The Supreme Court on Wednesday directed multi-national firm JP Morgan to deposit Rs 140 crore, which was Amrapali Group home buyers money and allegedly siphoned off in contravention to the norms as per the forensic auditors report and last year's order in the case.
The top court asked the company to apprise it by next week as how it would deposit the home buyers money and by what time.
The Enforcement Directorate (ED) told the top court that criminal conspiracy was hatched between JP Morgan Group of Companies and the Directors of Amrapali Group under which JP Morgan India Property Mauritius Company-II made Rs 85 crore investment in Amrapali Zodiac in 2010 and exited it during 2013-15 by taking about Rs. 140 Crore outside India through "sham transactions and shell companies".
A bench of Justices Arun Mishra and U U Lalit told senior advocate Mukul Rohatgi, appearing for JP Morgan India, to deposit the home buyers' money as per the findings of court appointed forensic auditors and the last year's verdict in the case.
At the outset, Rohatgi told the bench that JP Morgan had not diverted any home buyers' money and the ED has wrongly attached its assets worth Rs 187 crore.
The bench told Rohatgi that the multi-national firm had indeed diverted home buyers money and it should apprise the court by next week as by when it can deposit the money and how it plan to do so.
The top court's remark came on a plea of JP Morgan challenging the attachment proceedings by the ED.
It said that the Rs. 85 Crore investment in Amrapali Zodiac in 2010 were contrary to the prevailing FDI norms within the country, on account of the fact that the same were made on the terms of guaranteed rates of return to the JP Morgan Group of Companies, which was impermissible under the FDI norms of the country.
The ED said that investments were made in exchange of equity in Amrapali Zodiac and shareholders agreements were entered into between JP Morgan India Properties Mauritius Company-II and Amrapali Zodiac, and Ultra-Homes Construction Pvt. Ltd. and Amrapali Homes P Ltd.
It said that as per the agreements, nominee directors of the investors were required to be on the Board of Directors and JP Morgan India Property Mauritius Company (JPMIPMC) II, nominated employees of JP Morgan India Pvt Ltd, Mumbai--Gunjan Bahl and Hrushikesh Kar-- to act as nominee investor directors.
The ED said during the investigation it has found JPMIPMC II, invested an amount of about Rs. 85 Crore in Amrapali Zodiac Developers P Ltd. on September 24, 2010 to acquire 7,85,715 class B equity shares which were allotted at an artificially exorbitant rate of Rs 1071.81 per share as compared to the share acquired by the developers at the rate of Rs 191 per share merely ten days before the acquisition by JP Morgan.
"During the course of the investigation it has been revealed that there was no change in the business model of the company or any significant and sudden gains to the company in the interim period, to justify the astronomical increase in share price; thus, indicating malfeasance," the probe agency said in its 41-page affidavit.
It said that the directors of the Amrapali Group--Anil Kumar Sharma, Shiv Priya and Ajay Kumar--in furtherance of their criminal conspiracy with JPMIPMC-II, acting through its investor-nominee directors created three shell companies, namely--Mannat Buildcraft Pvt. Ltd., Neelkanth Buildcraft Pvt. Ltd. and M/s. Rudraksh Infracity Pvt. Ltd.
"Thereafter amounts of Rs 100 Crores in 2013, Rs 25 Crores in 2014 and Rs 10 Crore and Rs 5 Crores in 2015 were diverted to Mannat Buildcraft Pvt Ltd, which in turn diverted the same to Neelkanth Buildcraft Pvt. Ltd and Rudraksh Infracity Pvt. Ltd. These diverted amounts, totalling to Rs. 140 Crores, were utilized for purchasing the shares of Amrapali Zodiac Developers P Ltd, held by JPMIPMC-II during the period of 2013 to 2015," it said.
The agency said that a "fabricated and staged" valuation of shares were arranged to justify the transfer of funds to JPMIPMC-II through funds arranged from other companies of the Amrapali group, diversion of the funds from home buyers.
"It is clear that Hrushikesh Kar and Gunjan Bahl, employees of JP Morgan India P Ltd., serving on the board of Directors of Amrapali Zodiac Developers P Ltd.,were involved in creation of shell companies, were involved in staged valuation of shares, to launder home buyers' funds to the tune of Rs. 140 Cr to JPMIPMC II," the agency said in its affidavit.
The ED had on May 27 told the top court that it has attached the assets worth Rs 187 crore of JP Morgan as the multi-national firm on other hand denied any wrong doing.
The firm, JP Morgan India had said that attachment of properties by the ED is blatantly illegal as it was not part of any kind of financial dealing with Amrapali Group and it was JP Morgan Singapore and Mauritius which had allegedly invested in the real estate group.
On May 22, the top court had allowed ED to attach properties of JP Morgan, which was engaged in transactions 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 top court had on July 23 last year, 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.
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