SC Orders Probe Against Unitech Over Money Laundering, Siphoning of Homebuyers' Money

New Delhi: The Supreme Court has ordered an investigation against Unitech group over money laundering and diversion of funds meant for housing projects, as it also shot down the bail plea of Unitech promoters Sanjay Chandra and his brother Ajay Chandra.

After Enforcement Directorate investigating into Amrapali group, Unitech is the second real estate group to come under the scanner of the anti-money laundering agency under the orders of the top court.

A bench headed by Justice DY Chandrachud asked Attorney General KK Venugopal to take cognizance of the report filed by the forensic auditors that evidenced diversion of money collected from the homebuyers to tax havens abroad, besides several other acts in breach of laws.

The apex court also asked the central government to immediately suspend the management of Unitech Limited and take over through independent directors.

The bench, in its order on Wednesday, noted that mostly between 2006 and 2014, Rs 14,270 crore was collected by Unitech from 29,800 home buyers. Out of this, 12,000 home buyers are left in the lurch, said the court, as it requested the top law officer to have the modalities and terms devised as soon as possible so that their interests could be protected.

Lending reliance to the forensic auditor’s report, the court noted that at least 40 per cent of the collections, which may amount to more than Rs 6000 crore, were potentially not utilised by the Unitech group towards the construction or execution of the 74 identified projects.

The court, referring to the auditor’s report, also pointed out that more than Rs 3,000 crore was shown to be invested in over a dozen companies in Cyprus, besides huge sums being diverted through transactions with undisclosed related parties.

The report had also highlighted serious misrepresentation by Unitech IT team relating to the availability of electronic information, which has been held by Sunil Keswani, Ex-CFO, Manoj Popli and by the promoters Ramesh Chandra, Ajay Chandra and Sanjay Chandra.

“We are clearly of the view that the Union of India must step in forthwith by suspending the management of Unitech Limited and appoint independent directors to take over the management. The sorry state of affairs to which the homebuyers have been reduced is a direct consequence of acts of commission and omission on the part of the management of Unitech Limited and its subsidiaries,” stated the court order.

It added that these acts of commission and omission involved not only acts of wrongdoing in relation to the home buyers, but also towards the banks and financial institutions, and these elements of criminal wrongdoing must warrant a proper investigation by the law enforcement machinery, both from the angle of money laundering and other related facets.

“We accordingly direct that the report of the Forensic Auditors be made available to the learned Attorney General for India so that a copy of the report may be made available to all concerned agencies of the Union of India for further action,” directed the bench.

The court maintained that it is affirmatively of the view that the Union of India must take all necessary steps to ensure that a proper investigation is carried out by the law enforcing machinery since large amounts which have been collected both from the home buyers as well as from the financial institutions have been prima facie found to have been diverted, siphoned off and misappropriated.

As senior lawyer Abhishek Manu Singhvi requested for releasing the Unitech promoters, who are presently lodged in Delhi’s Tihar Jail, the bench held that in view of the auditor’s report and the fact that despite its orders, auditors faced non-cooperation, it has no hesitation in rejecting the duo’s bail.

“We would now expect the Union of India to act pro-actively in the matter and inform this Court on the next date of hearing on the steps which it initiates to replace the existing management and ensure that the management of Unitech Limited is handed over to an independent group of directors who can fulfill the mandate and responsibility of attending to the concerns of the home buyers by completing the remaining projects,” read the order, fixing January 15 as the next date.