SC lets central government take over control of Unitech
21 January 2020
The Supreme Court on Monday accepted a proposal by the central government to take over management control of embattled realty firm Unitech Limited. A bench headed by Justice D Y Chandrachud also directed that the new board of Unitech should prepare a resolution framework for the company and prepare a detailed report.
The government, which had earlier expressed willingness to take over management control of Unitech Ltd and complete its 12,000-odd stalled projects, providing relief to hassled homebuyers, however, said it would not be infusing any funds in the bankrupt company.
The bench agreed with an earlier proposal of the government to form a new board to take control of the firm. Accordingly, the court ruled that a new seven-member board will supersede the existing board of directors.
Former Haryana cadre IAS officer Yudvir Singh Malik will be the chairman and managing director of the board. The new board of directors will also have a retired Supreme Court judge to monitor the preparation of resolution framework by the board.
The government also sought a moratorium for 12 months. The Supreme Court bench, also comprising Justice M R Shah, however, granted 2-month moratorium from any legal proceedings against the company's management.
The centre had on Saturday told the apex court that it is agreeable to revisit its 2017 proposal to take over the management control of Unitech Ltd and complete its stalled projects for providing relief to around 12,000 hassled homebuyers.
In its six-page note submitted to the court, the government said it is prepared to revisit its proposal of December 2017, to remove the existing management of Unitech Ltd and appoint 10 nominee directors of the government.
The centre, however, said it would not infuse any funds for completion of pending projects of the company.
In 2017, the centre had moved the National Company Law Tribunal (NCLT) seeking suspension of the current directors and an order of restraint on the alienation of assets by Unitech Ltd.
The NCLT, in its order dated 8 December 2017, issued interim directions for suspension of directors of Unitech Ltd and restrained them from alienating, mortgaging, creating charge or lien or interest in the properties owned by them personally or that of the company till the conclusion of investigation.
However, the top court on 13 December 2017, stayed the NCLT order and later the centre agreed to withdraw its application from the tribunal.
In 2018, the apex court had directed a forensic audit of Unitech Ltd and its sister concerns and subsidiaries by Samir Paranjpe, Partner, Forensic and Investigation Services in Grant Thornton India.
The forensic auditors in their report had said that Unitech Ltd received around Rs14,270 crore from 29,800 home buyers mostly between 2006-2014 and around Rs1,805 crore from six financial institutions for the construction of 74 projects.
The audit revealed that around Rs5,063 crore of home buyers money and around Rs763 crore of fund received from financial institutions were not utilised by the company and high value investments were made in off-shore tax-haven countries between 2007-2010.
The top court ordered investigation into the omission and commission of promoters of Unitech Ltd under Prevention of Money Laundering Act (PMLA).
Unitech promoters Sanjay Chandra and his brother Ajay Chandra are currently lodged in Tihar jail for allegedly siphoning off homebuyers' money.