In a respite to over 12,000 hassled homebuyers of UnitechLtd, the Supreme Court Monday allowed the Centre to take total management control of the embattled realty firm and appoint a new board of nominee directors.
The top court approved the name of retired Haryana cadre IAS officer Yudvir Singh Malik as chairman and managing director (CMD) of the new board and directed that the existing board of directors of the company would stand superseded.
It also refused to appoint Unitech Group founder Ramesh Chandra, as a member of the new board saying that it would not be appropriate at this stage.
A bench of Justices D Y Chandrachud and M R Shah asked the new board to submit its report in two months on the resolution framework of the company.
It also approved the names of members of the board which include A K Mittal, ex-CMD of National Buildings Construction Corporation (NBCC); Renu Sud Karnad, Chairman of HDFC Credila Finance Service Pvt Ltd; Jitu Virwani, CMD of Embassy Group; and Niranjan Hiranandani, Managing Director of Mumbai-based Hiranandani Group.
"The idea of a professional board is to allow them to take control of the company and complete the pending projects in the interest of homebuyers," the bench said and indicated that the court would stop monitoring the Unitech matter once everything falls in place.
The top court ordered that existing management board of Unitech would stand superseded with the new board of directors taking charge.
Senior advocate Kapil Sibal, appearing for existing management of Unitech, said that Ramesh Chandra and an accountant should be allowed to be appointed on the new board of the company as it would be of immense help to the homebuyers due to his experience.
The bench however refused to agree with the contention and said that to avoid any misunderstanding, it would not be appropriate to
appoint any member of the existing board on the new one.
Unitech promoters Sanjay Chandra and his brother Ajay Chandra are currently lodged in Tihar jail for allegedly siphoning off homebuyers' money.
The top court granted two-month moratorium to the new board and granted it immunity from any legal proceedings against the company's management sayiing the proceedings initiated against the firm, subsequent to any court order would also stand suspended till further orders.
It said however that investigating agencies probing irregularities in the company would continue their work.
The top court said that it will appoint a retired apex court judge to monitor the preparation of resolution framework by the new Board.
It said the committee headed by Justice S N Dhingra, which was appointed to sell the company's assets and use the money in completion of pending projects, would continue to work till the new board comes up with a resolution framework.
The bench clarified that the newly constituted board can take any commercial decision in the interest of homebuyers and with regard to any pending projects.
The top court also directed the present management of the company, forensic auditors, asset reconstruction companies, banks and financial institutions and state governments to extend cooperation to the new board.
Attorney General K K Venugopal, appearing for the Centre, said the new board taking control of Unitech management is a mix of talent and would help in speedy completion of the stalled projects.
He said the Centre will not infuse any funds for completion of pending projects of the company and the court should ensure a period of calm and direct a moratorium on litigations for 12 months.
It said, that the idea of board of independent directors is to professionalise the management 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.
In 2017, the Centre had moved the National Company Law Tribunal (NCLT) seeking suspension of the current directors and taking of control of the management of Unitech Ltd but had later withdrawn the proposal after a stay on its move from the apex court.
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 crore from 29,800 homebuyers mostly between 2006-2014 and around Rs 1,805 crore from six financial institutions for the construction of 74 projects.
The audit revealed that around Rs 5,063 crore of homebuyers' money and around Rs 763 crore of fund received from financial institutions were not utilised 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).
The top court approved the name of retired Haryana cadre IAS officer Yudvir Singh Malik as chairman and managing director (CMD) of the new board and directed that the existing board of directors of the company would stand superseded.
It also refused to appoint Unitech Group founder Ramesh Chandra, as a member of the new board saying that it would not be appropriate at this stage.
A bench of Justices D Y Chandrachud and M R Shah asked the new board to submit its report in two months on the resolution framework of the company.
It also approved the names of members of the board which include A K Mittal, ex-CMD of National Buildings Construction Corporation (NBCC); Renu Sud Karnad, Chairman of HDFC Credila Finance Service Pvt Ltd; Jitu Virwani, CMD of Embassy Group; and Niranjan Hiranandani, Managing Director of Mumbai-based Hiranandani Group.
"The idea of a professional board is to allow them to take control of the company and complete the pending projects in the interest of homebuyers," the bench said and indicated that the court would stop monitoring the Unitech matter once everything falls in place.
The top court ordered that existing management board of Unitech would stand superseded with the new board of directors taking charge.
Senior advocate Kapil Sibal, appearing for existing management of Unitech, said that Ramesh Chandra and an accountant should be allowed to be appointed on the new board of the company as it would be of immense help to the homebuyers due to his experience.
The bench however refused to agree with the contention and said that to avoid any misunderstanding, it would not be appropriate to
appoint any member of the existing board on the new one.
Unitech promoters Sanjay Chandra and his brother Ajay Chandra are currently lodged in Tihar jail for allegedly siphoning off homebuyers' money.
The top court granted two-month moratorium to the new board and granted it immunity from any legal proceedings against the company's management sayiing the proceedings initiated against the firm, subsequent to any court order would also stand suspended till further orders.
It said however that investigating agencies probing irregularities in the company would continue their work.
The top court said that it will appoint a retired apex court judge to monitor the preparation of resolution framework by the new Board.
It said the committee headed by Justice S N Dhingra, which was appointed to sell the company's assets and use the money in completion of pending projects, would continue to work till the new board comes up with a resolution framework.
The bench clarified that the newly constituted board can take any commercial decision in the interest of homebuyers and with regard to any pending projects.
The top court also directed the present management of the company, forensic auditors, asset reconstruction companies, banks and financial institutions and state governments to extend cooperation to the new board.
Attorney General K K Venugopal, appearing for the Centre, said the new board taking control of Unitech management is a mix of talent and would help in speedy completion of the stalled projects.
He said the Centre will not infuse any funds for completion of pending projects of the company and the court should ensure a period of calm and direct a moratorium on litigations for 12 months.
It said, that the idea of board of independent directors is to professionalise the management 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.
In 2017, the Centre had moved the National Company Law Tribunal (NCLT) seeking suspension of the current directors and taking of control of the management of Unitech Ltd but had later withdrawn the proposal after a stay on its move from the apex court.
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 crore from 29,800 homebuyers mostly between 2006-2014 and around Rs 1,805 crore from six financial institutions for the construction of 74 projects.
The audit revealed that around Rs 5,063 crore of homebuyers' money and around Rs 763 crore of fund received from financial institutions were not utilised 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).
