New Delhi:

In a strong signal to defaulting realty firms, the Supreme Court on Tuesday ordered a court-mandated panel 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.

Earlier, 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 the Agra properties of the defaulting firm had also run into problems, a bench of CJI Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud ordered the committee to auction unencumbered personal assets of Unitech directors.

This is the first time that the SC has ordered the auction of personal assets of directors of a distressed firm. Unitech sources said this would hit the directors hard as most of them were paid employees.

2 Kolkata plots of Unitech may get ₹116cr in auction

If their personal assets are sold, 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.

The court has repeatedly refused pleas by Unitech for release of Sanjay Chandra and his brother from jail even though the firm said the brothers wanted to settle all debt. The counsel had been pleading at least for custodial parole for Chandra to allow him to strike deals with buyers to generate money for refunds and construction of flats for those wanting houses.

CJI Misra had said last year, “Every individual’s liberty is precious. But in this case, the court has to strike a balance between one individual’s liberty and the tears of 16,299 homebuyers, who have been running after a mirage for years after investing their hardearned money in projects undertaken by Unitech. When you’re seeking wings of liberty, we can’t close our eyes to tears of 16,299 home buyers.”

Agrawal handed over a chart to the court explaining that Unitech had taken up 74 housing projects across the country and delivered flats completely in 13 projects. The chart gave details of 31 projects in Gurgaon, Noida, Greater Noida, Chennai, Bengaluru, Rewari, Ambala, Kolkata and Mohali where 16,299 flats are yet to be delivered in breach of promise and for which Unitech has already collected Rs 7,816 crore.