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SC Nod for Centre’s New Formula to Take Over Unitech Management, Ex-IAS Officer YS Malik to be CMD

The Centre in 2017 had moved the National Company Law Tribunal (NCLT) seeking suspension of the existing board and restraining the alienation of company's assets.


Updated:January 20, 2020, 4:07 PM IST
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SC Nod for Centre’s New Formula to Take Over Unitech Management, Ex-IAS Officer YS Malik to be CMD
File image of Unitech properties.

New Delhi: The central government will take over the management of embattled real estate firm Unitech Ltd as the Supreme Court on Monday approved the Centre’s formula to complete stalled projects and bring relief to around 12,000 hassled homebuyers.

Agreeing with the government’s proposal to form a new board to take charge of the firm immediately, the court ruled that the 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 Centre had in a six-page note submitted to a bench headed by Justice D Y Chandrachud, agreed to revisit its proposal of December 2017 to remove the existing management of Unitech. However, it would not infuse any funds for completion of pending projects of the company.

On December 18, last year, the top court had asked the Centre if it was agreeable to revisit its 2017 proposal as there is urgent need for the projects of Unitech Ltd. to be taken up by a specialised agency, so as to ensure completion in a time bound schedule in the interest of the home buyers.

The top court had said, "Since the Union of India withdrew the application which it had submitted before the NCLT only for the reason that this Court was seized of the present proceedings, we are of the view that the Union of India should revisit the original proposal in the interests of home buyers and consider appointing independent Directors for the takeover of the management of Unitech Limited".

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 December 8, 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 December 13, 2017, stayed the NCLT's December 8, 2017 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 M/s Grant Thornton India.

The forensic auditors have also submitted their report which said that Unitech Ltd received around Rs 14,270 crores from 29,800 home buyers mostly between 2006-2014 and around Rs 1,805 crores from six financial institutions for the construction of 74 projects.

The audit revealed that around Rs 5,063 crore of home buyers money and around Rs 763 crores of fund received from financial institutions were not utilized by the company and high value investments were made 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.

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