management Consultant (PMC) construction of the stalled projects.

At the outset, Additional Solicitor General N Venkataraman said that they needed permission for the appointment of PMCs to provide relief to the home buyers of Unitech but they had been unable to resolve their dispute with the Suraksha ARC.

He said that some issues remain to be resolved and they will hold more discussions in their regard.

Senior advocate Parag Tripathi, appearing for Suraksha ARC, said that they had one meeting for just one hour and five minutes in which nothing was resolved and no efforts were made by the Unitech management to resolve the dispute.

The bench said that both parties have to sit together and find a solution.

Advocate Ravindra Kumar, appearing for NOIDA authority, said that appointment of PMCs will enable the stalled project of Unitech to be completed but dehors the payment of outstanding to the authority.

We have purchased land from people and farmers and have given it to Unitech. We have to pay compensation to these farmers and people whose lands were taken. Unitech is obliged to pay the outstanding amount of over Rs 5300 crore, Kumar said.

The bench said that it would consider the issue of NOIDA at a later stage.

On August 25, the top court had allowed the new board of management of Unitech Group to hold negotiations with three ARCs, which are assigned around 8000 out of the 15,000 total flats for one-time settlement of the mutually agreed dues.

It had been said that a sub-committee of four directors constituted by the new board of management will hold negotiations with Suraksha ARC, JM Financial ARC, and Edelweiss ARC, about the outstanding dues and the settlement agreement.

The top court also permitted the sub-committee to hold negotiations with Noida and Greater Noida authorities, which has raised objections to the resolution plan presented by the new board, about the dues and the amount payable by the Unitech Group.

The new board of Unitech has earlier told the court currently there are 74 (residential) and 10 (Commercial) under-construction projects wherein possession of about 15,000 units has to be delivered to homebuyers.

It has been said that the construction and completion of the unsold stock of about 4000 units have to be taken up simultaneously and out of the total, 35 projects (comprising 5,918 sold units of which possession has to be given and another 2090 unsold units) have been assigned to the ARCs.

For complete development of all the projects and delivery to homebuyers, it is imperative that the new Management is given permission for engagement of the PMCs, and for the award of contracts, for all projects, including those assigned to the ARCs it had said.

In its resolution plan, the new board of management has said that construction of 15,000 units has to be done for delivery of possession to homebuyers in three to four years and at current price levels, the estimated cost of construction is Rs. 5,500-6,000 crores.

It had said that if construction is not done, then the refund claims of these homebuyers will be approximately Rs 11,100 crores.

On January 20 last year, in a respite to over 15,000 hassled home buyers of Unitech, the top court had allowed the Centre to take total management control of the realty firm and appoint a new board of nominee directors.

The apex court had approved the name of retired Haryana cadre IAS officer Yudvir Singh Malik as chairman and managing director (CMD) of the new board and directed that the existing board of directors of the company would stand superseded.

In 2018, the top court had directed a forensic audit of Unitech Ltd and its sister concerns and subsidiaries by Samir Paranjpe, Partner, Forensic and Investigation Services in Grant Thornton India.

The forensic auditors had submitted their report which said that Unitech Ltd received around Rs 14,270 crore from 29,800 home buyers from 2006-2014 and around Rs 1,805 crore from six financial institutions for the construction of 74 projects.