In an effort to rectify the wrongs committed by an erring private firm, the government has moved National Company Law Tribunal (NCLT) to take management control of realty major Unitech on grounds of mismanagement and diversion of funds.
Unitech spokesperson, however, denied receiving any intimation from the Ministry of Corporate Affairs. “We are yet to receive any such correspondence. We have not till now received any notice,” the spokesperson said.
Sources said that the Ministry of Corporate Affairs has not only sought suspension of Unitech’s existing board and its chief financial officer in a petition filed with the National Company Law Tribunal, but it also wants to replace the board with 10 of its own nominee directors.
“The current board will have to be completely dismantled and a new board would be set up by the government. As far as the pending projects go, it would be the decision taken by the new board on how they want to go about completing pending projects,” said Neeraj Sharma, Director, Grant Thornton Advisory Private Limited.
Ironically the news of the government taking over the Unitech board has had a positive effect on the company share price which hit an upper circuit to Rs 7.30, up 20 per cent.
In April this year, managing directors Sanjay Chandra and Ajay Chandra were arrested by the Economic Offences Wing (EOW) of the Delhi Police.
According to the sleuths at EOW, the Chandras have been accused of allegedly duping buyers who had booked flats in his Greater Noida residential project to the tune of Rs 35 crore. The buyers alleged that Unitech failed to complete the project on time and also did not refund the money along with the interest.
This is not Sanjay Chandra’s first brush with law. Earlier he was also arrested by CBI in 2G case. Chandra had bid and won licence for telecom project and later sold to Norway based company, Telenor.
Over two dozen home buyers of Unitech’s housing projects in Noida and Gurgaon had approached the National Consumer Disputes Redressal Commission (NCDRC) after the builder had failed to give them possession of their flats as the per schedule. The company had promised to hand over the possession of flats in 2012, but failed to meet the deadline.
The consumer forum had asked Unitech to refund the money to the home buyers with interest.
On January 12, 2017, the Supreme Court directed that Rs 2 crore deposited by real estate major Unitech Resorts Ltd. with its registry be distributed among 39 home buyers who have sought refund of their amount for delay in handing over the possession of flats in the Vista housing project in Gurgaon.
Slapping a penalty on Unitech Resorts for delaying handing over of flats, the Supreme Court on February 20, 2017, directed it to deposit 14 per cent interest on the Rs 16.55 crore invested by 39 home buyers with it.
Also the Consumer Disputes Redressal Commission in Chandigarh sentenced Unitech's chairman Ramesh Chandra and managing directors Ajay Chandra and Sanjay Chandra to a three-year jail term for not complying with the court's order.
The court has also issued non-bailable warrants against Unitech chairman and two MDs, along with charging a fine of Rs 10,000 each. In the last week of March, Supreme Court directed Unitech chairman and managing directors to be present in the court on May 5 in connection with a petition over a proposed scheme of compromise between the company and some homebuyers in its projects. The court also asked the builder to submit its final proposal for the completion of its pending projects.