Delhi HC Approves Scheme Proposed by Ex-Management for Revival of ASSOTECH Limited

Delhi HC Approves Scheme Proposed by Ex-Management for Revival of ASSOTECH Limited

The Delhi High Court on Friday indicated green signal to the revival scheme presented by the ex-management of ASSOTECH Limited after receiving consent for the proposed scheme from all the stakeholders including the petitioner, official liquidator (OL), Essel Finance, Religare, Celeste Towers, etc. subject to the terms and conditions.

To monitor the progress of construction of ASSOTECH three residential projects i.e. Assotech Windsor Court, Celeste Towers and The Nest, the court directed the appointment of a retired Judge as ‘Court Commissioner’.

The decision was taken pursuant to the report submitted by OL which favoured the ex-management over the new bidder to complete construction of the company's residential projects stating that it will be more feasible.

Consequent to the approval of the revival scheme, the court has directed the ex-management to file the said proposal/action plan before the Court and to open an ‘Escrow Account’ with a deposit Rs 5 crore within three weeks time.

OL has been tasked to ensure the maintenance of the Escrow Account and to furnish a monthly report outlining the functioning of the revival scheme to the court.

In lieu of the scheme, Court has permitted the ex-management to demand payment from homebuyers as per the agreement. Further, they are free to raise a loan for the purpose of construction of the flats with the prior permission of court commissioner.

In another report submitted by the Serious Fraud Investigation Office (SFIO), it highlighted that financial statements of the company reveal that it has made many investments and are involved in many transactions with related parties and subsidiaries.

After observing that an estimated amount of Rs. 350 crore has been syphoned by the ex-management, a show-cause notice has also been issued to the parties to show why such investments were made.
The Court issued directives to all the parties not to sell off or dispose of any property except with the prior permission of the court.

The Court rejected the submission made by Homebuyers counsel, Advocate Aishwarya Sinha, urging to conduct a forensic audit of the company and decided to go ahead with the current revival plan scheme as proposed by ex-management.

The Delhi High Court had previously dismissed a revival scheme filed by ASSOTECH company stating that the scheme does not include all the creditors and home buyers of the company and hence must be dismissed.

As per the facts, the issue pertains to the failure of ASSOTECH in repaying the dues of over 30 secured creditors and failure to complete the three residential projects situated in Ghaziabad and Noida, proposed to be completed six years back.

In 2016, an official liquidator (OL) was appointed to function as a Provisional Liquidator and to look into the matter. OL had proposed to infuse a sum of Rs 5 crore from personal resources of the ex-management of the company as security, proposed to complete the three incomplete residential projects by March 2020 and sell a commercial building spread across 1200 sq meters in Sector 24, Noida having estimated realizable value of Rs. 20 crores.

The company has claimed that a sum of approximately Rs 124 crore is expected to be generated with the completion of all projects, which will be sufficient to pay all its dues.

Delhi High Court
Official Liquidator (OL)
Serious Fraud Investigation Office (SFIO)

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