In FAO 3560 of 2021 (O&M)-PUNJ HC- P&H HC upholds lower court order dismissing Unitech’s application seeking acceptance of security in lieu of its property attached by DM for not fulfilling its assurances given to public while garnering investment from them Justice Fateh Deep Singh[05-04-2022]

Read Order: Unitech Limited v. Sanjay Kumar Thakran

Monika Rahar

Chandigarh, April 18, 2022: Finding no perversity in the impugned order of the Additional Sessions Judge, Gurugram, the Punjab and Haryana High Court has dismissed the seven appeals filed by the appellant company- Unitech Limited against the lower court order rejecting its application seeking acceptance of security by the Court in lieu of the property attached by the orders of the District Magistrate, Gurugram for not returning the sum gathered by Company by inviting the general public to invest in its scheme.

The Company, Unitech Ltd., was carrying on multifarious commercial activities including building residential flats, commercial premises etc., as well as running profitable business ventures and had a conglomerate of companies under the umbrella of Unitech Limited. 

In 2013, the Company invited members of the public to invest in their fixed deposit scheme, which the public did but on being unable to fulfill obligations arising out of this assurance and undertaking, the company ran into rough weather. 

It was after the general public raised a hue and cry over the company’s surreptitious acts of defrauding the public who also approached the National Company Law Tribunal way back in December 2017 seeking removal of the existing management of this company and for appointment of nominee directors, the matters came before the Courts. The matter was also taken to the Supreme Court which is pending now. 

In the meanwhile, the District Magistrate, Gurugram, by exercising its powers under Section 4 of the Haryana Protection of Interest of Depositors in Financial Establishment Act 2013  attached the properties of the Company and further prohibited and restrained it from transferring/charging property detailed in the schedule annexed in the said order. On September 11, 201, the attachment was notified by the Haryana Government in its gazetted notification. 

Perturbed by this, the company moved before the Court below various applications under Section 12 of the Act primarily because Unitech Reality Private Limited is a separate legal entity though a subsidiary of the Unitech Limited and had never been a party to the proceedings before the Apex Court and therefore properties could not be attached. It was even claimed that the fallout of the orders of the District Magistrate jeopardized the rights of 114 home buyers and thereby hampering the procedure of delivering homes to the home buyers. 

The precise relief sought through the applications of the appellant company is that they are ready to furnish other sets of immovable properties belonging to the appellant company which are of more than the economic worth in question and that the same property be taken as security in the Court which would be sufficient for the satisfaction of the Court and therefore the attachment orders of the learned District Magistrate be set aside/modified. 

After appreciating the submissions of the parties, the Court opined that the Act was brought into force w.e.f. November 27, 2014, by the Legislature of the State of Haryana with the primary objective of protecting the interests of depositors in the financial establishment and for matters connected therewith or incidental thereto.  

After perusing the provisions of Section 4 of the Act, the Bench of Justice Fateh Deep Singh observed that sub-Section 4 of Section 4 clarifies that such an attachment of property would be dealt with in a manner provided for attachment in execution of a decree under the Code of Civil Procedure 1908. Further, reference was also made by the Court to Sections 12 and 14 of the Act. 

Also, on the aspect of the pendency of the matter before the Supreme Court, the Court noted that it was the own grouse of the appellant company that it moved the Top Court seeking modification of its order of 2020 whereby they sought to seek the indulgence of Supreme Court for approval of their updated and revised resolution framework (to the extent of payment to the FD holders including senior citizens fixed deposit holders be only paid from the Final Surplus in accordance with the Final Surplus Distribution Waterfall). 

The Court observed that this prayer was pending approval by the Apex Court, thus the Court did not find it appropriate to interfere in such proceedings or pass any orders which might conflict with the orders that were likely to be passed by the Top Court.  

More so, without the appellant company seeking leading additional evidence before the High Court, the Court opined that the updated Resolution Plan could not be considered to be part of the appeal, especially, when one of the reasons for dismissal of the applications of the appellant company was that no such resolution was placed/proved on the record (the one claimed to have been passed by the newly constituted Board of Directors resolving to offer the security of the shop in question in lieu of the attached property). 

Thus, dismissing the appeals , the Court concluded by saying that there was no apparent perversity in the orders of the lower Court and thus, the Court needed to be slow in showing indulgence to the present matters.