In relief for 30,000 homebuyers, Centre to take over Unitech
The funds were allegedly misappropriated by Unitech Group and its directors. This is the second time a big, high profile company has been taken over by the government after Satyam in 2009. Scandal engulfed Hyderabad-based Satyam after its chairman Ramalinga Raju admitted its books were cooked to the tune of Rs 7,000-odd crore. The software firm was later taken over by Mahendra Group’s IT arm.
Agreeing with the Supreme Court’s suggestion to step in to protect the interest of homebuyers and investors, the Centre proposed the name of retired IAS officer Yudvir Singh Malik as chairman and managing director of the company. It also proposed names of six others, including NBCC CMD, to be made directors to run the affairs of the company to complete all housing projects.
As was revealed by a forensic audit, the group and its promoters creamed thousands of crores of rupees and it became difficult for the existing management to complete the housing projects. The apex court then asked the Centre to take over the company though the government had way back in 2017 itself started proceedings to take over the group but was halted in its tracks when the SC stayed the process.
In an affidavit filed by ministry of corporate affairs, the government, however, told the court that it will not infuse any funds for the projects and pleaded that its appointed directors be made immune to ongoing litigation against the company. The government pleaded that the court appoint a retired SC judge to supervise the resolution framework finalised by the proposed Board of Directors and that the Board be empowered to take steps to raise money for completion of projects.
“This court may permit the proposed Board of Directors to raise funds due from home-buyers and to sell the unsold inventory of stocks and make the unclaimed inventory available for re-selling. Further the Board be allowed to monetise unencumbered assets of the company for completion of housing units. In addition, the court may release funds lying with the apex court pertaining to the company and its management,” the affidavit said while putting 11 conditions for taking over the company.
It also said the government should be given the right to refer the company to liquidation or an Insolvency and Bankruptcy Code (IBC) like resolution outside frameworks of the code in the absence of requisite resources to complete the projects. It said the working of the Justice S N Dhingra committee, which was given the task by the SC to sell assets of the company, be stayed after the government takes over the management.
Unitech Group is involved in construction of 74 housing projects and around 29,800 home-buyers have invested in the projects. Due to its financial crisis, the Group has been unable to complete the projects, leaving buyers in the lurch. The apex court had on October 30, 2017 set a condition for depositing Rs 750 crore in the SC registry for grant of bail to Unitech honchos Ajay and Sanjay Chandra but they failed to comply.
Giving details of the Group, the Centre told the court that there are over 250 subsidiaries under its umbrella including 32 foreign subsidiaries and three foreign associates which are incorporated in tax havens like Libya, Cyprus, British Virgin Island, Channel Island.
Established in 1971 by a group of technocrats, Unitech Limited has been a pioneering real estate company. It started business as a consultancy firm for soil and foundation engineering and but later diversified to real estate. Unitech’s managing director Sanjay Chandra and his brother Ajay Chandra have been in jail since August, 2017 after being arrested by the Economic Offences Wing (EOW) of the Delhi Police for not handing over possession of flats to buyers despite money was paid to the company.