A Corporate Affairs Ministry (MCA) source here said that it is with the intent to avoid insolvency proceedings against Unitech, which would leave thousands of homebuyers stranded, that the government wants to quickly take over management of the real estate firm following Friday's NCLT order.
On a plea by the Central government seeking to take control of Unitech, the NCLT on Friday dismissed the board of the company and directed the MCA to nominate 10 directors to the board.
The NCLT suspended all the 8 directors of Unitech over allegations of mismanagement and siphoning of funds and authorised the government to appoint its 10 nominees on the board.
The government had approached the NCLT to take over the management with a view to protecting the interest of nearly 20,000 home buyers and 51,000 depositors to whom the company owes over Rs 700 crore.
The NCLT ordered the government to furnish the names of its nominees by the next date of hearing on December 20.
The government argued that Unitech was a fit case for insolvency, but considering the interest of thousands of home buyers and small depositors it would be advisable for the state to take over the company's management.
"We want to avoid insolvency of this company, otherwise the 19,000 homebuyers will be left high and dry," Additional Solicitor General Sanjay Jain said at the NCLT hearing.
"We are persuaded to record that the affairs of the company are not being carried in accordance with the provisions of the Companies Act.
"In fact, prima facie appears to us that the affairs of the Unitech are being conducted against large public interest. Therefore, a prima facie case is made out," said the order of two-member NCLT bench headed by Chairman Justice M.M. Kumar.
Reacting to the NCLT order, Unitech said in a statement that the company has been "striving hard to secure financing so that construction can continue to complete various projects".
The Supreme Court has asked Unitech to deposit Rs 750 crore by end of December in connection with bail pleas of directors Sanjay Chandra and Ajay Chandra, who were arrested by the the Delhi Police earlier this year for allegedly not developing a project despite receiving funds from investors.
The apex court is already hearing pleas against Unitech's default in handing over several residential projects in Delhi-NCR.
Commenting on the development, developers body Credai President Jaxay Shah said in a statement: "While we are not aware of the details of the matter and reasons for the Ministry of Company Affairs to approach the NCLT, the verdict of the NCLT, however, must be trusted."
The government had last taken over the board of a private firm almost 10 years back - of IT company Satyam.
(This story has not been edited by Social News XYZ staff and is auto-generated from a syndicated feed.)
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