SC asks forensic auditors to examine trail of home buyers’ Rs 3,000 crores, diverted by Amrapali Group

The SC has asked the forensic auditors to examine the money trail of Rs 2,990 crores received from home buyers that were taken out from nine companies of the Amrapali Group, for creating assets and purchasing shares of sister companies

The Supreme Court, on December 12, 2018, asked forensic auditors to examine the trail of around Rs 3,000 crores of the home-buyers’ money, allegedly spent by the Amrapali Group on buying shares of its sister companies and asset creation. Amrapali Group CMD Anil Sharma, directors Shiv Priya and Ajay Kumar returned to the court, a total amount of Rs 1.55 crores of home buyers’ money ‘lying’ with them.

The top court grilled several accountants of the Group, as to how they have prepared the account statements, which were submitted in the court and on what basis they created the accounts this year, for financial years 2015-16, 2016-2017 and 2017-2018. It directed the forensic auditors to ascertain the numbers of flats which were ‘benami’ property, doubly booked or booked on a nominal value by the Amrapali Group. A bench of justices Arun Mishra and UU Lalit directed the Debt Recovery Tribunal, Delhi, to conduct the valuation of Amrapali’s five-star hotel Tech Park in Greater Noida and sell it by the end of January 2019.

See also: Forensic auditors find a web of 200-250 firms, where Amrapali diverted funds

It also questioned Sharma about the sub-leases granted to the family members of Amrapali directors and where the Rs 3,000 crores of home buyers’ money had gone. The bench, after failing to get a satisfactory reply, asked the two forensic auditors, Pawan Kumar Aggarwal and Ravi Bhatia, to examine the trail of around Rs 3000 crores. “More than Rs 2,990 crores were taken out from nine companies of Amrapali Group in the name of assets creation and purchase of shares of sister companies. You should examine the trail of the money, as to how and where did it go and the assets created by the fund”, the bench told the forensic auditors.

The court asked the company to file the details of the assets it created with Rs 2,990 crores and the board resolutions, which allowed Rs 1,100 crores to be spent for purchasing share capital. It directed the forensic auditors to also examine whether any siphoning of funds was done, by granting sub-leases or any favours were doled out in such transactions. The top court noted that pursuant to its last order in which one last window was given to the directors and other officials of the company to return home buyers’ money, Sharma and two directors Shiv Priya and Ajay Kumar returned Rs 1.25 crores, Rs 20 lakhs and Rs 10 lakhs, respectively. The court sought an affidavit from Sharma and the two directors, to declare that they do not have any more money of home buyers lying with them.

The bench directed Amrapali CFO Chandra Wadhwa and statutory auditor Anil Mittal, to deposit Rs 9.69 crores and Rs 27 lakhs of home buyers’ money lying with them, by January 2, 2019. It allowed the 86 luxury cars and SUVs, which were earlier attached by the court, to be brought to the corporate offices of the Amrapali Group, where car dealers can hold a physical inspection and later sell them. When Sharma was questioned by the bench about the sub-leases the company granted, he replied that the firm had received over Rs 66 crores, by granting sub-leases and denied any wrongdoing. “The forensic auditors should examine the sub-leases granted by Amrapali Group, by the next date of hearing,” the bench said, adding that the real estate firm should comply with all the requests made by the forensic auditors in 24 hours. The court posted the matter for further hearing on January 16, 2019.

 


 

SC orders attachment of Amrapali’s five-star hotel, malls, cinema hall, factories

Calling the Amrapali Group ‘a worst kind of cheater’, the Supreme Court has asked the Debt Recovery Tribunal to attach and dispose of the firm’s properties across India, including a five-star hotel, cinema hall, malls and factories

December 6, 2018: Continuing its crackdown on the embattled Amrapali Group, the Supreme Court, on December 5, 2018, ordered the attachment and sale of the realty firm’s five-star hotel, cinema hall, malls and factories across India, calling it ‘a worst kind of cheater’ and ‘a perfect liar’, for not complying with the court’s direction. The top court also ordered the attachment of four swanky corporate offices of the Amrapali Group, situated in Noida and Greater Noida and asked the Debt Recovery Tribunal (DRT), Delhi, to auction them.

The top court gave a window to the firm’s directors and their family members, to return home buyers’ money, if they have it, by December 10, 2018. It asked the firm to explain by next week, the diversion of around Rs 3,000 crores of home buyers’ money for other purposes. A bench of justices Arun Mishra and UU Lalit issued notice to the Amrapali Group CMD Anil Sharma and its directors, chief financial officer and statutory auditor Anil Mittal, asking them why a criminal case for breach of trust, should not be lodged against them.

“You (Amrapali Group) are a worst kind of cheater in the world. You have cheated the home buyers all along and now, you want to sell the facilities created for them. The facility area created for the home buyers is not a charity you have done to them,” the bench said, after it was told that the real estate firm wants to sell a nursery school, an open space and a nursing home, to raise funds. It gave 24 hours to the Amrapali Group, to hand over the raw data files of the business transactions of the company, including the vouchers, receipt and the required authorisation for the period of 2015-18, to the forensic auditors appointed by the court.

See also: Forensic auditors find a web of 200-250 firms, where Amrapali diverted funds

The bench pulled up the firm for repeated non-compliance with the court’s direction and not giving the data of business transactions for period of 2015-2018, to forensic auditors. “You are a perfect liar. You are a first-degree liar. You have not given specific information, what we have asked for in our earlier orders. We are not satisfied with your affidavit and you have only tried to manipulate the things. Despite our nine orders, you have not given specific information about business transactions for period 2015-18,” the bench said.

It directed the DRT, Delhi, to auction all the attached properties including the hotel, malls, corporate offices, movie hall, factories and lands across India. Among the properties the court directed to be attached forthwith and auctioned by the DRT, include a five-star hotel Amrapali Holiday Inn Tech Park at Greater Noida in Uttar Pradesh; an FMCG company called Amrapali Biotech and Mums situated in Rajgir and Buxar districts of Bihar; Amrapali Mall in Gaya of Bihar; Amrapali Mall at Muzaffarpur in Bihar; Amrapali Mall, Bareilly in UP; Hitech City movie hall at Meerut, UP; Amrapali Precast factory at Greater Noida; land in Purnia in Bihar and Bhubneshwar in Orissa; and a villa in Goa. The court also ordered attachment of a fleet of luxury cars, which were bought by the company from the home buyers’ money.

The court, while perusing the affidavit of Amrapali Group, pointed out that it had invested Rs 1,100 crores of home buyers’ money, in purchasing the shares of a sister company. “How can you do it? It was not promoters’ money. If they had put in the money with the company, then, it is understood but how can the home buyers’ money be used to purchase the shares. Give us all the details, who authorised to purchase the shares,” the bench said.

On being told that there were suspicions of ‘benami’ home buyers who have booked the flat at the paltry sum, the bench directed the forensic auditors appointed by the court to investigate the affairs of the company, to issue a notice to the owner of the flat and if no response is received, then, that property should be put on sale.

In a comprehensive affidavit placed before the apex court, Anil Sharma has admitted diversion of Rs 2,996 crores to other Group companies.

On November 13, 2018, in a massive crackdown on the Amrapali Group for ‘wilful disobedience’ of its orders, the apex court had attached the company’s 100-bed multi-speciality hospital, bank accounts, the building which houses its office, certain firms and a ‘benami’ villa in Goa. It had asked the CFO to deposit Rs 11.69 crores with its registry within three weeks. It also asked a statutory auditor Anil Mittal, to pay Rs 47 lakhs. It restrained the realty firm from alienating its companies, through which it had transactions and ordered attachment of such firms. The top court has also restrained Amrapali Group from creating any third-party rights for 86 luxury cars and SUVs purchased from the company’s funds.

The apex court had earlier warned the Amrapali Group for its repeated non-compliance and ‘hoodwinking’ of the court’s order, saying that the ‘writing is very clear on the wall’. It had also initiated contempt proceedings against Sharma and its directors, for prima facie violating the court’s order and thwarting the course of justice. The court is seized of a batch of petitions filed by home buyers, who are seeking possession of around 42,000 flats booked in projects of the Amrapali Group.

 


 

SC orders attachment of Amrapali Hospital, company properties, ‘benami’ villa in Goa

In a massive crackdown on the Amrapali Group for ‘wilful disobedience’ of its orders, the Supreme Court ordered the attachment of the company’s 100-bed multi-speciality hospital, bank accounts, the building which houses its office, certain firms and a ‘benami’ villa in Goa

November 15, 2018: The Supreme Court, on November 13, 2018, ordered that attachment of the Amrapali Group’s state-of-the-art, multi-speciality, 100-bed hospital situated at Greater Noida, for which funds from Ultra Home Construction Pvt Ltd were utilised. The bench also attached the bank accounts of GauriSuta Infrastructures Pvt Ltd, its director Sunil Kumar and its assets, after forensic auditors disclosed that Amrapali transferred home buyers’ money from one firm to sister companies, using it as conduit. The top court also directed attachment of towers which housed the company’s office and ‘Aqua Fortis’ villa in Goa, as no one came forward to claim ownership.

The top court also asked the Group’s chief financial officer Chander Wadhwa, to deposit Rs 11.69 crores with its registry, within three weeks. It also asked a statutory auditor Anil Mittal to pay Rs 47 lakhs. It restrained the realty firm from alienating its companies, through which it had transactions and ordered attachment of such firms. It also restrained the Amrapali Group from creating any third-party rights for 86 luxury cars and SUVs, purchased from the company’s funds.

The court sought the presence of CMD Anil Sharma and two directors Shiv Priya and Ajay Kumar, on November 19, 2018. A bench of justices Arun Mishra and UU Lalit, said that the Amrapali Group has deliberately not complied with its earlier order and committed a ‘serious fraud’, by diverting home buyers’ money from one company to other.

See also: Forensic auditors find a web of 200-250 firms, where Amrapali diverted funds

Forensic auditors Pawan Kumar Aggarwal and Ravi Bhatia, appointed by the court to look into the affairs of the embattled firm, said that home buyers’ money was given as advances, to the tune of Rs 442 crores to 15 companies and nine individuals, from Amrapali Saphire project. The report of the forensic auditors said that Amrapali Infrastructure Pvt Ltd was the main company and around Rs 2,000 crores were transferred from it, to other sister companies. Bhatia told the bench that a firm called ‘Stunning Construction Pvt Ltd’ did some ‘stunning work’ as it paid income tax returns of the companies, as well as directors and other individuals, for which it received Rs 500 crores.

The bench then asked the forensic auditors to ascertain the investment of Amrapali in its projects and the ‘ghost’ home buyers, as the properties could have been sold to such benami persons, to augment the value of company.

“They have created web of companies since 2010, to transfer funds from one project to another, to circumvent the restrictions enforced in the Companies Act,” the auditors told the bench, adding that the promoters have also tried to avoid stamp duty, by transferring the high-value property to other company. Aggarwal said that in the forensic audit they have found transactions of the Group with 27 other ‘dummy companies’ and since last year, the promoters of Amrapali have started withdrawing money from bank accounts of such companies.

The court also pulled up the Group, for filling a 3,000-4,000 page affidavit, with no requisite information and warned that the directors may be sent behind bars, for not disclosing the details sought by the court. “We are giving one last opportunity to explain everything, to the concerned directors and the Amrapali Group and comply with the orders of the court. It should also be explained as why contempt action should not be initiated against them,” the bench said. The bench posted the matter for further hearing on November 20, 2018.

On October 31, 2018, the apex court had directed the Amrapali Group to disclose the names of all the companies with which it had any kind of transactions, after forensic auditors pointed out that there may be a web of more than 200-250 such firms, where home buyers’ money was transferred. The two forensic auditors, appointed by the court to look into the affairs of Amrapali Group had said that besides 47 sister companies, they stumbled upon 31 companies, whose names were never disclosed by the embattled real estate firm. The court was also told that there may be a case of the Foreign Exchange Management Act (FEMA), as large amount of money was transferred to a multi-national company based in Mauritius.

It questioned Wadhwa as to how a group company paid his income tax amounting to Rs 2 crores, when he was earning only Rs 50,000 per month. It had also initiated contempt proceedings against Sharma and its directors, for prima facie violating court’s order and thwarting the course of justice. The court is seized of a batch of petitions filed by home buyers, who are seeking possession of around 42,000 flats booked in projects of the Amrapali Group.

 

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