In a major setback for real estate developer Mantri realty, the Bombay High Court has directed the court receiver to take possession of all of the assets, books and records of the company. The court has also directed Chairman Sunil Mantri & three directors of the company – Ranjit Rane, Deepankar Salvi and Pankaj Arekar – to not leave the country without permission from the court.

The order came as the High Court heard around 35-40 petitions that had been filed against Mantri Realty for alleged non-payment of dues. These petitions had been filed by various individual investors and had been clubbed together under Section 433 and 434 of the Companies act 1956 along with Rule 101 of Companies Rules. Investors allege that the total amount due by the company is over Rs 300 crore.

The High Court had adjourned the case several times in the past on the back of assurances by Mantri Realty and Sunil Mantri to settle these petitions by paying off small creditors and giving flats in lieu of payment to big-ticket creditors. However Justice K R Shriram noted that this had not been done and came down heavily on the company for not complying with earlier promises and misrepresenting facts including:

– Not providing copies of the company’s unaudited balance-sheets/annual report up to 31.03.2015.

– Not disclosing to the court that Sunil Mantri had ceased to be the Managing Director of the company.

– Not fulfilling an undertaking to handover TDS certificates to various parties and not paying the installments due.

HC Orders Seizure of Company Assets

Justice K R Shriram also took a harsh view of Mantri Realty creating third-party rights on its Bengaluru property Mantri Premero even though the matter was pending before the court. “The conduct of Shri Sunil Mantri smacks of utter dishonesty and disrespect to the Court. The indulgence that was granted from time has only been abused. It is quite obvious, particularly, when one considers the Bangalore project, that the attempt was to drag on the matters by assuring settlement, and in the meanwhile, create third party rights or hive of the assets and deprive the creditors of their dues” noted Justice KR Shriram in his order.

Apart from taking physical possession of the Mantri Realty’s assets, the High Court also directed the Company, its directors including ex-directors of the Company, managers, officials and staff and Chairman Sunil Mantri in particular to “not create any third party right or encumber or deal with any of the assets or properties, movable and immovable of the company”.

Real estate experts say this is a big problem for Mantri Realty and its projects in different parts of the country including Mumbai, Pune and Bengaluru. “As the court has barred from selling any of his properties it means that he cannot reduce his liabilities and play with the funds of the purchasers. The company will be literally defunct. In short the management of this company will vest in the court receiver and its decision will be final” says Advocate Vinod Sampath.

Mantri Realty in talks with Petitioners

Petitioners whom NDTV spoke to said that the company was in touch to negotiate a settlement, but no agreement has been reached as yet. They also said that they will not drop the case until Mantri Realty company provided security-backed guarantees. Real estate consultants say the legal case could drag on for a while, with existing customers getting affected. However, in the event of the court directing that Mantri Realty’s projects be auctioned – experts say rights of existing customers will be protected and will have to be honored.

Mantri Realty attempted to get a stay on the High Court order, but the motion was rejected. The next hearing is to take place on the 25th of January. A company spokesperson declined to comment on the matter as it was sub-judice, but indicated that all efforts were being made to resolve the problem.

Nikhil Narayan Sivadas, Assistant Editor, NDTV