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SC withdraws special facilities provided to Unitech promoters in Tihar Jail

The move comes after concerns over the embattled realty firm's impediment in assisting the court-appointed forensic auditors.

Vandana Ramnani @vandanaramnani1

Concerned over embattled real estate firm Unitech not assisting court-appointed forensic auditors, the Supreme Court on May 9 ordered the withdrawal of special facilities given to the company's promoters, who are lodged in Delhi's Tihar Jail since August 2017.

The apex court had earlier directed jail authorities to facilitate Unitech Managing Director Sanjay Chandra's meetings with company officials and lawyers to make arrangements to refund buyers and complete unfinished projects. Chandra was entitled to negotiate terms for unencumbered properties or assets of the group.

The court order states that brothers Sanjay and Ajay Chandra henceforth be treated like ordinary prisoners as per Tihar jail's manual.

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"The facilities which have been granted to the aforesaid two Directors shall stand revoked forthwith. They shall not be entitled to any additional facilities apart from those which are available in the normal course in terms of the Jail Manual. This direction shall take effect immediately," the SC order read.

The decision came after the court-appointed forensic auditor informed the SC on May 9 that Unitech officials were uncooperative and did not supply digital evidence required to track diversion of homebuyers' funds by the realty company.

"The status report makes it evident that the forensic auditors have not been provided with complete recourse to the electronic records including those which were in the possession and custody of the Chief Financial Officer(s). In the absence of a complete availability of the electronic records to the forensic auditors, their task has been severely undermined and obstructed. As a consequence, effective implementation of the order which had been passed by this Court for undertaking a forensic audit has been thwarted," the Supreme Court said.

A bench of Justices DY Chandrachud and MR Shah did not order CBI probe in express terms, but said that it would like to have assistance of Attorney General KK Venugopal on the issue during the next hearing on July 5.

"In the present state of affairs, the Court may be left with no alternative but to now entrust the investigation of the case to the Central Bureau of Investigation," the order said.

It said the court would want the AG to assist them on whether the government would like to complete the stalled projects of Unitech with the help of central construction agencies.

"... it has become necessary to request the learned Attorney General for India to render his assistance to the Court with a view to explore whether the entire process of completing the unfinished construction projects as well as the management of the company can be suitably taken over and entrusted to an agency to be nominated by the union Government so as to fulfill the obligations due to the home buyers. The home buyers who have invested their life savings have been left in the lurch. We would request the learned Attorney General for India to assist the Court on this aspect of the matter," the order said.

"We would appreciate if the learned Attorney General for India can convene a meeting at an appropriate senior level of the union Government to apprise the Court of the course of action which the Government would seek to pursue, to tide over the difficult situation in which the home buyers have been placed and to protect the interests of all stakeholders," it added.

The SC had earlier stayed the December 8, 2017 order of the NCLT allowing the Centre to take over the management of Unitech Ltd.

The top court had in January this year rejected the bail plea of the jailed directors, stating that the Chandras had not deposited Rs 750 crore with its registry as per an October 2017 order. Only Rs 400 crore has so far been deposited by the company.

On December 7, 2018, the apex court had directed a forensic audit of Unitech Ltd and its sister concerns and subsidiaries by Samir Paranjpe, Partner, Forensic & Investigation Services in M/s Grant Thornton India. The forensic audit had been proposed in various phases with the first phase focusing on 74 construction projects and the entities of Unitech involved.

The court had also directed Unitech to identify and nominate two of its directors who are not in jail and a team of three senior officers for coordinating with the forensic auditors for the purpose of supplying all the data, materials and information as is required by the auditors.

The amicus curiae appointed in the case has said in its report that out of 74 construction projects undertaken by Unitech, as many as 61 were incomplete and about 16,300 home buyers were involved in these projects.

In February this year, over 100 Unitech home buyers have moved an application in the SC asking it to direct the government of India to take over the management of the embattled firm.

The application moved in the SC had sought for the immediate suspension/removal of the board of directors of Unitech and the appointment of the nominees of the union/government of India in its place.

 

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First Published on May 9, 2019 10:34 pm
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