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Auditors bare Amrapali's double-dealing, shell cos

Realty firm floated 23 cos. in names of peons, office boys, drivers

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Police personnel prepare to seal Amrapali Corporate office at Sector 62, in Noida, late on Wednesday
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While realty firm Amrapali Group made a killing by extracting a fortune from homebuyers, choice flats in three of the company's prime housing projects were doled out to a select few for as low as Re 1, Rs 11 and Rs 12 per square foot.

The details were revealed to the Supreme Court by a two-member auditing team that examined 46 companies of the group and submitted an interim report on Wednesday.

Exposing the web of deception spun by the firm, the auditors Ravinder Bhatia and Pawan Kumar Agarwal discovered that 23 companies were formed in the name of office boys, peons and drivers employed by the consortium.

This was a ploy to launder money of homebuyers to sister firms and pay advances/loans to relatives of the company's chairman and directors, that remain outstanding till date, the auditors said.

The extent of this diversion was quantified by the auditors to be Rs 2,761.49 crore.

'Duplicate buyers'

There were even duplicate purchasers against the same plot — something the audit unearthed. The auditors spotted nine instances where the same flat was allotted to two persons, in Crystal Homes, Princely Estate, Patel Platinum and Silicon City projects. This is how Amrapali cheated homebuyers — by getting money from two buyers against one flat. "This way, the company collected Rs 2.35 crore from the first buyer and Rs 1.86 crore from the second buyer of the same properties. The audit exercise is still on and more such duplicate purchasers will be identified," the auditors informed the bench of Justices Arun Mishra and UU Lalit.

More shocking was the sale of flats at paltry sums. The auditors informed the court that as per their scrutiny so far, eight units in Crystal Homes project, four units in Dream Valley-I project, and seven units in Silicon City project were booked for as low as Rs 1, Rs 11 and Rs 12 per square foot.

When the auditors confronted the management about the sale of flats for a pittance, to their surprise, they were asked to consider the flats as vacant.

There was also a barter arrangement that has come to light in the audit exercise. as many as 75 homebuyers in various Amrapali projects were shifted to LA Residential Developers in exchange of Rs 10 crore. However, the account books of the company do not record this arrangement.

When Amrapali management was confronted on this finding, they asked the auditors to consider these 75 residential units as vacant and to put it up for sale for an estimated Rs 35 crore.

Similarly, purchase of construction material was routed from one Amrapali firm to another using a conduit who received a margin on this purchase. The audit found several such ghost suppliers whose addresses turned out fake. Some suppliers who were contacted by auditors were shown to have received payment and flats, which was dismissed as a bogus claim by the supplier's representative.

Another web of corruption came to light as a sum of Rs 85 crore was shown as investment by JP Morgan, Mauritius into an Amrapali Group company in violation of the Companies Act. This company then transferred its shares to two shell companies worth Rs 140 crore. The Court sought an explanation from JP Morgan in this regard.

The directors of Amrapali had unaccounted cash and jewellery and the company's chief financial officer (CFO) transferred a sum of Rs 12.96 crore in the name of his wife on the day when he was to be questioned about his assets by the auditors.

Auditors’ Key Finds

  • Duplicate sales: Nine instances spotted where the same flat was allotted to two persons in four projects —Crystal Homes, Princely Estate, Patel Platinum and Silicon City
  • Throwaway rates: Eight units in Crystal Homes project, four in Dream Valley-I, and seven in Silicon City were booked for as low as Re 1, Rs 11 and Rs 12 per square foot 
  • Rs 85cr Shown as investment in Amrapali Group by JP Morgan, in breach of Companies Act 
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