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Informist, Friday, Feb. 21, 2025

 

NEW DELHI – The Supreme Court Friday stayed a National Company Law Appellate Tribunal order asking NBCC (India) Ltd. to take over 16 projects of Supertech Ltd. and act as project management consultant for their completion. In December, the appellate tribunal had said NBCC shall go the extra mile to ensure the projects are completed.

 

A bench headed by Chief Justice of India Sanjiv Khanna issued notices to Ram Kishor Arora, the suspended director of Supertech, the debt-ridden company's resolution professional Hitesh Goel, NBCC, and other parties on appeals by Apex Heights Pvt. Ltd., Assets Care and Reconstruction Enterprise Ltd., Yamuna Expressway Industrial Development Authority, and others.

 

The court said the primary issue is whether the appellate tribunal was right in awarding the work to NBCC without following due procedure under the Insolvency and Bankruptcy Code, 2016. It asked the parties to file notes to suggest alternatives to the appellate tribunal's order to deal with the issue of construction of the buildings and flats.

 

The case has its genesis from the Delhi bench of the National Company Law Tribunal admitting a petition by Union Bank of India to start insolvency proceedings against Supertech. Last year, the tribunal had directed project-wise resolution of Supertech's projects. Thereafter, in an appeal before the appellate tribunal, NBCC had shown an interest in the real-estate company's projects. Favouring NBCC, the appellate tribunal had directed the setting up of an apex committee and project-wise committees.

 

NBCC had said the project management consultant fee was fixed at 8% of the tentative construction cost of INR 94.45 billion, which works out to INR 7.56 billion. NBCC was to complete the projects within three years, it had said in an exchange filing. The 8% fee includes a 1% marketing fee, NBCC had said. The 16 projects would cover 49,748 houses in Uttar Pradesh, Uttarakhand, Haryana, and Karnataka, the company had said. 

 

In its appeal, Assets Care and Reconstruction Enterprise said the appellate tribunal had contravened the 2016 Code by directing the formation of the apex committee vested with "overarching powers". The committee was made the authority to transfer surplus funds between projects, to compel the release of existing charge of financial creditors over mortgaged property and issuance of no-objection certificates, and to use surplus funds to repay corporate-level dues, said Assets Care and Reconstruction Enterprise.

 

Assets Care said the apex committee's composition, comprising two nominees from the largest financial institutions, a nominee of NBCC, a real estate expert, and the resolution professional as chairman, disproportionately empowered larger stakeholders and marginalised secured creditors in the project-wise committees. Further, the structure of the apex committee not only jeopardised the functionality of the project-wise committees, but also undermined its rights as a secured financial creditor with admitted claims of INR 1.51 billion.

 

The Yamuna Expressway Industrial Development Authority said it had leased the land to Supertech for "Project Upcountry". Supertech had breached the terms of the lease deed by failing to make timely payment, resulting in an outstanding amount of about INR 3.96 billion, the authority said. A further amount became due on account of annual lease rent after initiation of insolvency, it said.

 

The authority cancelled the lease deed after Supertech failed to pay the dues. The cancellation order was confined to the areas allotted for commercial and institutional purposes and the area allotted for homebuyers was left intact, the authority said. The appellate tribunal had allowed NBCC to undertake construction of various incomplete projects of Supertech in spite of the authority's objection that the proposal made no provision for payment of its dues, it added.

 

On Friday, shares of NBCC (India) Ltd. ended 2.0% lower at INR 81.08 on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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