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The Supreme Court on Friday requested the insights of former Intelligence Bureau director and former National Human Rights Commission member Rajiv Jain regarding the insolvency proceedings of Supertech Realtors. This request follows a recent CBI report that accuses suspended director Ram Kishore Arora of misappropriating homebuyers’ funds in 21 projects.
A Bench led by Justice Suryakant decided against staying the NCLAT’s August 13 ruling upholding the insolvency proceedings against Supertech Realtors. The Bench noted that every project associated with Arora is under investigation due to allegations of siphoning off significant amounts of money from homebuyers.
“Are you aware of the (CBI) report on the diversion of funds?” the Supreme Court inquired of Arora’s senior counsel Kapil Sibal and lawyer Siddharth Bhatli, who contended that the company had reached a resolution with the banks and was progressing with the implementation of a Rs 477 crore settlement.
However, the Bank of Maharashtra’s counsel refuted this, stating, “We are not interested in any settlement.”
Following a brief hearing, Justice Suryakant remarked: “Considering the complexity of the issues presented, we invite Rajiv Jain, former Director of the Intelligence Bureau and former Member of the National Human Rights Commission, to assist us and provide his valuable opinion and report.”
The Supreme Court also instructed Arora to provide a digital copy of the complete documentation to Jain and scheduled the matter for further hearing next Friday.
In his appeal, Arora argued that the Corporate Insolvency Resolution Process was improperly initiated against Supertech Realtors, despite his entering into a One Time Settlement (OTS) with the Bank of Maharashtra and making an upfront payment of Rs 20 crore.
“… the OTS was developed after progressively higher settlement proposals were presented by credible investors to the consortium of lenders. This entire sequence of events indicates that the Bank of Maharashtra acted not with the intention of resolution as required under the IBC, but with a singular focus on recovery, thereby undermining legitimate settlement efforts and jeopardizing a significant real estate project that affects thousands of homebuyers, land authorities, and both secured and unsecured creditors,” stated the appeal filed through counsel Dhananjay Garg.
Asking for the insolvency process to be annulled, Arora maintained that he has consistently demonstrated his good faith, financial viability, and commitment to resolution, while the lenders’ actions have been arbitrary and unilateral, violating public law obligations. He argued that the settlement backed by investor financing should be monitored by the Supreme Court to ensure project completion, safeguard homebuyer interests, and guarantee a timely recovery for secured creditors.
The NCLAT upheld a National Company Law Tribunal’s ruling on August 13 allowing a petition from the Bank of Maharashtra to initiate insolvency proceedings against Supertech Realtors for a Rs 168 crore debt, dismissing Arora’s challenge to the tribunal’s decision.
Supertech Realtors is a fully owned subsidiary of Supertech Ltd, which entered insolvency on a petition from Union Bank of India in 2021.
In December 2012, the Bank of Maharashtra provided a term loan of Rs 150 crore as part of a consortium arrangement with other lenders to Supertech Realtors. The developers entered into a loan agreement worth Rs 735 crore for the development of residential apartments, office spaces, retail, and a luxury hotel named ‘Supernova’ in Noida, Uttar Pradesh, with Union Bank of India, Central Bank of India, Corporation Bank, Bank of Maharashtra, and Oriental Bank of India.
In April, while addressing a different set of petitions from homebuyers, the Supreme Court ordered a CBI investigation to begin preliminary inquiries into various real estate projects, including those by the Supertech group, to explore the relationship between banks or financial institutions and developers regarding projects where homebuyers have deposited significant amounts without delivery or launch. Following this, the CBI registered an FIR against Supertech and other builders in July.
Additionally, the Enforcement Directorate in 2023 alleged that Arora was the principal controlling person at Supertech, who instructed the diversion of investors’ and homebuyers’ funds amounting to crores of rupees to various shell companies. The agency has also initiated a money laundering case against Supertech and Arora.
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