SC refuses to interfere with NCLAT order allowing Supertech's promoters to complete projects

The Supreme Court on Thursday refused to interfere with the National Company Law Appellate Tribunal’s order that adopted project-wise resolution of real estate firm Supertech Ltd, which is undergoing insolvency proceedings, and continued construction of all other projects by the developer under the supervision of insolvency resolution professional (IRP).

A Bench led by Justice Dinesh Maheswari in an interim order without going into the proposition of “project-wise resolution” said: “We should adopt the course which appears to carry lower risk of injustice, even if ultimately in the appeals, this court may find otherwise or choose any other course. In that regard, the element of balance of convenience shall have its own significance.”

“If at the present stage, the CoC is ordered to be constituted for the corporate debtor as a whole in displacement of the directions of the appellate tribunal, it is likely to affect those ongoing projects and thereby cause immense hardship to the home buyers while throwing every project into a state of uncertainty,” the SC said

Without interfering with the NCLAT’s June order that constituted the CoC only for Eco Village-II project, Greater Noida, it, however, said “any process beyond voting on the resolution plan should not be undertaken without specific orders of the SC.” The other propositions, including constituting a monitoring committee, will be examined later, it said, while allowing the NCLAT to deal with the offers of resolution applicants and pass appropriate orders, subject to final outcome of appeals before SC.

It listed the case for final hearing in the second week of July.

The NCLT had in March 2022 admitted Supertech to insolvency for default of Rs 431 crore to a consortium of banks. Supertech had in 2013 availed of a credit facility of Rs 350 crore from the consortium of banks to part fund its Eco Village II project. Union Bank’s exposure to the credit facility was Rs 150 crore.

The SC order came on appeals by the Union Bank of India and Indiabulls Asset Reconstruction Company, being the financial creditors of Supertech Ltd, questioning the “project-wise” insolvency resolution process. Indiabulls also wanted to restrain the erstwhile management from having any involvement in CIRP and also maintain the status quo regarding the assets of the corporate debtor. Assets and Care Reconstruction Ltd, a beneficiary of corporate guarantee, had challenged the NCLAT’s January order that directed IRP to call a meeting of only those financial institutions who had lent money to Supertech before finalisation of the term sheet.

However, R.K. Arora, the suspended director of the company, wanted that the ex-management be be allowed to carry out the execution of the interim funding and settlement plan and no coercive action be taken against assets of the corporate debtor, its promoters, directors and management which otherwise would delay completion of projects.