HIGHLIGHTS
*This is the first time that the SC has ordered auction of personal assets of directors of a distressed firm
*Last year, the court had asked Unitech to deposit Rs 750 crore by December 31, 2017, but the realtor failed to do so
*Company's managing director Sanjay Chandra and his brother are in jail for nearly a year
NEW DELHI: In a strong signal to defaulting real estate firms, the Supreme Court on Tuesday ordered a court-mandated committee to initiate auction of personal assets of directors of distressed real estate giant Unitech, whose managing director Sanjay Chandra and his brother are in jail for nearly a year.
Last year, the court had asked Unitech to deposit Rs 750 crore by December 31, 2017, but the realtor failed to do so. On learning that the auction of Agra properties of the defaulting real estate firm had also run into problems, a bench of Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud ordered the SC-appointed committee to auction unencumbered personal assets of Unitech directors.
This is the first time that the SC has ordered auction of personal assets of directors of a distressed firm. However, Unitech sources said this will be very hard on the directors as most of them are paid employees. "If their personal assets are sold, then that will cause a great loss and hardship to them and their families," they said.
The firm's counsel told the court that most of the properties of the directors were encumbered. However, the court said the auction process would start with these properties.
The court also permitted auction of two plots of Unitech in Kolkata which would fetch Rs 116 crore. When the lease holder of one of the plots showed interest in participating in the auction and said it was willing to purchase both plots, the SC asked for a deposit Rs 50 lakh in the court registry to establish bona fide.
The court had earlier allowed auction of Unitech properties in Agra, Varanasi and Sriperumbudur, which was expected to fetch in excess of Rs 600 crore. But amicus curiae Pawanshree Agrawal said the Agra auction had hit a hurdle and the SC-appointed committee will notify auction of the Varanasi properties soon.