Appellant affiliated with Unitech Group granted adjournment under Moratorium orders

The Tribunal determined that the Appellant, classified as an affiliate of Unitech Group, falls under the scope of the Supreme Court's Moratorium orders dated 20.01.2020 and 24.03.2021. The Adjudicating Authority's decision to reject the Appellant's adjournment application was overturned, recognizing the Appellant's affiliation and control by Unitech Holdings Limited. Consequently, the Section 7 Application by the Respondents was adjourned sine die, aligning with the Moratorium benefits.

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Issues Involved
1. Applicability of the Supreme Court's Moratorium orders dated 20.01.2020 and 24.03.2021 on the Appellant.
2. Determination of whether the Appellant is an affiliate or subsidiary of Unitech Limited.
3. Validity of the Adjudicating Authority's decision to reject the Appellant's application for adjournment sine die.

Issue-wise Detailed Analysis

1. Applicability of the Supreme Court's Moratorium Orders
The primary issue revolves around the applicability of the Moratorium orders passed by the Hon'ble Supreme Court on 20.01.2020 and 24.03.2021. The Supreme Court's order dated 20.01.2020 imposed a Moratorium on the institution of proceedings against Unitech Limited and its subsidiaries. The subsequent order on 24.03.2021 extended this Moratorium to all group entities of Unitech Limited, including affiliates, trusts, and subsidiaries. The Appellant argued that it falls under the scope of this Moratorium as it is controlled by Unitech Holdings Limited, a wholly owned subsidiary of Unitech Limited. The Tribunal concluded that the Moratorium is indeed applicable to the Appellant, recognizing it as an affiliate of Unitech Group.

2. Determination of Affiliate or Subsidiary Status
The Appellant claimed to be an affiliate of Unitech Group rather than a subsidiary. The Tribunal examined the shareholding pattern and control dynamics, noting that Unitech Holdings Limited holds a 41.95% share in the Appellant. The definition of "Affiliate" was pivotal, which includes entities controlled by or having significant shareholding by the parent company. The Tribunal found that Unitech Holdings Limited exercises control over the Appellant, including appointing Directors, thus classifying the Appellant as an affiliate of Unitech Group. The Tribunal emphasized that the Appellant's status as an affiliate entitles it to the benefits of the Moratorium.

3. Validity of the Adjudicating Authority's Decision
The Adjudicating Authority had rejected the Appellant's application for adjournment sine die, stating that the Appellant failed to prove it was a subsidiary of Unitech Holdings Limited. The Tribunal found this reasoning flawed, as the Appellant never claimed to be a subsidiary but an affiliate. The Tribunal highlighted that the new Board of Directors of Unitech Limited had taken steps to appoint Nominee Directors in the Appellant, further solidifying the control and affiliation. Consequently, the Tribunal set aside the Adjudicating Authority's order, allowing the application for adjournment sine die and recognizing the applicability of the Supreme Court's Moratorium orders to the Appellant.

Conclusion
The Tribunal concluded that the Appellant, being an affiliate of Unitech Group, is entitled to the benefits of the Moratorium orders dated 20.01.2020 and 24.03.2021. The order of the Adjudicating Authority dated 06.04.2022 was set aside, and the Section 7 Application filed by the Respondents was adjourned sine die, subject to any further orders or clarifications by the Hon'ble Supreme Court.

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