The National Company Law Tribunal (NCLT) has allowed the Centre to take management control of realty giant Unitech after the Corporate Affairs Ministry moved the bankruptcy court.
The tribunal gave its approval to the Ministry to appoint 10 directors on Unitech Group's board, asking it to submit a list of 10 names.
Unitech failed to deliver Rs. 7,816-crore-worth 16,299 flats to homebuyers.
Centre to suggest nominee directors in four weeks
NCLT has restrained the directors of Unitech from acting as board members.
The tribunal's two-member bench led by Chairman Justice MM Kumar also stated that Unitech directors wouldn't be allowed to sell the company's assets or their assets.
The bankruptcy court asked Corporate Affairs Ministry to suggest 10 nominee directors in four weeks and sought the debt-laden firm's response within the same period.
Government moves NCLT, alleging mismanagement, diversion of funds
The Corporate Affairs Ministry approached NCLT seeking to take control of the troubled real estate company, Unitech, "on the grounds of mismanagement and diversion of funds" by the management.
In its petition, the Ministry also sought suspension of the existing board of Unitech as well as its Chief Financial Officer. The Ministry said it wants to replace Unitech's board with its nominee directors.
Unitech MD Sanjay Chandra arrested
In April 2017, following some homebuyers' complaints, Unitech Managing Director, Sanjay Chandra was arrested by the Economic Offenses Wing (EOW) of the Delhi Police for financial irregularities.
Sanjay Chandra was accused of illegally diverting the capital of one project into a separate company.
He purportedly got the funds invested in the other company and siphoned off the funds into foreign accounts.
Chandra's brother arrested, too
Along with Sanjay Chandra, his brother Ajay Chandra and another person were also arrested in connection with the fraud case linked to delayed housing projects in Noida and Gurugram lodged by agitated homebuyers. Unitech and its subsidiaries did not deliver 19,000 flats to investors.
No stranger to arrest: Booked for duping buyers
The Delhi Police had previously filed an FIR against the Chandra brothers on the grievance of home buyers.
Chandra was involved in deceiving buyers who had bought flats in his Greater Noida residential scheme.
The buyers claimed that Unitech had not finished the project on time and also had not provided them with a mandatory refund with interest.
SC refuses to grant interim bail to Unitech MD
On 15 September, the Supreme Court denied interim bail to Unitech MD Sanjay Chandra after learning the firm still hasn't handed over 16,299 flats for which it received Rs. 7,816cr.
Rejecting the argument that incarceration breached the principle of jurisprudence, SC observed Chandra's liberty came at the cost of 16,299 homebuyers' tears.
Earlier, it had asked homebuyers if they wanted the flats or refunds.