BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS.

A for the purpose and as such the Court should stay in our hands. In the circumstances, it is apparent that the Amrapali Group does not intend to abide by order dated 17.5.2018 and its conduct is dubious. Thus, we have no hesitation in recalling the order dated 17.5.2018 permitting Amrapali Group to complete the projects. We hereby recall the order entrusting the project to the Amrapali B Group of companies for completion, along with co-promoters, and we place it on record that the conduct of Amrapali Group of companies is wholly unfair and on each and every date they have been shifting their stand before us and it was absolutely improper on their part to do so. They have violated our order also. They C have earlier filed affidavits making certain representations and now want to wriggle out of that. Be that as it may. We recall the order dated 17.5.2018 under the aforesaid circumstances.

7. In the circumstances, as the Chairman of the NBCC is present before us and has shown willingness to undertake the projects, D the matter cannot be left at that. Let the NBCC complete the projects, let it undertake the study and work out the details. Though the time of 45 days was prayed, considering the urgency of the matter, we grant 30 days’ time, as the people are deprived of basic necessities of life, and they are residing in some incomplete buildings. We appreciate the gesture of the Chairman of NBCC, E who has assured us to complete the projects as may be directed and to submit a proposal in this Court within 30 days. Let a proposal be submitted in 30 days before us.

8. In the circumstances, we direct the promoters and also request Mr. M.L. Lahoty and two other representatives to be nominated by home buyers to assist and submit the details and all requisite documents to the Chairman, NBCC as also to the Chairman of the Committee. Noida authority and Greater Noida authority shall also furnish to them all the documents which are in their possession. Let promoter, Noida authority, Greater Noida authority and buyers furnish all the documents/pleadings they have submitted to this Court, within three days from today.

9. We also place on record the appreciation to the offer made by the Chairman, NBCC, and also by Mr. Mishra, Chairman of the Committee. Let them make an endeavour to form policy and to solve problems of other groups of companies also. However, the

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 343 [ARUN MISHRA, J.]

matters are pending in the Court, they have to appraise this Court A of their proposals and only thereafter to take steps in this regard.

10. Mr. Anil Mittal, the Chartered Accountant of Anil Ajay & Company, who is the statutory auditor for most of the companies, is present in the Court. Similarly, Mr. Ravi Kapoor, the Chartered Accountant of Serva Associates is also present in the Court. It is pointed out that the information furnished by them is contained on page 6 and 7 of the compilation Annexure X-1. It is stated by Mr. Anil Mittal that his engagement as statutory auditor has begun in the year 2008 and continued up to 2015. He was the auditor from 2008 and has also stated before us that after 2015 no papers have been given to him. It was stated by Mr. Gaurav Bhatia, learned counsel, that at present S.N. Dhawan & Company is doing the audit of the Company.

11. Since we find that various documents have been placed on record indicating transfer/diversion of the fund by the Amrapali Group itself, the Amrapali Group has admitted that out of the six projects, there was transfer/diversion of Rs.2765 crores. Though it was submitted that the amount was transferred to other projects, in our opinion, this was clearly diversion of funds. The amount given by the home buyers for the completion of their projects/ houses could not have been diverted before the completion of the projects. We request the auditors to find out how much money has been so transmitted/diverted to other projects and how it has been used. Let projectwise information of all projects be furnished. The Amrapali Group of Companies shall furnish the requisite information and documents and shall cooperate with the statutory auditors. Let the auditor certify how much money has been diverted from which project and how it has been used in other projects, including the projects of Heartbeat city. The internal auditor is requested to assist Mr. Anil Mittal in this regard.

12. It was stated before us that the bank accounts of Amrapali Healthcare Pvt. Ltd. have also been frozen and it is necessary to run the hospital to keep the accounts operational. Considering the fact that the hospital requires money on a day-to-day basis, we order de-freezing of account of Amrapali Healthcare Pvt. Ltd. only. However, at the same time, we direct that let the details of the bank account(s) of it be placed before us right from 2008 till H

p. 344 Copy page pinpoint

A date. Interim order dated 1.8.2018 to continue unless otherwise ordered.

13. For the purpose of assessing the proposal to be submitted by the NBCC and to pass requisite orders in this regard, we fix the hearing on 4.9.2018 at 2.00 p.m. Let the aforesaid reports be B submitted by Mr. Anil Mittal and Mr. Ravi Kapoor, Chartered Accounts before 4.9.2018. For further order of other IAs. and arrangement of funds to be provided to NBCC and regarding furnishing of accounts, let matters be listed on 8.8.2018 at 2.00 p.m. Personal presence of Secretary, C Housing and Urban Affairs and Chairman, NBCC, is dispensed with.”

15. There are various order sheets indicating how the wrong and incomplete information had been submitted on behalf of Directors of Amrapali Group of Companies.

D 16. The National Building Construction Corporation Ltd. had been appointed by this Court to complete the construction vide order dated 12.9.2018.

17. Vide order dated 8.8.2018, this Court had directed the Directors of various companies including the Managing Directors to file affidavits regarding immovable properties and moveable properties and their valuation. We had earlier asked the statutory auditors of Amrapali group of companies to conduct the audit. However, it was pointed out on 4.9.2018 that there was the necessity of appointing independent auditors so as to conduct a forensic audit. On 6.9.2018 this Court directed the forensic audit. Following order was passed on 4.9.2018 : “We have heard learned counsel for the parties. A proposal has been submitted by the NBCC in the booklet form. Let it be placed on record along with an affidavit of a responsible officer of the NBCC. Let a copy of the same be circulated to the learned counsel appearing for the parties. G Let Amrapali Group of Companies file a response to the NBCC’s proposal for completion of the project. We have heard Sh. Gaurav Bhatia about the property which can be sold. He has attracted our attention to the affidavit of Shri Anil H

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 345 [ARUN MISHRA, J.]

Kumar Sharma in terms of the Court’s order 10.5.2018 filed with respect to I.A. No. 7366 of 2018 in W.P. No. 942 of 2017. He has submitted that Saleable Area Commercial is described at page 20 of the affidavit. The value is given as per the development model, not the Distress Sale Value. Let Distress Sale Value be also stated on affidavit and with respect to the fact that what are the encumbrances and also the dues of Noida/Greater Noida Authorities as against the property as mentioned at page 20 of the affidavit. He has also attracted our attention to the list of encumbered property on page 27 of the affidavit and list of unencumbered property on page 28. Let affidavit be filed specifically stating with respect to the nature and extent of encumbrances with respect to encumbered property and how much is the amount due and what are the documents executed. D With respect to list of the unencumbered property also mentioned at page 28 there are certain dues of Noida/Greater Noida Authority that may be clearly specified and let affidavit also specifically state that these properties are otherwise unencumbered properties. Affidavit in detail be filed in this regard too. E With respect to the audit, the accounts for three years have not been made available to statutory Auditor as pointed out by Mr. Anil Mittal of Anil Ajay & Co., appointed by this Court. Mr. Maninder Singh learned senior counsel has urged that there is the necessity of appointing independent auditors so as to conduct F a forensic audit. He has prayed for time to suggest the names in this regard. It was also pointed out by the learned counsel appearing for the Bank of Baroda that certain audit exercise has been undertaken on behalf of the Bank of Baroda with respect to the transaction entered into with Bank of Baroda which was the G subject matter of other proceedings. Let the names of Auditor be suggested so as to conduct a deep and pervasive forensic audit of the Amrapali Group of Companies. Suggestions be made on the next date of hearing. H

p. 346 Copy page pinpoint

A Mr. Shyam Diwan and Mr. Siddharth Luthra learned senior counsel have pressed I.A. Nos. 124711-124712 of 2018 and I.A. No. 36562 of 2018. These I.As are to be considered after forensic Audit is concluded and a report is received. List on 6th September 2018.”

B 18. This Court appointed Mr. Ravi Bhatia of M/s. Bhatia & Co. and Mr. Pawan Kumar Aggarwal of M/s. Sharp & Tannan Company to conduct the forensic audit, which was ordered to be conducted with effect from the year 2008 till date, to be completed within two months. On 12.9.2018, a list of properties was submitted which was to be sold by the Debt Recovery Tribunal, Delhi, (DRT) and the details of properties, title deeds and maps were to be submitted to the DRT. This Court directed statutory Auditor, Mr. Anil Mittal, to hand over the original records of Amrapali group of companies vide order dated 12.9.2018. This Court also directed remaining records from 2008 till date, be handed over within 10 days. Amrapali group of companies were also directed to hand over the documents required by the forensic auditors. The matter was taken up by this Court on 26.9.2018. Considering the non-cooperation of the Directors, the following order was passed by this Court on 26.9.2018 : “Heard the learned counsel for the parties.

E It was pointed out by Mr. M.L.Lahoty, learned senior counsel that there are certain existing Directors, namely, Mr. Anurag Sanghai, Mr.Vinay Vishal and Mr.Sankalp Shukla, particulars of their properties, etc. have not been filed as ordered by this Court and there are several other existing or former directors whose names have not been disclosed. Let the names of all the directors F be disclosed without remiss before the next date fixed along with details of asset etc. as already ordered by this Court. It was also pointed out by Mr. Lahoty in I.A. No.116688/2018 that ‘O’ 2 valley particulars have not been disclosed by the group of companies. Let reply to the said I.A be filed by the Amrapali G Group of companies and details of ‘O’ 2 Valley be also disclosed. It was also pointed out that DRT has initiated the proceedings and has directed the production of the original documents, sanctioned plans and other relevant documents available with Amrapali Group of Companies. It was also submitted that valuation has also been H

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 347 [ARUN MISHRA, J.]

ordered. We direct the Amrapali Group of companies and the A Directors viz. Mr. Anil Kumar Sharma, Ms. Shiv Priya, and Mr.Ajay Kumar to submit Maps clearly delineating an unencumbered portion of their properties and other details which have been asked by the DRT. Let them be present before the DRT on each and every date until and unless it is specifically dispensed with by the DRT. Let the order of DRT be complied with by the Amrapali Group of the company before 4.10.2018. With respect to the handing over the documents by the Statutory Auditors as well as by the Amrapali Group of companies, we note it regrettably that order passed by this Court has been violated and the documents have not been handed over in spite of clear and categorical direction to hand over the documents to forensic auditors within ten days. However, it was pointed out by Mr. Gaurav Bhatia, learned counsel that statutory auditors are going to hand over the document, etc. w.e.f. 2008 to 2015 by tomorrow to the forensic auditors. Let all the necessary documents which may be in possession of Amrapali Group of companies in addition to statutory auditors be also handed over from 2008-2015 and also all the papers of Amrapali Group of companies 2015-2018 by tomorrow. We make it clear that the documents with respect to 2015-2018 shall be handed over by the Amrapali Group companies along with all the original documents necessary to do audit shall be handed over to the forensic auditors by tomorrow. Let account books in whatever status they are, at present, be also handed over. We request the forensic auditors to send their representative on the next date of hearing to apprise us of compliance of this order. F

Before IRB certain proceedings are pending for recovery of dues and inter alia, there are dues of Bank of Maharashtra, etc also as pointed out including that of Bank of Baroda. Let the details of all the outstanding dues of secured and unsecured G creditors project-wise and in total be submitted in this Court in a tabular form. Let total outstanding dues be stated, including that of Noida and Greater Noida authorities supported by affidavit. Mr. Anoop Kumar Mittal, Chairman of the NBCC and Ms. Pinky Anand, ASG are present. It was pointed out on behalf of the H

p. 348 Copy page pinpoint

A NBCC that detailed project report has to be prepared of Group A Project within 30 days and Group B and C Projects within 60 days. It was also pointed out that tenders may be permitted to be floated by NBCC Group A and B projects. The NBCC is permitted to float the tenders and also to go ahead with the preparation of the DPRs and also to submit detailed proposals, terms, and conditions in this Court as prayed by them. Existing architects of Amrapali Group of Companies to ensure cooperation with the NBCC. Non-cooperation shall be viewed seriously by this Court. Let DRT go ahead with the process of finding out the encumbrances. We also permit the Bank of Maharashtra and all other such creditors who may have a charge on the unencumbered property to state their claim before DRT. Let reply be filed in IA No.139255/2018, 117300/2018,95140/2018, 135446/2018, 138400/2018. D All applications for impleadments to the extent of intervention are allowed. List on 9.10.2018.”

19. On 9.10.2018 when despite the orders dated 12.9.2018 and 26.9.2018, orders were not complied with, records were not handed E over and there was utter violation of orders passed by this Court, we directed the Police to seize all the documents and to hand them over to the Forensic Auditors from the possession of 46 companies and their Directors. We directed all the Directors to surrender their passports and hand them over to the Police. The observations made by this Court F were being misused by Amrapali group of companies, “No coercive action will be taken by any authority with respect to the building where completion is going on under the order passed by this Court”. As observed on 27.3.2018, we clarified that the observations did not deal with any police investigation in any criminal case or in FIR which may have been registered with the Delhi Police, EOW, to make investigation in any G case which is required to be made. Police was free to make an investigation. On 10.10.2018 this Court directed the concerned police officers to seal all the seven premises situated at Noida and Greater Noida. On 11.10.2018 certain directions were issued so as to facilitate the forensic audit. After audit work was over for the day, on a prayer H

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 349 [ARUN MISHRA, J.]

made by learned counsel on behalf of the three Directors of Amrapali A group of companies, they were permitted to stay overnight in Hotel Park Ascent but they shall not be allowed any access to the mobile phone or the facility of telecommunication without permission in writing of the police. This Court also directed issuance of a formal notice on the suo moto contempt. B

20. On 24.10.2018 the forensic auditors were present. They have disclosed as to diversion of funds of more than Rs.100 crores to a firm known as GauriSuta Infrastructures Pvt. Ltd. in which Ashish Jain and Vivek Mittal were the Directors. They are stated to be the relatives of the Statutory Auditors. We directed the personal presence of Chander Wadhwa, CFO of Amrapali group of companies on the next date. On C 26.10.2018 the Forensic Auditors submitted an interim report. It was pointed out that the tally data of 23 companies, reserves and surplus figures as appearing in the tally data does not reconcile with the reserves and surplus as appearing in the last signed financials. The difference has also been pointed out in a tabular form. There were several advances, D investments, utilisations, advances made to suppliers and payments made to Mr. Anil Sharma and Mr. Shiv Priya, Directors of the company for professional charges, etc. It was also pointed out that in spite of repeated reminders, groupings have not been supplied. Grouping is a process to indicate the process between the stage of trial balance, balance sheet, and profit and loss account. All files had not been handed over and Mr. E Anil Mittal, the Statutory Auditor had sent one file late in the evening. This Court ordered that in case documents were not handed over, the same shall be viewed seriously and the incumbents punished suitably. The last opportunity was granted to hand over the requisite documents to the Forensic Auditors. We directed Statutory Auditors to comply with the requisition made by the Forensic Auditors. It was also noted by this Court that a sum of Rs.242.38 crores had been handed over to Gaurisuta Infrastructure Private Ltd., Vidhyashree Buildcon Private Ltd., Mannat Buildcraft Private Ltd. This Court observed in para 5 thus : “5. It has also been pointed out by Shri Pawan K. Aggarwal in his report that so far with respect to four companies, namely, Gaurisuta Infrastructure Pvt. Ltd., Vidhyashree Buildcon Pvt. Ltd., Mannat Buildcraft Pvt. Ltd. And Jhamb Finance & Leasing Pvt. Ltd., only it has been noticed that a sum of Rs.242.38 crores has been

p. 350 Copy page pinpoint

A handed over to them and in most of these firms Shri Ashish Jain and Shri Vivek Mittal are the Directors. Beside, it was stated before us by Shri Anil Mittal, statutory auditor, that his nephew- Vivek Mittal joined as a Director on the request made by Shri Chander Wadhwa, CFO, to create a company and he has in turn asked Shri Ashish Jain, an employee of his client, to join as another B Directory of at least 10 companies, created at the request of the CFO and Amrapali Group of Companies. It is a shocking state of affairs that the statutory auditor himself was responsible for the creation of companies in an aforesaid manner. Shri Anil Mittal has also stated before us that he was aware that the money was C flowing to the said companies through bank statements. However, on a specific query made by this Court to him, he has admitted that this fact of flow of money was not reflected in the audit report, which was signed by him in the audited Balance Sheet, in spite of knowing the fact that money has flown out of the accounts of the Amrapali Group of Companies to aforesaid companies.” D About the creation of companies consisting of his nephew as Director on the request made by Mr. Chander Wadhwa, CFO for asking Ashish Jain, an employee of his client, to join as another Director. The Company agreed at the request of the CFO and Amrapali group of companies. E

21. Since the CFO did not reply to the questions put by the Forensic Auditors to him, his conduct has been noted by this Court thus: “6. We regretfully also note the conduct of the CFO, who is personally present before us today. His questions and answers have been placed on record by Shri Pavan K. Aggarwal, Forensic Auditor, along with his report and today we find that Shri Chander Wadhwa has contradicted his version which he had made to the Forensic Auditor. He has apologized for making wrong statements to the Forensic Auditor and has assured us that in future he will render all cooperation to the Forensic Auditors rightly, honestly and diligently. He has admitted today that there was appointment order as CFO and there was an authorization in writing issued to him for dealing with the banks. He has virtually contradicted the entire statement which he had made and has feigned ignorance to the Forensic Auditors. Be that as it may. We give him the last H

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 351 [ARUN MISHRA, J.]

opportunity to come out clean and live up to the reputation of a A profession of a Chartered Accountant. Let him cooperate with the Forensic Auditors, supply entire information correctly, truly and diligently. In case any remiss is found, it is made clear not only to him but also to the statutory/internal auditors that we will be compelled to take appropriate action as against them in the B aforesaid factual situation, including the one for the professional misconduct.”

22. It was further pointed out by the forensic auditors that there were 23 more groups of companies to whom money had been diverted and these companies had been created by Amrapali group of companies. This Court directed disclosure of these companies in the order dated C 26.10.2018 thus: “7. Shri Pavan K. Aggarwal has also pointed out to us that there are 23 groups of companies to whom the money has been diverted and these companies have been created. Let the names of the companies be disclosed to the Amrapali Group of Companies and we direct the police to seize all the documents of these 23 companies to which money has been diverted and be handed over to the Forensic Auditors.

9. We also direct the Directors of other 23 companies, which have been identified so far by the Forensic Auditors, to file their detailed affidavits in this Court, disclosing the amount received by them, dates of receipt, for what purpose and how it is utilized and invested by them.”

23. We had also directed Mr. Chander Wadhwa, CFO to file affidavit pointing out appointment order, authorisation, authority to sign any voucher and his entire role in the organisation thus: “13. Let Shri Chander Wadhwa, CFO, file his affidavit in this Court placing the appointment order; authorization made to him from time to time; his authorization letters; details of attendance, if any, at the Board meetings; authority to sign any voucher; and his entire role which he has performed in the organization. Besides, it was also stated by Shri Chander Wadhwa, CFO, that he was one of the Directors of the Amrapali Development UK Ltd. and Saffron LLP, Delhi. Let the details of the Articles of Association H

p. 352 Copy page pinpoint

A of these companies be placed on record and the present composition of the Directors and the entire transactions be disclosed on affidavit, along with the documents of these companies and returns, if any, which have been filed, be also handed over to the Forensic Auditors and affidavit be filed in this Court in this regard.

B 14. It was also stated by Shri Chander Wadhwa that his nephew is one of the Directors in M/s. Rinku Computech, one of the shareholders of the Amrapali Biotech India Pvt. Ltd. His disclosure on affidavit be also made by Shri Chander Wadhwa.”

24. We also issued other directions to ensure that laptops and computers were made available to forensic auditors. On 31.10.2018 this Court noted that certain transactions of Amrapali group to Zodiac/J.P. Morgan, Mauritius/Singapore by the creation of various companies. We directed the bank statement of J.P. Morgan from 2008 till date to be filed. With respect to the money received from the Indian companies and in particular from Amrapali group of companies, all monetary transactions of J.P. Morgan, Mauritius and Singapore with Amrapali group of companies be disclosed with details on affidavit. We directed the Amrapali group of companies/statutory auditors as well as Anil Mittal, Ravi Kapoor and S.N. Dhawan and CFO to disclose the names of all the companies in which their family members or acquaintance were included as Director and all the transactions inter alia family members and relatives. It was also pointed out by Mr. Chander Wadhwa, CFO that though his salary was Rs.15,000 per month, a car worth Rs.43 lakhs was given to him by the company in lieu of his services. It was also pointed out that an amount of Rs.2 crores has been paid on account of Chander Wadhwa’s tax liability by Amrapali group of companies. Further F directions were also issued to make the disclosures. This Court has noted the conduct of non-compliance of the order vide order dated 13.11.2018 thus: “4. This Court has drawn suo moto contempt on 12.10.2018 and that is listed on 20.11.2018. In spite of the aforesaid observation made in the order dated 26.10.2018, still there is gross disobedience of the directions issued by this Court and in the affidavit filed in compliance of the order dated 26.10.2018, the various disclosures as ordered have not been made. Besides that, there is a failure to hand over to the forensic auditors, the relevant material as pointed out by them.

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 353 [ARUN MISHRA, J.]

5. The names of all the related companies have also not been disclosed with which the transactions have taken place. No such statement has been made categorically in terms of the order passed by this Court on 31.10.2018 and absolutely vague averments have been made. This tantamount to deliberate noncompliance of the orders of this Court despite several opportunities having been granted.

7. An affidavit has also been filed by Mr. Anil Sharma of Amrapali Group of Companies in which names of the companies which were ordered to be disclosed have not been disclosed and no statement has been made as ordered on 31.10.2018. It is a gross violation of the orders passed by this Court. There are certain averments in the affidavit which shows that certain properties have been sub-leased, out of Dream Valley, Centurian Park, Amrapali Leisure Valley. The subleases have been created. Full disclosures have not been made as to subleasing since earlier affidavits were contrary to it, it was shown as unencumbered property. we direct the Directors of Amrapali Group of Companies to disclose entire transaction and relevant documents as well as Greater Noida Authorities to file the documents about sub-leases, who is holding the land as on today, its considerations, how it has been used, how much consideration was received and where the amount is lying, and the sub-lease deeds be also placed on record. E We order that there shall not be any further alienation of the sub- leased property by anyone.

8. Statements of various bank accounts have also not been furnished besides other particulars. Learned counsel has again surprisingly prayed for three weeks’ further time to furnish the F details though sufficient time had been given. No direction is being complied with. The Directors are filing the affidavit on each and every date making improvement as the forensic audit progresses. They are not making full disclosures and concealing the facts and have not mentioned in the affidavit what they are ordered to do. It G is clear that they are obstructing the course of justice to the best of their ability. This state of affairs cannot be continued any further. For non-compliance of the directions issued from time to time, we have already drawn suo moto contempt and as subsequent orders

p. 354 Copy page pinpoint

A have also been violated. For the purpose of taking the contempt proceedings to further logical end, before this Court passes any further order, we give an opportunity to the Amrapali Group of Companies and Directors to furnish their reply as to why they should not be punished for the contempt and the violation of the order passed by this Court from time to time by November 19, B

2018. The case will be taken up for considering non-compliance of the order and for filing the wrong affidavits before this Court, on 20.11.2018 along with the suo moto contempt that has been registered vide order dated 12.10.2018.

9. We have two affidavits. One of Anil Mittal and another of C Chander Wadhwa. Both are passing liability on each other for creating certain additional companies. None want to own the responsibility. We require Amrapali Group of Companies and their Directors to file a reply to the affidavit, filed by their CFO Chander Wadhwa and Anil Mittal. Let the copies of affidavits of Chander D Wadhwa and Anil Mittal be furnished to the Advocate on Record, Amrapali Group of Companies. Let para-wise and point-wise reply be submitted as to what has transpired in the Court, as recorded in order-sheets, including what they have stated in their affidavits.

12. It was also pointed out that Computech Pvt Ltd. is in possession of a substantial amount. The forensic auditors are in the process of examining the details. However, at this juncture pursuant to findings of forensic auditors, it was pointed out by Mr. Vikas Singh, learned counsel appearing on behalf of Chander Wadhwa, CFO that a sum of Rs.7.58 crore from Rinku Computech Private Limited and Rs.4.1 crore is lying with Chander Wadhwa, said amount is out of the transactions with the Amrapali Group of Companies. He has volunteered to deposit the amount within three weeks from today. Let it be deposited in the account opened with the Registrar of this court, within three weeks.

14. From the forensic auditors’ report, it is prima facie clear that G Amrapali Healthcare Private Limited, as pointed out in Annexure 11 is created out of funds belonging to the Amrapali group. That is extracted hereunder:

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 355 [ARUN MISHRA, J.]

Annexure-11 A Amrapali Healthcare Private Limited (As per Audited financials 2015-16) Details of Asset (Figures in crore) Sl. No. Asset Book value Address

1. Land 0.53 Amrapali Hospital B P2, NH-34 Omega 1, Greater Noida, Uttar Pradesh-201310

2. Building 4.43 Amrapali Hospital P2, NH-34 Omega 1, Greater Noida, Uttar Pradesh-201310 C

Date of transaction Area (sq. meters)- Constructed area- Sl. No. Shareholder’ % holding No. of shares Name D

1. Ultra Home 99.89 % 93,85,260 Constructions Private Limited

2. Swapnil 0.03 % 2500 Shikha E

3. Suvash 0.08% 7500 Chandra Kumar Total 100 % 93,95,260

* In FY 2016-17 the shares of Ultra Homes Construction Pvt. F Ltd. are transferred in the name of Gaurisuta Infrastructure Pvt. Ltd. Details of Inter Corporate Deposits (figures in crore) Sl. No. Name of company Amount

1. Ultra Home 5.36 G Construction Private Limited

2. Others 0.32

p. 356 Copy page pinpoint

A List of Present Directors Sl. No. Name Begin Date

1. Swapnil Shikha 27/11/2012

2. Suvash Chandra 27/11/2012 Kumar B It has also been pointed out that this hospital is, in fact, owned to the extent of 99.89 percent by Ultra Home Constructions Pvt Ltd. and funding has been made by the said company. It is one of the companies out of the Amrapali Group of Companies involved in the case. Thus, it is apparent that this property has to be sold as it has been purchased out of money of buyers, in order to make available the money for the construction of the buildings.

17. It is a case where we find ourselves in a situation that the money of Greater Noida and Noida Authorities has not been paid, buyers have also been duped. Other financial institutions have not been paid. Construction has not been completed. Money paid by buyers has been diverted for the creation of various companies and assets have been created. All these assets are accountable and have to be sold as it is not the independent investment made by these directors. It is a patent and blatant fraud which appears to have been played, the way in which the money has been transacted and creation of companies has taken place in connivance with the CFO, statutory auditors. It was also pointed out that there are various related companies in which money has been transferred. We restrain all monetary transactions out of bank accounts or any kind of alienation of the property held by the related group of companies where the money has been siphoned and has been used for the creation of the assets. Any transfer made in any manner shall be illegal, void and inoperative.

20. It is also necessary in order to find out the actual amount invested in building activities, out of the funds collected. It also appears that certain companies were created only for the purpose of purchasing raw materials. Whether actual transactions of purchase have taken place is required to be ascertained. Let all the vouchers of the purchase, Bills, orders, etc., which are in possession of Amrapali Group of Companies and the estimates of various raw materials for each and every building without which H

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 357 [ARUN MISHRA, J.]

construction of a building is not possible to be undertaken to be positively handed over to the forensic auditors within a week. We also request the forensic auditors to propose how the actual valuation of the buildings constructed so far by the Amrapali Group of Companies on the spot can be made so as to ascertain the actual investments made and extent of diversion. Let the estimate and quantities of the bills be also furnished by Amrapali Group to the forensic auditors along with the names of all the suppliers and mode of payment. They may also collect information/documents from suppliers.” Certain directions were also issued to DRT to make the valuation to sell the property. Other facts were also noted. C

25. On 20.11.2018 this Court had noted non-compliance of various orders passed by this Court from time to time. Various sub-leases had also been created. We issued the directions vide order dated 20.11.2018 as under: D “3. It appears that various sub-lessees have been created. It was informed to us by the learned senior counsel appearing on behalf of the Amrapali Group of Companies that certain structures have been raised by the sub-lessees. We have asked them to disclose all the information on affidavit, but the order still remains uncomplied. Various directions in this regard have been issued in paragraph 7 of the order dated 13.11.2018. There are various other directions issued time to time also and compliance thereof is still wanting, though time fixed is over.

4. In the circumstances, we give one last opportunity to the Amrapali Group of Companies, particularly to all the Directors of the company and also those who have filed a reply in the Suo Motu Contempt. They have to file their further affidavits in compliance with the aforesaid directions as to what they have done and to make the disclosure as envisaged in various orders.” We had also directed that any non-cooperation with the Forensic G Auditors shall be viewed seriously. Statements of accounts of banks were also ordered to be issued by the banks. In order dated 5.12.2018 this Court observed that let the Amrapali group of companies and their Directors Mr. Chander Wadhwa, CFO and Mr. Anil Mittal to explain as to why criminal action be not initiated against them on the basis of H

p. 358 Copy page pinpoint

A affidavits, various documents and the statements made in this Court on various dates and why their conduct as projected in the case be not reported to the ICAI to inquire. We directed the production of details of immovable properties as well as the movables etc. This Court also noted that DRT has pointed out that there was non-cooperation and non- compliance on the part of Amrapali group of companies. It was also B pointed out to this Court that certain buyers/companies who have booked the flats by making payment of a paltry amount for the purchase of several flats/plots, did not appear to be genuine buyers. We have directed the Forensic Auditors to look into this issue. We also directed all the Directors of companies, their relatives, family members, Mr.Chander C Wadhwa, CFO and statutory auditors who were in receipt of money of home buyers, to deposit the same in this Court. The last opportunity was given to do so.

26. On 12.12.2018 in para 4 we have observed thus: “4. Pursuant to our order dated 05.12.2018, Mr. Adhikari Devi D Prasad, Mr. Bhuvan Pant, Mr. Prasanna Kumar Rout, Mr. Jagannath Sharma, Mr. Tarun Kumar Sharma, and Mr. Sunil Kumar and also Mr. Anil Sharma, Director, Amrapali Group of Companies are present in the Court. We generally asked them how the accounts for the period 2015 to 2018 were prepared by them and submitted in the Court. They have stated that it was based on tally data which was given to them. In addition, Mr.Prasanna Kumar Rout, who worked as an Accountant with Amrapali Sapphire, stated that he made the entries up to August 2018 in the tally data on the basis of the documents/vouchers which were made available to him. Mr.Jagannath Sharma, who is a Chartered Accountant and partner in L.D.R. Company stated that they have prepared the balance sheet on the basis of the tally data provided to them for the years 2015 to 2018. However, when cross-checked with the Forensic Auditors, the Court was informed that the data from 2015 to 2018 has not been made available fully to them. It was also pointed out that there should be supporting documents/material to make these entries other than the Bank statement when these statements have been prepared that should also be clarified by Amrapali Group and supplied to the Forensic Auditors.”

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 359 [ARUN MISHRA, J.]

We also directed details of unsold apartments and flats of the projects to be submitted in this Court. It was also pointed out that the methodology has been adopted by creating sub-leases as a mode of siphoning off the amount of the buyers. This Court noted the following facts and issued the requisite directions: “8. Mr. Lahoty, the learned counsel, also pointed out that the methodology which has been adopted for creating the subleases was, by and large, a mode of siphoning the amount. He has given the following details as Annexure E, which is extracted below:- “CREATION OF SUB-LEASES I. Amrapali Centurian Park: (Current Status: 228646 Sq. Mts.) C

As per the lease deed, Lessor here is Greater Noida Authority

1. Lessee here is Amrapali Centurian Park Pvt Ltd (Total Area – 2,72,916 Sq Mts)

2. Sub- Lessee of Amrapali Centurian Park here are: D o Hawelia Builders Pvt. Ltd (Hawelia Valenova Park – 14920 Sq Mts) o DSD Homes Pvt Ltd (Novena Green – 14760 Sq Mts) In DSD Homes, Mr. Nishant Mukul (brother in law of E Chairman Mr. Anil Sharma) Ex-Director of Amrapali Group was also a director. o Elegant Infracon Pvt Ltd (Elegant Villa Phase I, III, & IV - 14590 Sq Mts) In the Elegant Infracon following are consortium partners F with shareholding: Vidhyashree Buildcon Pvt Ltd (26%) Nishant Creation Pvt Ltd (19%) Anjali Buildcon Pvt Ltd (20%) Agrawal Associates (Promoters) Ltd (5%) G Elegant Infracon Pvt Ltd (19%) Stunning Construction Pvt Ltd (11%) Vidhyashree Buildcon is one of the companies as mentioned in an order dated 26.10.2018 page 13, point 5, to whom sum of Rs.242.38 crores has been handed over. Mr. Pankaj Jain (current H

p. 360 Copy page pinpoint

A director of Amrapali Group) was also a director in Vidhyashree Buildcon Pvt Ltd. Sushma Bajaj & Kulbhushan Bajaj (Current directors of Amrapali Group) are also directors in Nishant Creation Pvt Ltd. Mukesh Kumar Roy (DIN: 2175661) who is presently director of Amrapali Group (listed in 46 companies LA Residentia) is also director of Anjali Buildcon. In Anjali Buildcon Mr. Sanjiv Kumar (DIN: 03136323) is also one of the directors, who is the director of New Tech La Palacia to whom Shri Balaji Hi-Tech Construction Pvt Ltd (A sublessee of Amrapali Dream Valley) has further transferred the sub-lease of said project. Stunning construction is one of the Amrapali Group Company listed in 46 companies.

D Rs 46 Crs (Approx) amount which is to be paid by sublessee/s II. Amrapali Dream Valley: (Current Status: 260307) As per the lease deed, Lessor here is Greater Noida Authority.

1. Lessee here is Amrapali Dream Valley Pvt Ltd (Total Area – E 354298 Sq Mts)

2. Sub- Lessee of Amrapali Dream Valley Pvt Ltd here are: o M/s Shri Balaji Hi-Tech Construction Pvt Ltd (Total Are – 12479 Sq Mts) F o M/s K.V. Developers Pvt Ltd (Total Area – 19986 Sq Mts) o M/s J.M. Housing Ltd (Total Area – 33537 Sq Mts) o M/s Samridhi Reality Homes Pvt Ltd (Total Area – 27989) o Sum Total Area is 93991 Sq Mts Shri Balaji Hi-Tech Construction Pvt Ltd one of Amrapali Group G company (Sr.53 Page 2913 of an affidavit by Mr. Anil Sharma as Affidavit Submitted in terms of order dated 26.09.2018, 31.10.2018. submitted on 12.11.2018, where Mr. Ajay Kumar & Mr. Mukesh Kumar Roy were directors. Shri Balaji Hi-Tech Construction Pvt Ltd has further transferred the sub-lease to a new company namely New Tech La Palacia H

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 361 [ARUN MISHRA, J.]

Pvt. Ltd, which has applied for a revised sanction plan dated A 21.01.2013 and it’s not yet approved. (page 18 of GNOIDA affidavit) In New Tech La Palacia Mr.Sanjiv Kumar (DIN: 03136323) is a director who is also a director of Anjali Buildcon (one of the shareholders of Elegant Infracon Pvt. Ltd. who is sub-lessee of B Amrapali Centurian Park. Rs. 91.89 Crs (Approx) amount which is to be paid by sublessee/s III. Leisure Valley: (Current Status: 396124.20 Sq. Mts C As per the lease deed, Lessor here is Greater Noida Authority.

1. Lessee here is Amrapali Leisure Valley Pvt Ltd (Total Area – 419519.20 Sq. Mts.)

2. Sub- Lessee of Amrapali Leisure Valley Pvt Ltd here are: D a. M/s Start Landcraft Pvt. Ltd. (Total Are – 23395 Sq Mts) Rs.3.2 Crs. (Approx) amount which is to be paid by sublessee/s”

9. We have directed Mr. Anil Sharma, Director of Amrapali Group of Companies and other Directors to explain the sub-leases and place the documents regarding the creation of subleases on record. E Mr. Anil Sharma stated before us that approximately a sum of Rs.66 Crores has been received by the creation of these sub- leases and that amount has been accounted for in the accounts of concerned Amrapali Group of Companies. With respect to the money utilization in an aforesaid manner, companies, names of Directors, relationship and activity made by sub-lessee so far, let details be filed on an affidavit. We also request the Forensic Auditors to look into this aspect and submit a report before us on the next date of hearing along with other aspects mentioned in the above-quoted details filed on behalf of the flat buyers.”

27. The directions were also issued to DRT to make a further valuation of Tech Park (Hotel) in Greater Noida. On 25.1.2019 we issued certain directions. On 11.2.2019 we directed M/s. J.P. Morgan to disclose the names of the investors and beneficiaries who invested in the Mauritius Fund which had invested in Amrapali INR Rs.85 crores. On 14.2.2019, dues were pointed out against individuals and Directors also. Against H

p. 362 Copy page pinpoint

A Directors there was a report of loans and advances to the extent of Rs.161.51 crores as noted in the order. We issued certain directions with respect to M/s. Golf Link City Projects Private Ltd. as well as M/ s. Royal Golf Link City Projects Pvt. Ltd. We directed Mr. Anil Kumar Sharma to deposit an amount; whereas the non-compliance made by Amrapali was also pointed out by the buyers which had been noted. As B inability was expressed on behalf of M/s. J.P. Morgan to explain valuation report dated 23.10.2013 submitted by Mr. Sudit K. Parikh & Co., Chartered Accountants, they were ordered to explain the valuation report on the basis of which Rs.140 crores had been withdrawn by M/s. J.P. Morgan. It was also pointed out in this connection that the shares of C Amrapali Zodiac were ultimately purchased for Rs.140 crores by M/s. Neelkanth and M/s. Rudraksha Forensic auditors pointed out that two persons namely Chandan Kumar, is a peon of Mr. Anil Mittal, statutory auditor and was working in his office and one is Vivek Mittal, nephew of Mr. Anil Mittal, who was doing petty jobs of sub-contractors, getting a monthly income of Rs.15,000. They were stated to be Directors in the D companies, i.e., M/s. Neelkanth and Rudraksha. They were not having any capacity to give Rs.140 crores to M/s. J.P. Morgan. This Court has noted the facts thus: “As inability was expressed on behalf of M/s. J.P. Morgan as well as other counsel to explain the report dated 23.10.2013 E submitted by Mr. Sudit K. Parikh & Co., Chartered Accountants. In the circumstances, so as to find out the basis of the valuation, it is necessary to call Mr. Sudit K. Parikh [Address : Ballard House, 2nd Floor, Adi Marzban Path, Ballard Pier, Fort, Mumbai – 400 001] to explain the valuation report on the basis of which Rs. 140 F crores had been withdrawn by M/s. J.P. Morgan. Let the Registry send a communication to Mr. Sudit K. Parikh to appear before this Court on the next date of hearing. It was pointed out that shares of Amrapali Zodiac were ultimately purchased for Rs.140 crores by M/s Neelkanth and M/s G Rudraksha. It is pointed out by forensic auditors that there are two persons, namely, Chandan Kumar, who is a peon of Mr. Anil Mittal, Statutory Auditor, and working in his office and another one is Vivek Mittal, who is the nephew of Mr. Anil Mittal, and is doing petty jobs of sub-contractors and having a monthly income of Rs.15,000/-. It is stated by the learned counsel appearing on H

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 363 [ARUN MISHRA, J.]

behalf of M/s J.P. Morgan that in one company, Chandan Kumar A and Atul Mittal were Directors. M/s Neelkanth and M/s Rudraksha are the private limited companies in which the abovementioned persons are named as Directors. They are not having the capacity to give an amount of Rs,140 Crores to be paid to M/s J.P. Morgan. This is a serious kind of fraud apparent from the aforesaid facts. B On being asked, Mr. Anil Kumar Sharma has shown reluctance to disclose about Atul Mittal, who was the Director of M/s Rudraksha along with Chandan Kumar. It is apparent that it was not a fair transaction of sale. That fact is required to be gone into. Let Mr. Anil Mittal and Directors of Amrapali Zodiac and Mr. Anil Sharma explain the situation by filing their personal affidavits from where the money came to be paid to M/s J.P. Morgan, who managed the money and how the companies were framed and for what purpose.”

28. On 28.2.2019, this Court considered IA No.35430/2019 filed by Deputy Commissioner of Police, EOW, Delhi Police, seeking permission to take into custody various Directors namely Anil Kumar Sharma, Shiv Priya, and Ajay Kumar. This Court has passed the following order: “I.A.No. 35430 of 2019 E This application has been filed by the Deputy Commissioner of Police, Economic Offences Wing, Delhi Police, seeking permission to arrest and take into custody various Directors, namely, Anil Kumar Sharma, Shiv Priya, and Ajay Kumar. They are presently in the custody of Noida Police vide our order dated 11.10.2018. We make it clear that the Delhi Police is free to arrest/take into custody any or all the other Directors of Amrapali group of companies. Any order passed by this Court, in this case, shall not come in their way to do so. Let the Police investigate the entire gamut of the scenario of the various projects, as projected in this case and various orders passed and investigate the entire matter. Prima facie, we find that the case requires serious investigation in the facts projected by the Directors, CFO, and the statutory auditors. The Police are directed to investigate the role of Mr. Anil Mittal, Statutory Auditor, and Mr. Chander Wadhwa, CFO as well. The H

p. 364 Copy page pinpoint

A Police may interrogate them and find out their criminality, if any, in the matter. Let various order sheets of this Court as well as the affidavits of Mr. Chander Wadhwa and Mr.Anil Mittal and Directors of Amrapali Group of Companies indicating the operational methods B of diversion of funds and creation of companies be also furnished to the Deputy Commissioner forthwith. The application is allowed.” This Court also issued other directions with respect to the persons who were called by the Forensic Auditors but did not report. Other C directions were also issued.

29. On 9.4.2019 we requested the parties to address this Court how to protect the interests of the buyers so that they can get a clear title after completion of the projects. In view of the dues of Noida and Greater Noida authorities and other secured creditors, such as banks, etc. how to work out equities in the circumstances and requested the parties to address this Court. Amrapali group of companies to address how much investment they have made in the project and what they have done with the money of the buyers and to inform us as to diversion of the money of home-buyers, how to secure it and why they should not be suitably dealt with in accordance with law for what they have done. In view of the aforesaid facts projected in various affidavits of the Directors and the interim report of forensic auditors. This Court listed the case for hearing on various issues. We have heard Forensic Auditors, Mr. Krishnan Venugopal, learned senior counsel and Mr. M.L. Lahoty, learned counsel, on 30.4.2019. Thereafter, we further heard the matter on 1.5.2019. They F concluded the arguments. Mr. C.A. Sundaram learned senior counsel was also heard and the learned counsel on behalf of Bank of Maharashtra and Bank of Baroda as well as Ms. Geeta Luthra and Mr. Gaurav Bhatia, learned senior counsel on behalf of Amrapali group. On 2.5.2019 and on 8.5.2019 certain directions were issued. On 10.5.2019 arguments were further heard and the case was reserved for orders. SUBMISSIONS

30. Mr. M.L. Lahoty, learned counsel appearing on behalf of 49,575 home buyers submitted that under section 8 of the Real Estate Regulation and Development Act, 2016 (for short, ‘the RERA’) and also in view of the provisions contained in sections 13 and 14 of the U.P. Industrial

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 365 [ARUN MISHRA, J.]

Area Development Act, 1976 (for short, ‘the Industrial Development A Act’), the lease deeds granted by Noida and Greater Noida authorities were ordered to be cancelled. In the lease deed also, there is a specific stipulation as to cancellation clause in case of cancellation and imposing penalty and for such other actions against the builder in case of default. Home buyers further submitted that after payment of first 10% of the lease premium, Amrapali Group has not paid any of the 20 half-yearly instalments from 2010 onwards. The Noida and Greater Noida authorities have been liberal, and not taking any stringent action against Amrapali Group which had been mandated by virtue of the provisions contained in the lease deed. The dues of Noida and Greater Noida authorities cannot be treated at par with the dues of home buyers. Home buyers further submitted that so far as the dues of the banks are concerned, they are not placed on any better footing and Forensic Auditors in their report have stated that but for the connivance of the bank officials, the act of money siphoning on such large scale would not have taken place. Banks have failed to monitor utilisation of the borrowed funds and they acted as mute spectators to the diversion of funds by Amrapali Group of Companies, its Directors and officials. Mr. Lahoty, on behalf of home buyers further submitted that the Reserve Bank of India has issued Master Circulars from time to time since 2014 onwards as to the obligations of the Banks and specifically directed that banks must necessarily monitor the ‘end use’ of the loans granted by them and call for periodical reports thereof. In the case of diversion and siphoning of loan funds, banks must invariably take action against defaulters. Reliance has been placed on RBI’s Master Circulars of July 2009, 2014 and 2015. In case after the cancellation of the leases, they are not able to construct, they may enter into an arrangement with any reputed builder like NBCC or L&T, etc. F A roadmap thereof need be drawn to be monitored by a Monitoring Committee which duly represents the interest of the home buyers, may also be directed to be constituted which will not only oversee the work but also oversee the construction activities and also submit a report to this Court so that the needs of the home-buyers are finally achieved. A further audit of connected companies may be ordered. Bank accounts G with Bank of Baroda are operationalised towards maintenance and electricity as families are residing in 21 Towers have been regularly depositing the electricity and other dues in their accounts which have become defunct after the discharge of IRP vide order dated 8.8.2018 passed by this Court. The amount be utilised for pending bills from August H

p. 366 Copy page pinpoint

A to October 2018 towards electricity and maintenance services by nominating a Joint Signatory in place of IRP.

31. Mr. Krishnan Venugopal, learned senior counsel appearing for home-buyers has urged that there is the distinction between mortgage and charge as a mortgage involves the transfer of interest, whereas, in case of a charge, there is no transfer of interest. He has further urged that non-production of relevant documents despite the court order, leads to a presumption of an adverse inference. As Amrapali Group has failed to comply with the court’s order, an adverse inference may be drawn against them. He has also pressed into service public trust doctrine and submitted that the State or the public authority which holds the property for the public or which has been assigned the duty of grant of largesse, etc. acts as a trustee, and therefore, has to act fairly and reasonably, promote public good and public interest. Public trust doctrine is a part of the law of the land. The doctrine is a facet of Article 21 of the Constitution. The action has to be bona fide. Public property cannot be transferred to private property in case it affects the public interest. General welfare and common good are to be kept in view by the public authorities exercising public power and discharging public duty.

32. Mr. Krishnan Venugopal, learned senior counsel further urged that in view of the findings recorded by the Forensic Auditors, section 8 E of the RERA has to be invoked. He further submitted that even though Amrapali was defaulting on payments of lease rents, authorities continued to allot further plots to them. The first lease had been granted on 1.5.2007 and the last on 30.7.2010. Despite default, they continued to issue permission to mortgage/NOCs for that purpose between 24.12.2009 and 27.2.2013, in spite of the fact that there was no payment of premium and advance annual lease rent up to date. The authorities have acted in breach of clause 7 of the conditions of the lease deed, they failed to monitor the progress of the project to protect the interest of the public.

33. In reference to banks, Mr. Venugopal submitted that banks were giving loans to finance Amrapali, in spite of the fact that they were diverted to other accounts and not utilised for construction. Banks do not even have effective mortgages because of NOCs. clearly, state that they would become effective only when Amrapali makes up to date payment of the premium and advance annual lease rent, and under the conditional NOCs., the banks were required to obtain confirmation from the authorities as to payment of premium and lease money for the

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 367 [ARUN MISHRA, J.]

mortgage to become effective. The banks have not handed over copies of mortgage deeds despite orders. Moreover, the banks have a second charge after all dues of the Noida and Greater Noida authorities are realised. The authority’s ownership rights over the plots are paramount. The public sector banks are also subject to public trust doctrine to the extent that they are custodians of public funds and are beneficiaries of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 and Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 passed in pursuance of the Directive Principles under Article 39(b) and (c) of the Constitution. The facts demonstrate the collusion between Amrapali Authorities and the banks. The home buyers who invested their hard-earned money, cannot be cheated and deprived of their money as well as their houses. Authorities cannot seek to recover any additional amount from the home buyers. They must be directed to complete the construction by realising only the remaining dues from home buyers under their agreements with Amrapali, by selling off unsold inventory of flats, etc. available with it and by selling off excess land allotted to Amrapali. The Committees of home buyers must be set up for each project to monitor the quality and progress of the construction as well as the costs involved so as to ensure that contractors do not engage in fraud or inflate construction costs in the course of completing the projects.

34. On behalf of the home buyers Association, it was submitted that by promoters of the real estate sector in India from 2008-2009, home buyers have been promised the houses of which they have been deprived of on a large scale in spite of the fact that they have paid a substantial amount of money. Construction has not progressed and money has been diverted elsewhere. There is a charge of the money of the home buyers must be treated as the highest priority. They have paid towards dues of Authorities also which amount has been diverted. Banks and authorities have failed to discharge their duties. Banks have granted loans to the projects in some cases which were not sanctioned even on the date of grant of loan. For example, Phase III of Amrapali Adarsh Awas Yojana Project. Banks have released the complete payment amounts to the builder without the construction having been reached even 10 to 20%. As such lending was not permissible. The current scenario is that the construction of the various projects is stalled and the home buyers are without any hope of the promised homes. Certain incumbents who have taken loan are compelled to repay the loan and H

p. 368 Copy page pinpoint

A money has been siphoned out. As such appropriate relief be granted to home buyers in view of the facts found in the report of the Forensic Auditors.

35. On behalf of the home buyers, reliance has been placed on the provisions contained in section 4(5) of the U.P. Apartments (Promotion B of Construction, Ownership, and Maintenance) Act, 2010 (for short, the ‘U.P. Apartments Act, 2010’). It is provided that the completion of the construction works of a building as a whole or the completion of an independent block of such building, as the case may be. The completion certificate can be issued for the blocks which have been completed. Noida and Greater Noida authorities are not issuing NOC for the reason C that payment of land dues has not been made by the builder, for which authorities are also responsible. The non-payment of dues by the builder should not come in the way as more than 9000 home buyers are already residing in the buildings. Most of them have paid the entire amount to the promoter. Others are waiting for the completion of buildings.

D 36. On behalf of Noida Authority, learned senior counsel submitted that public trust doctrine is not attracted to the facts in the instant case as there is no breach of trust. The decision to transfer lease at 10% was the carefully thought out policy of Noida approved by the State Government. It was applied uniformly to all and not restricted only to the E Amrapali Group. It was submitted that allotment of group housing plots is made by Noida authority in accordance with the prevailing policies and rates which have kept changing with times. In 2007, the allottees were required to pay 10% of the total premium of the plot as reservation money, before formal allotment letter was issued. Then, a further amount of 30% had to be paid within 60 days from the time of allotment. Thus, F 40% premium was required to be paid. Balance 60% had to be paid in eight half-yearly instalments along with interest.

37. It was further submitted on behalf of the Noida Authority that primarily on account of the global recession in the world economy, in the year 2008 a decision was taken to revise the rate of allotment money to G 10%. Thus, the total sum of 20% was to be paid before handing over possession. In the year 2009, the rate of allotment money along with registration money was revised to 10% of the total premium for the possession to be handed over. However, steps were taken to provide (i) facility of re-scheduling of payments in case the allottees intended to complete his project as per agreed policy; (ii) to exit the project; (iii)

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 369 [ARUN MISHRA, J.]

moratorium of two years on payment of balance premium; (iv) facility of sub-division of plots of area larger than 10 acres so as to make the larger projects financially viable.

38. It was also submitted on behalf of Noida Authority that after 2005, a total of 114 plots had been allotted to various group housing societies. 81 have been handed over the possession on payment of 10% B of the total premium. 29 projects, out of these 81, have been completed. Out of other 33 allotted earlier, 11 had been completed, and 7 have obtained part-completion certificates. Noida Authority, being a responsible public organisation, has been diligent in pursuing Amrapali Group, it has not taken the drastic recourse of terminating the lease deed as that would entail demolition of the existing structures as per the provisions of the C lease deed. In terms of the lease, home buyers have no title or legal rights to possession of the flats they are occupying. As the projects have been completed to some extent, it would have been unfair to leave the home buyers in the lurch. The occupancy certificate is issued in accordance with the provisions of the New Okhla Industrial Development D Area Building Regulations, 2010 (for short, ‘the Regulations of 2010’). Clause 20.0 of the Building Regulations requires the allottee to submit a notice of completion of the building, inter alia, with a structural safety certificate, NOCs from the Fire Department, Explosives department and Environment department. No building erected, re-erected, can be occupied in whole or in part unless occupancy certificate is issued by the CEO of E the Authority as per clause 20.1.1 of the Regulations. The lessee/promoter is entitled to allot the dwelling unit on a sub-lease basis. However, he has to make the payment of premium of the plot to Noida authority when permission to transfer built-up flats or part with possession of the whole or any part of the building which has been constructed is granted. The F physical possession of flats can be given to home buyers only after execution of sub-lease deed and sale deed has also to be registered before actual physical possession of the flat is handed over as required under the provisions of Registration Act, 1908. The declaration required to be made under section 12 of the U.P. Apartments Act, 2010 is also to be filed. G

39. It was further urged on behalf of the Noida Authority that the Noida Authority had the first charge including those created in favour of banks and financial institutions. The mortgage could have been effected in favour of Banks/financial institutions recognised by the RBI, National H

p. 370 Copy page pinpoint

A Housing Bank, HUDCO, New Delhi and the charge of such institution shall be the second charge on the dwelling units, thus, being financed. The permission to mortgage shall be effective only on making full payment of premium and up to date annual lease rent of group housing society. An intimation shall be given to the Authority about the creation of the charge by way of mortgage. The mortgage permission shall be granted as per the terms of the lease only on payment of dues of authorities.

40. It is submitted that it is open to the authority to cancel or terminate the lease. In the case of misrepresentation, suppression or violation of the conditions of lease and in the case of default and at the time of cancellation, an amount equivalent to 25% of the total premium of the plot shall have to be forfeited and possession of plot shall have to be resumed by Noida Authority with structure thereon. In the instant case, no dues certificate had not been issued by the Noida authority nor any sub-lease deed has been executed. The possession by various home buyers in respect of constructed flats is contrary to the provisions of the lease deed. The builder could not have handed over the possession. Any occupation of flats by the home buyers without compliance of mandatory provision of occupancy certificate and without payment of statutory dues, both to Noida Authority and to the Collector of Stamps and without execution of tripartite sub-lease deed may not be termed as legal and as such which could have resulted in their eventual eviction. E

41Copy pinpoint41. It was further submitted on behalf of the Noida Authority that pursuant to order dated 27.11.2017 passed by this Court, on depositing 10% of the dues to issue completion certificate such NOC could not be issued and the order passed by this Court has not been complied with by builder/promoter as such possession could not be handed over. In spite of reiterating the aforesaid direction of this Court on 31.1.2018, it has not been complied with by the promoter/leaseholder. It is submitted by the Noida Authority that its dues to Amrapali group exceed Rs.2191.38 crores till 30.4.2019. It is in public interest to ensure payment of premium/ lease money with penal interest etc. so that the development of the various projects at Noida is not impeded. Prayer has been made that in whatever manner practicable and by whatever scheme this Court may think fit and proper, aforesaid dues of the authority may be secured and ordered to be recovered.

42Copy pinpoint42. On behalf of Greater Noida Industrial Development Authority, H it was submitted that its dues were Rs.3,234.71 crores as on 15.1.2019

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 371 [ARUN MISHRA, J.]

in respect of 5 group housing plots of Amrapali group. These dues inter alia comprise of the amounts payable against the premium plus the penal interest for default, additional compensation and interest thereon, the lease rent and interest thereon and time extension charges for each of the five plots. Title in the flats can pass only by way of execution of a registered instrument. However, before that procedural requirements pointed out on behalf of the Noida Authority have to be complied with. Once completion certificate is issued, the rights in the flat will pass on to the flat buyers and then they would contend that the dues of the authority should be recovered from the builders who have defaulted in making payment and not the flat buyers. On the basis of that privity of contract, they would contend that the liability to make payment of the premium and other dues payable to Greater Noida authority, by lessee/builder is between them and they are not parties to the lease deed.

43Copy pinpoint43. It is further submitted on behalf of Greater Noida Authority that even with regard to the issuance of completion certificate for a part of the projects, the existing policy is that against the part-payment received, completion certificate would be issued in the same proportion minus 10%, so that the financial interest of the authority is protected. Therefore, sub-lease deeds too would be executed up to 90% of the proportion in which part-payment has been received. It was further submitted by the Greater Noida Authority that section 19(10) of RERA also provides for taking over of physical possession after issuance of completion certificate. The provisions of the U.P. Apartments Act, 2010 are also similar as well the provisions in the lease deed.

44Copy pinpoint44. It is further submitted on behalf of Greater Noida Authority that FAR admissible is 02.75 only and not 3.50. The differential FAR of 0.75 is not purchasable. The calculations made by Amrapali based on F FAR of 3.50 is itself wrong. FAR has not yet been purchased by Amrapali group by depositing the charges and submission of consent of two-thirds of the apartment owners. Under section 4(2)(1)(D) of RERA, 70% of the amount received from home buyers is to be put in a separate account to be maintained in a scheduled bank and is to be used towards G construction and land cost. The land dues payable to Greater Noida authority constitute an encumbrance as provided in section 4(1)(b) of the U.P. Apartments Act, 2010. As per section 11(4)(c) of RERA, it is the duty of the promoters to certify that all dues and charges have been paid. Thus, it follows that money received from the flat buyers is to be H

p. 372 Copy page pinpoint

A spent on construction and payment of land dues. Therefore, payment of land dues cannot be denied to it. Land dues are in the nature of public money. Amrapali group is bound to pay it. The amount is payable in instalments as such same is interest bearing for availing the facility of payment in instalments as such the land cost payable increases. In case of default, penal interest follows. There was no order passed by the B Allahabad High Court for staying construction on the leased plots. Amrapali Group was in possession of the allotted land and was proceeding with the construction. For 4 years, it has prayed for zero periods of interest to which the group is not entitled. It would lead to unjust enrichment by Amrapali as they have realised dues from home buyers and have not paid to the Authority. The order passed by the NGT with respect to Okhla Bird Sanctuary case was not applicable to the land in question. The dues payable to the authority are recoverable as the arrears of land revenue. The authority has the first charge. The permission to the mortgage was conditional one, it has not been complied with, in particular, conditions B, C and D. The mortgage had to be renewed every year and is subject to the payment of land premium, etc. The Greater Noida authority has written numerous letters to Amrapali group of companies to make the payment of its dues. In the case of Unitech, yet another Group, the Authority has cancelled the allotment which was questioned in this Court. As the cancellation of the allotment in case of E Amrapali could have led to greater complications as construction had commenced with third-party interest created. It would have opened floodgates to litigation. As such cancellation of lease deeds was not resorted to.

45Copy pinpoint45. Ms. Geeta Luthra and Mr. Gaurav Bhatia, learned senior F counsel appearing on behalf of Amrapali group of companies, have urged that Amrapali group started its activities in the name of M/s. Ultra Home Construction Pvt. Ltd. in the year 2003 with the purpose of providing low-cost housing to projects in Indirapuram (Ghaziabad) Noida, Lucknow, Indore, Bhilai, and more than 15,000 flats were handed over by the developers to flat owners in 5 different housing projects in Indirapuram G and Greater Noida. The balance sheets of Amrapali group of companies at 2007-08 shows that it had carried forward the money earned by the company to launch the projects after 2009-10 upon allotment of plots by Noida and Greater Noida authorities in their respective areas. Immediately after the allotment of land, the work was started and the Allahabad High H Court quashed acquisition. It had to be stopped as per the order passed

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 373 [ARUN MISHRA, J.]

by the Allahabad High Court. When in 2016 Amrapali group again started to infuse capital and manpower, proceedings were initiated in NCLT by Bank of Baroda as against Amrapali Silicon City Pvt. Ltd. and M/s. Ultra-Home Constructions Pvt. Ltd. There were legal impediments/force majeure conditions in completing the projects within the period given in the flat buyer agreement. The Allahabad High Court finally decided the matter in Gajraj Singh & Ors. v. State of U.P. on 21.10.2011. The Patwari Village issue was pending before this Court till 2015. On 14.5.2015 this Court finally decided the matter in the case of Savitri Devi v. State of U.P. It was an order passed by the National Green Tribunal with respect to Okhla Bird Sanctuary which also hindered the work. Higher compensation was ordered to be paid by the Allahabad C High Court in 2011. The period of litigation ought to have been treated as zero periods for the purpose of payment of dues by Noida and Greater Noida authorities. Amrapali Silicon City was affected on account of litigation and land acquisition issues. The work of Leisure Valley, Dream Valley, and Leisure Park were also affected. There was an issue of the D approach road with the farmers with respect to Sapphire Housing Project. Other projects were also affected due to farmers’ agitation, want of proper roads, etc. The authority was required to give electricity, sewer and water connections. Proper facilities were not extended timely.

46Copy pinpoint46. It was further submitted on behalf of Amrapali Group that a High-Power Committee has been constituted by the State of U.P. A E sum of Rs. 2,715 crores are to be paid to the authorities including the interest and purchasable FSI costs. The outstanding of banks is Rs.985 crores. It was submitted that the projects are viable in case some relief is granted towards land dues of authorities and dues of the banks. The joint inspection indicated that substantial construction had been carried F out. The cost of construction to complete the launched projects, as per NBCC is Rs.6827 crores; whereas the cost as per Amrapali group is Rs.5630 crores. Calculation of NBCC is wrong. The projects are divided into 3 categories: (i) where the allottees were living; (ii) advanced stage of construction; and (iii) work is at a nascent stage. The amount defaulted by buyers is Rs.511 crores, total receivables from them are Rs.5,332 G crores. The encumbered and unencumbered assets can be sold to complete the project. The valuation worked out by the DRT comes to Rs.7,353 crores considering the maximum permissible FAR of 3.50. The order may be passed in respect of amounts due from Raipur and Bhubaneswar Housing Board which are recoverable from them to H

p. 374 Copy page pinpoint

A deposit in Court. Certain suggestions have also been made on behalf of Amrapali group for arranging the required funds. That home buyer may be directed to pay the cost. Unsold inventory of the launched projects on sale would generate Rs.1,922 crores. In case of any shortfall, there can be a sale of unencumbered assets of the company. Reputed builders may be engaged for undertaking the construction of the various projects. B Amrapali has spent Rs.10,630 crores as against Rs.11,652 crores received from home buyers. As per the affidavits dated 16.5.2018 and 3.12.2018, the total cash outflow is Rs.395 crores utilised by the group in the creation of assets whose current valuation as per DRT is Rs.1200 crores. The Noida and Greater Noida authorities have partial registration policies as C provided in Building Regulations and the Act and an appropriate Committee may be constituted for supervision. Amrapali group shall extend all help in the building of the projects.

47Copy pinpoint47. With respect to the report of the Forensic Auditors, it has been submitted that there is no undervaluation in booking the flats. The D value of flats depends upon the situation etc. as the flats were booked at different times, they have different prices as per the prevailing market. In certain cases, the customers took possession of various Towers in partially unfinished conditions and managed the pending work by themselves. In some projects, lifts were installed by the customers’ associations. In some other cases, interiors of the flats were finalised by the customers themselves. Amrapali group reduced the value of such flats in their books accordingly.

48Copy pinpoint48. With respect to other amounts recoverable from KMPA/ relatives/Directors, as per the affidavit submitted by Shiv Priya on 20.11.2018, Rs.4.3 crores were paid towards his taxes. The same has been adjusted against the salary due of Rs.4.4 crores from various Amrapali group of companies. Salary of Rs.1.6 crores is recoverable by Shiv Priya from Amrapali group of companies. As per the affidavit of Mr. Ajay Kumar, Rs.1.21 crores were paid by the company towards his taxes out of his outstanding salary up to 31.3.2015. Though his salary for the financial years 2016-18 is still to be mentioned in the books of accounts on account of his due salary. A sum of Rs.25 lakhs has been paid by him to Ultra Home Construction Pvt. Ltd.; in addition, a sum of Rs.25 lakhs paid to Yogesh Chand is duly debited in his ledger and as mentioned in his affidavit.

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 375 [ARUN MISHRA, J.]

49Copy pinpoint49. With respect to Amrapali Infrastructure Pvt. Ltd., it was A submitted that an advance to Directors of Rs.113.54 crores was used by the Directors to purchase shares of Ultra Home Construction Pvt. Ltd. Ideally, the shares should have been issued in the name of Amrapali Infrastructure Pvt. Ltd. The money moved from Amrapali Infrastructures Pvt. Ltd. to Ultra Home Construction Pvt. Ltd. Precast Factory’s B valuation is Rs.179 crores. Mr. Anil Kumar Sharma has surrendered the shares in favour of Amrapali Infrastructure Pvt. Ltd. to the extent of INR 73.2 crores. Mr. Shiv Priya has surrendered the shares in Amrapali Infrastructure Pt. Ltd. during 2018-19 of Rs.35.1 crores.

50Copy pinpoint50. With respect to Amrapali Hospitality Services Pvt. Ltd., it was submitted that the company gave Rs.6.62 crores to Directors as advances out of which Rs.6.55 crores were given to Mr. Anil Kumar Sharma and his family. In the financial year 2017-18, Rs.2.25 crores were used by Mr. Anil Kumar Sharma for payment of housing loan of Jay Pee Green Property. Rs.1.25 crores were deposited with this Court by way of Demand Draft, Rs.0.85 crores were paid to settle the bank loan of Leisure Valley Villa and Rs.0.5 crores were transferred for payment of TDS liability of Amrapali hospital.

51Copy pinpoint51. With respect to Hi-Tech City Developers Pvt. Ltd., the Auditor’s report indicates that a sum of Rs.4.24 crores was given as an advance to Mr. Anil Kumar Sharma in 2009-10 which was used by him for purchasing shares of Ultra Home Construction Pvt. Ltd. Ideally, the shares should have been issued in the name of Amrapali group of companies. No transfer of money was there. Mr. Anil Kumar Sharma had surrendered shares in favour of Amrapali Infrastructure Pvt. Ltd., during the year 2018-19 but this has not been reflected in the books of the company. With respect to cash in hand, there is no consistency in the report of the auditors. Only Rs.9 crores were available in cash in various group companies. The entire amount was spent on payment of wages due to various labours at different times. With respect to other recoverable advanced to various parties amounting to Rs.234.31 crores, the details are not available in the report. These advances are against genuine business transactions. There is a possibility that such expenses have not been booked and squared off.

52Copy pinpoint52. With respect to the diversion of home buyers amount to the extent of Rs.3,500 crores and bogus billing of Rs.1500-1600 crores, out of the total amount received from home buyers of Rs.11,652 crores H

p. 376 Copy page pinpoint

A would leave INR 6,652 crores for carrying out the existing construction at sites. The total sum available for construction purposes comes to Rs.4,352 crores, after deducting the amount of payment to the authorities and banks of Rs.1,000 crores and Rs.1,300 crores respectively. With respect to non-genuine purchases from suppliers, though a sum of Rs.554 crores was given to the income-tax authorities, on appeal the error had B been corrected by the income-tax authorities. There was an error in the report of the forensic auditors. The report of the forensic auditors as to non-existing companies is also not correct. It is further submitted that Gaurisuta Infrasolution Pvt. Ltd., which manufactures PVC doors and windows had business transactions with Amrapali group, payment/ C advances were made to them. It is a fact that parties are related. It does not mean that all transactions are dubious. Law does not prevent such transactions. The short term and long-term loans to third parties were not for diverting loan funds and home buyer funds to group companies.

53Copy pinpoint53. With respect to Auditors’ list of 27 companies formed for the purpose of routing the cash of the companies, were formed before demonetisation. With respect to J.P. Morgan Property Mauritius Company-II, Amrapali Zodiac Developers Pvt. Ltd. transferred money to another company to buy-back stake in J.P. Morgan but did not do it directly as share buy-back rules did not permit such transactions. It may be maximum violations of the Companies Act but is not a diversion of money. With respect to FEMA, it is submitted that again it is a violation of ECB guidelines but again it was not a case of diversion of money. Money was needed for construction, therefore, arrangement with J.P. Morgan was made.

54Copy pinpoint54. With respect to doubt of Forensic Auditors as to the genuineness of interest paid by Amrapali Silicon City Pvt. Ltd. to IPFFI and claiming interest @ 17% which is very high, it was submitted that rate of interest depends upon the money lending transactions and is not illegal or prohibited in law.

55Copy pinpoint55. With respect to charging for professional services and fee by G Directors, it was stated that a person rendering professional services should have a membership of professional bodies and have some certificate of practice. A lot of companies pay a professional/consulting fee to outsiders to assist them in their business. Amrapali group has also paid salaries and consultation fees to Directors as they were providing H

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 377 [ARUN MISHRA, J.]

their expertise and skill. Ultimately prayer had been made to evolve A some mechanism for completion of housing projects.

56Copy pinpoint56. On behalf of Royal Golf Link City Projects Pvt. Ltd., it is submitted that a loan of Rs.50 crores or Rs.48,52,05,100 was paid by Ultra Home Constructions Pvt. Ltd. to Royal Golf. Interest @ 9% amounting to Rs.5,83,42,977 has been paid to Ultra Home. Subsequently, B the agreement has been entered into to repay Rs.50,46,78,022 by 31.3.2017 or in lieu thereof 30 Villas have to be allotted by Royal Golf to Ultra Homes. This Court has attached 30 Villas allotted to Ultra Home. It is ready to give 30 Villas by 30.4.2021 or to refund the amount of Rs.48,46,78,022 in 4 equal quarterly instalments in full and final settlement of all claims of Amrapali group. C

57Copy pinpoint57. On behalf of Bank of Baroda, it has been submitted that Forensic Auditors have made adverse comments without any basis. Bank of Baroda had deployed suitable methods to monitor the utilisation of funds. No diversion of funds was permitted by Bank of Baroda. Monitoring of the loan was done and before sanction of the loan, the net worth of the promoters/Directors of ASCPL was ascertained. Bank of Baroda relied upon a letter dated 29.7.2010 from Noida to ASCPL. The term loan agreement was executed amongst ASCPL, Bank of Baroda, Bank of Maharashtra and Oriental Bank of Commerce “Consortium” for a term loan of Rs.300 crores. After execution of due documents and deeds of corporate guarantee issued in favour of Bank of Baroda, corporate guarantees were submitted by Ultra Homes Construction, Jotindra Steels and Tubes Ltd. along with Vidhyashree Buildcon. Pvt. Ltd. RoC search report of guarantors was also obtained. NOC of Noida dated 21.2.2012 for mortgaging the project site to procure a term loan from the consortium was also obtained. A detailed project report was issued by Solomon Consulting Pvt. Ltd. There was the appointment of independent lender’s Engineer and thereafter accounting was done, post- disbursal of loan by Bank of Baroda. The money was released on the basis of lenders Engineers advice of Rs.49 crores out of Rs.55 crores. Thus, there was no lack of due diligence and considering the progress of construction, steps had been taken by the Bank of Baroda to protect its interests after the account became NPA. Active steps were taken to recover the amount. The similar mechanism had been adopted for Amrapali Infrastructure Pvt. Ltd. With respect to Ultra Homes Construction Pvt. Ltd., also a loan of Rs.75 crores was sanctioned out H

p. 378 Copy page pinpoint

A of which Rs.65.84 crores were disbursed for the construction and development of an Integrated Information Technology Park, (IT Park), Hotel, Commercial complex, service apartments and residential complex on Plot No.59, Sector Knowledge Park-V, Greater Noida, which were executed by Mr. Anil Kumar Sharma, Mr. Ajay Kumar, Mr. Shiv Priya and Mr. Madan Mohan Sharma. Amrapali Zodiac Developers Pvt. Ltd. B was granted a loan of Rs.75 crores. It was not utilised for payment of the cost of land or for payment of construction cost. The amount has been repaid and the account has been closed. The money may have been routed through various suppliers and contractors. The remittance of money is nothing but an example of due conduct of business. With C respect to the release of the corporate guarantee of M/s. Jotindra Steel and Tubes Pvt. Ltd., it is submitted that they were unable to infuse share capital as required and seemed unable to do so in the future as well. The shares due to M/s. Jotindra Steel and Tubes Pvt. Ltd. were also allotted to M/s. Ultra-Homes Construction Pvt. Ltd. Thus, the Bank of Baroda granted the request for release of the corporate guarantee in favour of D M/s. Jotindra Steel and Tubes Pvt. Ltd. Amrapali group had the right to mortgage the property as per the mortgage deed. There was no bank charge on the property mortgaged by Amrapali group. As per clause 15 of the mortgage deed, the buyer shall have no right after paying all amounts. The developer shall continue to have full authority over the flat unless a registered deed is executed in favour of the allottee. It is also submitted that the home buyers are not secured creditors. The home buyers were to acquire the premises on sub-lease basis which was never intended or stated anywhere that a sale would take place. The allottee shall not have any lien or interest on the flat unless sub-lease deed is executed. Therefore, they are not secured creditors, they have no right, title or interest or lien on the basis of allotment from flat buyer agreement. It is further submitted that the agreement does not create any rights in praesenti with a promise to enter into a future agreement. It does not create any right, title, interest or claim in the immovable property. In the absence of registration of document under the Registration Act, no rights are created in the immovable property in question under section 49 of the Registration Act.

58Copy pinpoint58. With respect to RERA provisions, it has been submitted by Bank of Baroda that section 11(4) of RERA deals with the interaction between repayment to secured creditors and rights of allottees. Sub- H section (h) of section 11(4) states that the promoter shall not create a

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 379 [ARUN MISHRA, J.]

mortgage or charge after an agreement to sell has been executed. A Therefore, the promoter is permitted to create such mortgage or charge prior to the execution of an agreement to sell. Section 4(2)(1) of RERA requires the promoter to disclose the prior encumbrance to the real estate authority. Under section 34(b) it is required to publish and maintain a website of records. Section 19(4)(1) of RERA provides that if the promoter fails to complete or is unable to give possession of an apartment, plot or building, the rights of allottees are restricted to receive the compensation from the promoter. The rights of allottees under section 19 of RERA can be contrasted with the right of the mortgagee who secured creditors under section 58 of the Transfer of Property Act, 1882. The RERA is restricted to protect the rights and interests of the allottees from the promoters and developers. RERA recognises and protects the rights of the lenders and does not in any manner take away any right under the existing statutes like the T.P. Act, SARFAESI, etc. RERA has not brought any change in the nature of the rights of home buyers. The Bank is entitled to receive its money along with interest in the event of failure to repay by builder/ promoter. IN RE: FORENSIC AUDITORS

59Copy pinpoint59. The Forensic Auditors have submitted their report running into eight volumes. It has been observed that the Amrapali Group was started in 2003 by Mr. Madan Mohan Sharma. Later on, it was managed by his son Mr. Anil Sharma. He gradually expanded his team and Mr. Shiv Priya, Mr. Ajay Kumar, Mr. Nishant Mukul, Mr. Chander Wadhwa, Mr. Mohit Gupta, Mr. Adhikari Das, and others joined in. By 2010, the Amrapali Group was leading real estate development firms, promising to offer luxury and comfort. In the beginning, the Amrapali Group has constructed and completed certain projects and earned the goodwill of the general public in the real estate business. The Amrapali Group used unfair means to promote themselves. It made false promises to lure the public to invest in its projects, purposefully delayed construction, cheated home-buyers for the title of flats and trapped home-buyers in rental returns. The Amrapali Group floated several companies. The public invested their hard earned money in Amrapali projects and the shareholders used these funds to infuse capital in other companies/ entities. Home buyers were cheated by making false promises/claims for example selling of flats which were not even part of the master plan of projects or unapproved in the master plan, double booking of the same H

p. 380 Copy page pinpoint

A flat by different customers. The homebuyers funds were diverted to other companies/directors through payment of professional fees, by way of booking of bogus bills of Rs.837 crores, by selling flats as undervalued prices in book and received differential market value in cash, by paying commission and brokerage on bogus booking of flats and by way of granting inter-corporate deposits of Rs.3,000 crores to related entities B and Rs.500 crores to unrelated entities/trusted partners for ultimately diverting funds to unapproved uses. SUMMARY OF REPORT OF FORENSIC AUDIT

60Copy pinpoint60. The summary of report submitted by Forensic Auditors in the C Court is as under:

1. Brief Introduction Amrapali Group started its operations in the year 2003 in Delhi. It was started by Mr. Madan Mohan Sharma who managed it for a brief period. Thereafter the operations of the Group were managed by his son - Mr. Anil Sharma. Gradually, he expanded his team and Mr. Shiv Priya, Mr. Ajay Kumar, Mr. Nishant Mukul, Mr. Chander Wadhwa, Mr. Mohit Gupta, Mr. Adhikari Das and other trusted partners/executives joined in. The Group was into the business of construction of residential complexes, townships, offices, commercial complexes. The Group built good reputation in the public and launched several projects in various cities in India. By 2010, the Group was a leading real estate development firms in India and particular in North India, promising to offer luxury and comfort in every project that it takes up. Subsequently, Mr. Mahender Singh Dhoni became brand ambassador of the F Group. To achieve good standing in the eyes of public, the Group used unfair means to promote themselves. The Group made false promises to lure public to invest in its projects, purposefully delayed construction, cheated homebuyers over title of flats, trapped G homebuyers in rental returns, sold flats at exorbitantly low prices and recovered market price in cash from them, among other unfair means adopted by them. The Group floated several companies through its directors, staff, trusted partners which were incorporated solely to divert homebuyers funds. The Group collaborated with external parties like JP Morgan in contravention H

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 381 [ARUN MISHRA, J.]

of FEMA and distributed returns along with principal amount, even though it did not book gains within the business of the company. Similarly, it collaborated with several other third parties and invested in other projects and built a cycle of returns in the form of unaccounted cash. The Group treated moneys received from home buyers as its own capital and used this money for investing in exclusively personal purposes, for example in constructing Amrapali hospital, hotels, malls, making movies etc. The Group booked bogus expenses and routed funds to trusted partners. The Group also used homebuyers funds for building personal properties, investment in mutual funds, expenses in daughter’s wedding, purchase of luxury cars, watches, building luxurious houses for directors etc. The Promoters diversified to different verticals i.e. Education, Entertainment (in making movies), FMCG, infrastructure, Shopping Malls, technology parks, hotel etc. from the diverted Home Buyers funds. The Promoters didn’t invest any paisa in such verticals and the whole empire was created out of the diversion. The Promoters created a web of more than 150 companies (Page No. 16-19 Volume I) for routing the funds and creating assets. About 100 Companies were under the supervision and control of promoters used mainly for the purpose of diversion of funds. The Directors and Shareholders of these Companies were benami and were the trusted junior employees of promoters. CFO and the Statutory Auditors. It is observed that the Company, i.e. management, CFO, the Statutory Auditors and key managerial persons deliberately and for reasons best known to them did not prepare the accounts till F 31st March, 2018 or thereafter as nobody wanted to let anybody know where the funds moved from 31.3.2015 onwards. In absence of Book of Accounts, we are constrained to report that the management deliberately withdrew the Bank Balances for making payments to some person and brought down the huge bank balance G to negligible amount. The management has diverted the Home Buyers’ funds from one Company to another Company in a very clever, pre-planned and clandestine manner. The management could not have done this without the full support of its CFO and the Statutory Auditors. As H

p. 382 Copy page pinpoint

A per the submissions made, many companies were controlled by CFO and the Statutory Auditors to which huge funds have been transferred. It can therefore, be easily said that both CFO and the Statutory Auditor were Master Mind behind these types of planning for diversion and the misuse of funds. It may be important to mention here that funds were transferred from one Company B to another and to third and to fourth and so on thereby absolutely confusing any person to find out the real trail where the money has gone, since there are more than 100 Companies through which these funds have been routed over the period.

2. HISTORY OF ALLEGATIONS C

Bank of Baroda and several other banks filed a petition before NCLT under section 7 of the Code for triggering Corporate Insolvency Resolution process in the matter of Amrapali Group D Companies. Homebuyers filed petition seeking construction and possession of around 42000 flats booked in Amrapali Group

On 6th September 2018, Supreme Court appointed Mr. P K E Aggarwal and Mr. Ravi Bhatia as joint forensic auditors to audit into the matter. ACCOUNTING PACKAGE The group was using Tally till March, 2015 for all of its group F companies. In April 2015, it introduced Far Vision an ERP which was not implemented properly. The opening balances were not properly entered. In November 2016, the group left half way Far vision and started recording partial transaction in tally. G To avoid the traceability, of the transactions, the Promoters and CFO and Adhikari (G.M Accounts) recorded the financial transactions up to March 2015 in Accounting Package tally, then shifted to FARVISION from April 2015 and continued till March

BIKRAM CHATTERJI & ORS. v. UNION OF INDIA & ORS. 383 [ARUN MISHRA, J.]

2016, and thereafter partially recorded transaction in tally and a A for a few companies in FARVISION and thereafter in tally. This was intentionally plan. The companies of the group stopped getting the annual accounts prepared and filing returns to Roc and Income tax.

3. Auditors B The Following Firms carried out the Audit of the Group Companies during the period: Anil Ajay & Co. BSR & Co. C Deloitte Haskins & Sells SN Dhawan & Co. Chander Wadhwa & Associates Manoj Usha & Co. Agarwal Seth & Co. D Kumar Chopra & Associates

4. Non genuine purchases from suppliers Purchase bills have been accounted for in the books of accounts without receipt of physical goods and purchase bills have been accounted for of suppliers who do not exist. There was an Income E Tax search and seizure on 9th September, 2010 and 7th August,

2013. During the search held on 7th August, 2013, it was held by the Income Tax Authorities that purchases are being made from bogus suppliers without receiving the goods physically. The total amount of purchases from such suppliers as observed by the F Income Tax department amounted to Rs.842.42 Crores approximately.. In order to confirm the genuineness of these suppliers and a few other suppliers we have sent written communication/ letters by speed post to them in order to confirm the transactions with the G Amrapali Group of Companies. Most of these letters have been received back with the remarks “No such firm exists at the specified address”. In addition to above, there is no system of calling quotations for purchases and there is no internal control with respect to inventory. H

p. 384 Copy page pinpoint