Legal standoff ends; time for SCK to look ahead

‘Honourable exit’ for SmartCity-Kochi as NCLAT dismisses insolvency case against the IT SEZ

Published: 13th October 2017 01:27 AM  |   Last Updated: 13th October 2017 07:35 AM   |  A+A-

By Express News Service

KOCHI: The tussle between SmartCity-Kochi (SCK) and Bengaluru Synergy Property Development Services - the project management consultant - seems to have ended with the National Company Law Appellate Tribunal (NCLAT), New Delhi, on Thursday dismissing the National Company Law Tribunal (NCLT), Chennai’s insolvency order against the IT Special Economic Zone (IT SEZ).
NCALT also quashed the appointment of an Interim Resolution Professional by NCLT and rejected the default claim raised by Synergy Property Development Services.

The spokesman for Synergy told Express his company did not contest SCK’s claims following an out-of-court settlement last month. In the out-of-court settlement, as reported by Express on September 22, SCK paid Rs 1.58 crore worth of dues, besides reimbursing the legal expenses incurred by Synergy.
“We wanted to give an honourable exit to SCK from the entire issue as we got our dues,” the spokesman said. “As per our out-of-court settlement, we decided to withdraw all the claims and cases against each other.”

The NCALT order, according to persons close to SCK, will allow the IT SEZ - a joint venture between Dubai Holding and the Kerala government - to look ahead after months-long internal issues which also saw a reorganisation of the parent Dubai Holding and an overhaul of SCK management.
The order has also released SCK from all the rigour of law and allowed it to function independently through its board of directors with immediate effect as the appellate tribunal set aside the freezing of account and all other orders passed by NCLT. SCK approached NCALT after the Chennai bench of NCLT admitted a default claim made by Synergy.

In its appeal, SmartCity Kochi stated Synergy “abandoned the work site before the completion of work and falsely claimed a default payment of Rs 2 crore”. It stated the company took sub-contract of design from the architect and “caused lots of damages to the project”. 
SCK contended Synergy misrepresented facts before NCLT to get a favourable order. It also contended a claim should be considered as disputed only if there is an arbitration (or legal suit) initiated before filing of petition by the creditor before NCLT.

SCK has been hitting one bad news after the other, crippling its work for some months now.  
The IT SEZ had Tecom Investments, a subsidiary of Dubai Holding, owning 84 per cent while the Kerala Government held the remaining 16 per cent. Later, TECOM Investment was abolished as an entity and the entire 84 per cent equity stake was transferred to Dubai Holding some months back. 
It also removed its managing director Baju George, and a new COO Manoj Nair was appointed recently.

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