Chennai: In a huge setback to Unitech, National Company Law Tribunal (NCLT, also known as the bankruptcy court) on Friday suspended eight directors of the embattled real estate major and allowed the government to appoint 10 directors on the board, effectively paving the way for a management takeover.
The tribunal will examine the names of government nominees at its next hearing on December 20. The move comes after the government approached the tribunal seeking to take over the company on grounds of gross mismanagement and siphoning off funds.
The government’s bid to take over the company, ostensibly to protect the interest of 20,000-odd home buyers of Unitech, is a rare move coming after a similar intervention years ago when it took over the board of Satyam (now Tech Mahindra). Unitech has over `6,000 crore debt with more than 16,000 undelivered units from 70 projects.
On Friday, NCLT also restrained Unitech’s suspended directors from selling their personal and company properties. According to the company’s website, the directors are chairman Ramesh Chandra, managing directors Ajay Chandra and Sanjay Chandra; Minoti Bahri, Sunil Rekhi, Chanderkant Jain, Dilip Kumar Malhotra and Virender Kumar Bhutani.
In response, Unitech said the government has not presented the facts correctly and that no “coercive steps for execution” can be taken in view of a November 20 order of the Supreme Court.
However, the tribunal refused to keep in abeyance its order to suspend the incumbent directors of Unitech Ltd and said the government appointed directors would comply with all the orders of the Supreme Court.
“This order, already passed, shall be subject to compliance of all orders of Supreme court,” said the NCLT bench headed by Chairman Justice M M Kumar.
In its petition to NCLT filed under Section 241 of the Companies Act, 2013, the government requested the tribunal to remove the eight directors. According to the government, Unitech is a fit case for winding up but the government prefers to take over the company to protect the interest of thousands of home buyers and small depositors.
Section 241 (2) of the Companies Act 2013 grants power to the central government to take management or control of the company if it finds “the affairs of the company are being conducted in a manner prejudicial to public interest”. (PTI)