2018 (8) TMI 1987 - SC - Indian Laws

Supreme Court Freezes Assets for Non-Compliance and Fund Diversion

The Supreme Court found non-compliance with its previous orders by a group of companies and co-promoters, expressing dissatisfaction with evasion ... Release of attached properties - diversion of funds - HELD THAT:- There was diversion of the funds, prima facie it is apparent that when the money was paid by the buyers for the purpose of investment in the particular project, it could not have been diverted. That would prima facie tantamount to a criminal breach of trust. We are not expressing any final opinion in this regard at this moment. However, at the same time, we propose to take a call on this after hearing the parties on this aspect. However, so as to further ascertain the extent of internal and external diversion from all the projects. The names of all the Chartered Accountants of all the aforesaid 40 companies be disclosed to us and their reports from 2008 till today be placed on record by tomorrow. The individual Bank accounts of the Directors of all the 40 companies are also freezed and they shall not be entitled to operate the same with immediate effect. Let details of all Bank accounts be furnished by tomorrow of companies and their Directors and of personal accounts of Directors. The properties in the individual names of the Directors are also attached and the same shall not be disposed of or alienated in any manner without express order of this Court. Let the matter be listed tomorrow, i.e., on 2.8.2018 at 2.00 p.m. Issues: Compliance with court orders, Interference by government committee, Diversion of funds, Freezing of bank accounts and properties, Directors' liabilitiesCompliance with court orders:The Supreme Court noted that certain obligations and directions were issued to a group of companies and co-promoters in a previous order dated 17.5.2018. However, compliance with these directives was not reported, and attempts were made to avoid fulfilling the court's orders. The court expressed dissatisfaction with the lack of compliance and the efforts to evade the obligations set forth in the previous order.Interference by government committee:The court observed that a meeting was conducted by a committee formed by the Government of Uttar Pradesh without seeking express permission from the court, despite the matter being sub judice. The committee's actions were seen as inappropriate and potentially undermining the court's authority. The court directed the presence of the Secretary to the Ministry of Housing and Urban Affairs and the Chairman of NBCC India Limited to explain their actions and produce relevant records.Diversion of funds:The court highlighted that there was an admission by the Amrapali Group regarding the diversion of over 2765 crores of rupees from six projects to other projects. In response, the court ordered the freezing of bank accounts of 40 companies associated with the group and the attachment of all their immovable properties. The companies were prohibited from dealing with these assets without the explicit permission of the court.Directors' liabilities and actions:The court directed the freezing of individual bank accounts of the directors of the 40 companies and attached their personal properties. The directors were barred from operating their bank accounts and disposing of their properties without the court's approval. Additionally, the court requested details of all bank accounts, both company and personal, to be provided promptly.Final considerations and next steps:The court indicated a potential criminal breach of trust due to the diversion of funds meant for specific projects. It requested the disclosure of all Chartered Accountants associated with the companies and their reports from 2008 onwards. Furthermore, the court required the presence of key individuals from the Amrapali group in the next hearing to address the ongoing issues and ensure compliance with the court's directives. The matter was scheduled for further discussion on the following day to monitor progress and take necessary actions.