Forensic auditors find web of 200-250 firms where Amrapali diverted funds; SC seeks details

The Supreme Court on Wednesday directed the Amrapali Group to disclose the names of all the companies with which it had any kind of transactions after forensic auditors pointed out that there may be a web of more than 200-250 such firms where home buyers money was transferred.    

The two forensic auditors, appointed by the court to look into the affairs of Amrapali Group said besides 47 sister companies, they stumbled upon 31 companies whose names were never disclosed by the embattled real estate firm.

The court was also told that there may be a case of the Foreign Exchange Management Act (FEMA), as large amount of money was transferred to a multinational company based in Mauritius.

It questioned Amarapali Group CFO Chander Wadhwa as to how a group company paid his Income Tax amounting to Rs 2 crore, when he was earning only Rs 50,000 per month.

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A bench of Justices Arun Mishra and U U Lalit said money of innocent buyers could not be misused like this and asked the Mauritius-based JP Morgan company to file its account statement with regard to the transaction with the Amrapali Group.

The counsel for J P Morgan said they had invested more than Rs 100 crore in the real estate business of Amrapali Group and they had a claim of Rs 168 crore from the reality firm.

At the outset, forensic auditors Pawan Kumar Agarwal and Ravi Bhatia said besides the 47 sister companies declared by the Amrapali Group, they have initially found 23 companies and now another eight companies with which the reality firm had transactions.

“We have no iota of doubt that not only promoters, Chief Financial Officer (CFO) and the internal auditors of the Amrapali Group were part of the syndicate. Prima facie, we have found the relatives of promoters, CFO and internal auditors were directors in these companies, where the money was transferred,” Agarwal said.

“Initially, we found 23 companies where transaction had taken place and now we have found eight more companies. We anticipate that there are more than 200-250 such companies, where the money was transferred, but their names have not been disclosed by the Amrapali Group till now,” he said.

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The court-appointed forensic auditor pointed out that in compliance with the earlier order of the court, the Amrapali Group had handed over 117 computers used by it, but 36 of them were not working and many were password-protected, which were not given to them.

The bench directed the group to disclose the passwords of these computers given to the forensic auditors within three days and mark which computer belonged to which company.

“We understand everything what is happening. We are not saying anything at present but waiting for the proofs and disclosure of details. They may hide the information for say seven days but on the eighth day we will have the information, no matter what,” the bench said.

The bench also asked the Amrapali Group to disclose the details of luxury cars owned by the company and their registration numbers after the forensic auditors flagged that a luxury car was given to the CFO.  

“It appears that they were not only in construction business, but into something else also,” the bench said and questioned the CFO about the benefits he took from the Amrapali Group.

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It also asked the CFO to disclose by Thursday the details of the companies he had incorporated, the home buyers money which was transferred to these companies, on whose authorisation the funds were transferred and the benefits he took from the Amrapali Group.

The court warned that any wrong information found at a later stage would lead to consequences and he may be sent behind bars.

The bench then questioned internal auditor Anil Mittal, who told the court that the company had transferred around Rs 50 to Rs 60 crore to the companies he had incorporated on the direction of Wadhwa.

The court asked Mittal to file an affidavit by Thursday, giving each and every detail of such companies and their transactions.

“You all were chartered accounts and were supposed to be a watchdog. You were to render services to the society. People rely on you. Being in the know-how of things you incorporated these companies which acted as conduit for transferring the money which Amrapali legally cannot do. This is nothing but an effervescence. There is a tall building but with no foundation,” the bench said.

The apex court also refused to allow CMD Anil Kumar Sharma and two directors, Shiv Priya and Ajay Kumar, currently residing under police surveillance at a hotel in Noida to visit home on the occasion of Diwali.

On October 26, the apex court had grilled the CFO and internal auditors of Amrapali Group over diversion of home buyers money and ordered that the company’s CMD as also its two other directors would remain under police surveillance at a hotel in Noida.

It had also initiated contempt proceedings against the group’s Chairman and Managing Director (CMD) Anil Kumar Sharma and its directors for prima facie violating court’s order and thwarting the course of justice.

The court is seized of a batch of petitions filed by home buyers who are seeking possession of around 42,000 flats booked in projects of the Amrapali Group.