The National Company Law Tribunal on Friday allowed the government to appoint new management for real-estate giant Unitech Ltd..
The NCLT agreed to the Ministry of Corporate Affairs plea and issued notices to Unitech’s existing directors, who are now restrained from acting as board members. The two-member bench said the government can appoint 10 nominee directors, whose names it will examine on December 20.
“We want to avoid insolvency of this company, otherwise the 19,000 home buyers will be left high and dry,” said Additional Solicitor General (ASG) Sanjay Jain.
Unitech’s lawyers were not present during court proceedings on Friday morning. ASG Sanjay Jain told the court that the company had refused to accept an advance copy of the petition that was sent to it.
Later, the NCLT bench heard Unitech’s lawyers plea but denied any relief. However, it said the order will be subject to any ruling by the Supreme Court.
The corporate affairs ministry had moved the National Company Law Tribunal to take management control of realty major Unitech on grounds of mismanagement and diversion of funds, Bloomberg reported earlier on Friday.
The Economic Offences Wing of the Delhi Police arrested Unitech managing director Chandra and his brother Ajay in April 2017 for allegedly cheating buyers and siphoning off clients’ money to foreign accounts. Unitech had also failed to complete housing projects in Greater Noida and Gurugram on time and the company’s management did not refund the money along with the interest. Unitech had yet to deliver possession of 16,299 flats worth Rs 7,816 crore to investors in 61 projects.
The Supreme Court denied Chandra bail until the company deposited funds with it to protect the interests of such buyers.
The ministry of corporate affairs had reportedly sought suspension of Unitech’s existing board of directors and its chief financial officer in a petition filed with the National Company Law Tribunal under the Companies Act, 2013. The government wanted to replace the board with 10 of its own nominee directors in the interim.
The NCLT has allowed the government’s plea.