Shares of Unitech Ltd have surged more than 30% in a 2-day period after the government was allowed to take control of the company. Earlier last week on Friday, the National Company Law Tribunal (NCLT) allowed the corporate affairs ministry to appoint 10 nominee directors for Unitech, who would be subject to tribunal nod, saying that the existing directors will not be allowed to sell a company or personal asset. Following the development, the stock of Unitech spiked as much as 19.67% to Rs 7.3 on Friday. Today also, in the early morning trade, shares went up 19.17% to Rs 8.7 before closing 9.59% higher at Rs 8. With a 2-day uptick in the share prices, the stock has appreciated 31.14% till today’s closing.
However, the real estate developer Unitech has appealed in Supreme Court against the decision of NCLT which allowed the government to take the control over the company. The Apex court has sought government take on safeguarding the interest of homebuyers associated with Unitech and is all set to hear the petition tomorrow. Amid the heavy trading volumes, more than 36 crore shares have exchanged hands within a 2-day period on both BSE and NSE with about 31.7 crores on NSE alone.
In one of the sternest actions ever on an erring corporate, the government and the National Company Law Tribunal on Friday acted in harmony and in quick succession to suspend the board of debt-ridden realty firm Unitech and replace it with an interim set-up consisting of government nominees. A prominent precedent of annulling a corporate board was the January 2009 order of the then Company Law Board, the predecessor of NCLT, allowing the government to take over the management control of Satyam Computer Services following a huge financial fraud that rattled corporate India.
While barring the nine existing directors of Unitech with immediate effect, a two-member tribunal bench headed by chairman justice MM Kumar directed the government to submit its 10 names to the board by December 20, the next date of hearing.
Meanwhile, Indian stock markets continue to rally for the third consecutive day and ended higher inching towards record highs on Monday ahead of the second phase of Gujarat state elections due later on 14 December. BSE Sensex gained 205.49 points or 0.62% and NSE Nifty added 56.6 points or 0.55% to settle at 10,322.25. A sharp uptick in the shares of Tata Consultancy Services, ITC, HDFC, and State Bank of India contributed heavily to the upsurge of key equity indices Sensex and Nifty today.