The Supreme Court asked the Enforcement Directorate (ED) on Monday, 13 January, to attach Indian properties of JP Morgan, which engaged in a transaction with the now-defunct Amrapali Group to allegedly siphon off home buyers' money in violation of the Foreign Exchange Management Act (FEMA) and FDI norms.
The ED said that it had prima facie found violations of FEMA norms by the US-based JP Morgan and that a complaint in this regard was lodged.
The Supreme Court also allowed the ED to take into custody the defunct group's CMD, Anil Kumar Sharma, and two other directors, Shiv Priya and Ajay Kumar, who are behind bars on the top court's order, for interrogation as regards alleged money-laundering offences.
It said the central agency could take them into custody immediately and once their interrogation was over, they could be sent back to a prison in Delhi.
According to the share subscription agreement between JP Morgan and Amrapali Group, the US-based firm had invested Rs 85 crore on 20 October 2010 to have a preferential claim on profits in the ratio of 75 percent to JP Morgan and 25 percent to the promoters of Amrapali Homes Project Private Limited and Ultra Home.
Later, the same number of shares was bought back from JP Morgan for Rs 140 crore by two companies — M/s Neelkanth and M/s Rudraksha — owned by a peon and an office boy of Amrapali’s statutory auditor Anil Mittal.
Adjudication Process Against the Firm
A bench of justices Arun Mishra and UU Lalit was told by ED Joint Director Rajeshwar Singh, who is supervising the probe against JP Morgan, that the MNC remitted the money back to the United States.
“They (JP Morgan) have a lot of properties in India. We want you to attach their office or corporate properties of a like amount. Then they will come running to us and we will see to it,” the bench said.
Singh said the adjudication process against the firm had begun in accordance with law.
On 2 December last year, the ED had informed the top court that it had prima facie found evidence of violation of FEMA by the multi-national firm and recorded the statements of the country head of the company with regard to dealings with the Amrapali Group.
It had said that though the investigation was underway, prima facie it appeared that there were also violations of the provisions of the Prevention of Money Laundering Act (PMLA) and that appropriate actions were being taken.
The apex court had then directed the ED that the investigation should be carried out impartially, properly and expeditiously within a period of three months.
On 23 July last year, the Supreme Court had cracked its whip on errant builders for breaching the trust of home buyers, ordered cancellation of Amrapali Group's registration under real estate law RERA and ousted it from its prime properties in the NCR by nixing the land leases.
It had ordered a probe by the ED into allegations of money laundering and to look into the charge of FEMA violation by JP Morgan.
“The money of the home buyers has been diverted. The directors diverted the money by the creation of dummy companies, realising professional fees, creating bogus bills, selling flats at an undervalued price, payment of excessive brokerage etc. They obtained investment from JP Morgan in violation of FEMA and FDI norms,” the top court had said.
It had said the equity shares of the group were purchased at an exorbitant price to suit the requirements of JP Morgan and the Amrapali Zodiac Developers Pvt Ltd had diverted home buyers' funds.
“The shares were overvalued for making payments to JP Morgan. It was adopted as a device for siphoning off the money of the home buyers to foreign countries,” the top court had said as it accepted the reports of forensic auditors.
It had also noted that the shares of Amrapali Zodiac from JP Morgan were ultimately purchased for Rs 140 crore by M/s Neelkanth and M/s Rudraksha, shell companies owned by a peon and an office boy respectively.
“The transactions of Amrapali Zodiac Developers Pvt Ltd with JP Morgan were clearly in order to avoid the provisions of the Companies Act,” it had said.
The Supreme Court had said it was apparent that M/s Rudraksha was created for money laundering as its two directors and shareholders had no income.
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