Is Unitech going the Satyam way? In a major setback for the real estate firm, the National Company Law Tribunal (NCLT) on Friday suspended its 10 directors citing mismanagement and diversion of funds.
NCLT also allowed the Ministry for Corporate Affairs (MCA) to appoint the replacements (directors) to run the company.
“MCA will appoint the directors by next week,” Sanjay Jain, Additional Solicitor-General, who is appearing for the government in the NCLT, told
Officials from Unitech were not available for comment.
Under NCLT rules, a copy of the petition is to be sent to the respondents as well. The government had sent the copy to Unitech, but the firm did not accept it. The government representative was not allowed to enter Unitech’s office premises, Jain said.
But, at the hearing on Friday, the company representative appeared in the court after lunch and asked for a week’s time to reply to the petition. The next hearing on the matter is on December 20.
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‘In public interest’ “It is in the public interest that the decision of appointment of directors is taken instead of declaring the company insolvent. We have kept in mind the interest of home-buyers and depositors, the decision of appointing new directors under Section 241 and Section 242 of the Companies Act, 2013,” said Sanjiv Narula, Central Government Standing Counsel.
Section 241(2) is invoked when the government is of the opinion that the affairs of the company are being conducted in a manner prejudicial to the public interest; the Central government can approach the tribunal. “This is the section we invoked,” added Narula
Section 242 deals with the power of the tribunal when such an application is made, Narula explained.
In the next few days, the standing counsel will send to the NCLT the list of people who are qualified to take up the position of directors.
The decision is expected to be taken before December 20, the date for the next hearing.
“Once appointed, the directors will look into the balance sheets of the company. Profits and losses, assets will be thoroughly looked into. The directors will assess the best way to revive the company,” added Narula.
In April, the Economic Offences Wing (EOW) of the Delhi Police arrested Unitech Managing Director Sanjay Chandra along with his brother Ajay Chandra for allegedly not giving flats to home-buyers on time even after receiving funds from the investors.
They also did not return the money to the home-buyers. There are believed to be about 51,000 depositors of Unitech.
Unitech has reportedly more than ₹6,000 crore in outstanding debt with more than 16,000 undelivered units spanning nearly 70 projects.