ORDER : Re: Proposal submitted by the NBCC 1. In pursuance of the previous orders dated 9 May 2019 and 5 July 2019, Mr K K Venugopal, learned Attorney General for India, has placed on the record the methodology proposed for undertaking the completion of stalled/incomplete projects of Unitech Group under the auspices of NBCC. The methodology proposed envisages the appointment of a four member committee by this Court. The role of the Committee is to oversee the implementation of the entire proposal by NBCC. NBCC, on its part, has proposed that it will act as a Project Management Consultant under the supervision of the Committee. NBCC has, however, stated that it will not undertake any work of construction. NBCC has not accepted any commitment of its own in financial terms. For the work which it proposes to perform, it expects a fee calculated at the rate of eight per cent of the actual cost of work. 2. Explaining the terms of the proposal, the learned Attorney General submitted that while NBCC is willing to fulfill the task, if it is entrusted by the Court, the successful completion of the work will depend upon the funds being made available for NBCC without which there can be no guarantee of the work being completed expeditiously. 3. Pursuant to the liberty granted by the Court, the home buyers have expressed serious objections to the proposal. The amicus curiae has made a summary of those objections. 4. The Learned Attorney General has fairly placed the conditionalities in the proposal, which has been submitted by NBCC. 5. We have, during the course of the hearing, also deliberated on certain developments which had taken place during the pendency of these proceedings which ultimately culminated in an order dated 18 December 2017. 6. From the record, it emerges that the Union of India had moved the National Company Law Tribunal1 in an application being CP-423(ND) of 2017 under Sections 241 and 242 of the Companies Act 2013. Highlighting the mismanagement which had taken place in the conduct of the affairs of Unitech Limited, the Union of India, by its application which was filed on 5 December 2017, sought directions from the NCLT for the suspension of the NCLT current Directors, and an order of restraint on the alienation of assets by the company. 7. Highlighting the mismanagement which had taken place in the conduct of the affairs of Unitech Limited, the Union of India, by its application which was filed on 5 December 2017, sought directions from the NCLT for the suspension of the NCLT current Directors, and an order of restraint on the alienation of assets by the company. 7. The NCLT, by its order dated 8 December 2017, issued interim directions in the following terms: “(i) The current directors Respondent No 2 to 9 are suspended and restrained from acting as directors of respondent no 1 company; (ii) All the respondents are restrained from alienating, mortgaging, creating charge or lien or interest in the properties owned by them personally or that of the company till the conclusion of investigation as directed by this Tribunal vide order dated 6.10.2016. (The inspection had started but due to non cooperation, it has not been completed). (iii) Ad-interim applicant are permitted to appoint 10 nominee directors on the Board of Directors of respondent no.1 company which shall remain subject to the approval of this Tribunal. A complete list alongwith antecedents of the nominee directors supported by an affidavit of a responsible officer be filed enabling this Bench to examine about their antecedents, eligibility and qualification.” 8. Since these proceedings were pending before this Court, when the hearing took place on 13 December 2017, the following statement was, however, recorded by this Court: “Mr Venugopal, appearing for Union of India very fairly stated, and we appreciate and record the same without any reservation, that the National Company Law Tribunal (NCLT) should not have been approached and/or should not have passed the order of the present nature. In view of the aforesaid statement made by learned Attorney General for India, we direct stay of the order dated 08th December 2017 passed by NCLT, Principal Bench in CP-423/(ND)/2017.” 9. Subsequently, on 12 January 2018, it was submitted on behalf of the Union of India before this Court by learned counsel that the petition which was instituted before the NCLT shall be withdrawn. Pursuant to this, an application was filed before the NCLT on which an order was passed on 16 February 2018 for the withdrawal of the petition, being CP-423(ND) of 2017, in pursuance of the statement which was recorded by this Court in its order dated 12 January 2018. 10. Pursuant to this, an application was filed before the NCLT on which an order was passed on 16 February 2018 for the withdrawal of the petition, being CP-423(ND) of 2017, in pursuance of the statement which was recorded by this Court in its order dated 12 January 2018. 10. These developments took place when the NCLT had been moved after this court had already assumed jurisdiction in the matter. As the course of events unfolded, this Court, by its previous orders, indicated the urgent need for the projects of Unitech Limited to be taken up by a specialised agency so as to ensure completion in a time bound schedule in the interest of the home buyers. 11. Since the Union of India withdrew the application which it had submitted before the NCLT only for the reason that this Court was seized of the present proceedings, we are of the view that the Union of India should revisit the original proposal in the interests of home buyers and consider appointing independent Directors for the takeover of the management of Unitech Limited. These deliberations may be conducted at the highest level so that the Court can be apprised by the learned Attorney General of the modalities which have been worked out. 12. The response of the Union of India may be filed on or before 15 January 2020. We commend the Union of India to take urgent action since the interests of nearly 12,000 home buyers is involved. 13. We hope and expect that a reasonable solution to the issue can be found. We leave it open to the Union of India to pursue alternative modalities so as to protect the interests of the home buyers. 14. Learned amicus curiae has agreed to provide the learned Attorney General with a compilation containing all the documents pertaining to the earlier application which has been noted in the above order. Re: Report of the Forensic Auditors 15. Mr Sameer Paranjape and Mr Nitin Talwar of M/s Grant Thornton have submitted an interim report on the Forensic Audit of Unitech Limited. 16. During the course of the hearing, the two representatives of M/s Grant Thornton have explained the Executive Summary attached to the Report which contains the gist of the findings. Re: Report of the Forensic Auditors 15. Mr Sameer Paranjape and Mr Nitin Talwar of M/s Grant Thornton have submitted an interim report on the Forensic Audit of Unitech Limited. 16. During the course of the hearing, the two representatives of M/s Grant Thornton have explained the Executive Summary attached to the Report which contains the gist of the findings. From the Report, some of the salient features which have emerged are summarised below: (i) An amount of INR 14,270 crores was collected by Unitech from 29,800 home buyers. Of this amount, INR 13,364 crores has been traced in the bank statements. Almost 90% of these collections were received during the period 2006-2014; (ii) The money trail analysis reveals that out of the collections from the home buyers amounting to INR 13,364.55 crores approximately, INR 5,063.05 crores or 40% of the collections were potentially not utilized by the Unitech group towards the construction/execution of the 74 identified projects. Moreover, due to limited information which has been provided to the Forensic Auditors, they have not been able to ascertain outflows aggregating to INR 2,389.73 crores, more particularly, on whether this amount was utilized for the 74 projects; (iii) Unitech availed of financial facilities aggregating to INR 1,805.86 crores from six financial institutions for the construction/execution of 74 projects. The money trail analysis reveals that 42%, amounting to INR 763.06 crores, has not been utilized for the construction/execution of these projects. As a result of limited information being provided to the Forensic Auditors, they have not been able to ascertain if outflows aggregating to INR 504.30 crores have been utilized for the 74 projects; (iv) Due to Unitech not submitting relevant data, the Forensic Auditors have not been able to perform their analysis on 23 projects and the analysis has been confined to the remaining 51 projects; (v) At an aggregate level, across the 51 projects, the collections exceeded the costs by INR 2,794.83 crores. This indicates that for 51 projects, INR 2,794.83 crores, which was collected from the home buyers, was not used for the purpose of the projects. Extrapolated across the remaining 23 projects, this data will match the estimation made by the Forensic Auditors; (vi) The Forensic Auditors have found instances which indicate a potential diversion of funds from Unitech: (a) One category consists of high value of investments/advances made and consequently written off in off-shore tax-haven countries/companies. Extrapolated across the remaining 23 projects, this data will match the estimation made by the Forensic Auditors; (vi) The Forensic Auditors have found instances which indicate a potential diversion of funds from Unitech: (a) One category consists of high value of investments/advances made and consequently written off in off-shore tax-haven countries/companies. Between 2007-2010, three subsidiaries of Unitech made investments of INR 1,745.81 crores in ten companies in Cyprus. Between 2016 2018, an amount of INR 1,406.33 crores or 80% of the total investment value was written off in these investments while the remaining amount of INR 339 crores is appearing as equity investments in the books of accounts. Similarly, in 2007 2008, Unitech Global Limited, a company registered in Jersey and a subsidiary of Nuwell Limited, another subsidiary, advanced a loan of INR 294.47 crores to Kortel Limited, another step-down subsidiary of Unitech. Kortel made investments of INR 292.99 crores in three foreign entities based in Cyprus during 2015-2016. INR 294.47 crores (100% of total investment value) was written off in the books of Kortel. (b) There is a high value of receivables due from related/undisclosed related parties. The Forensic Auditors have pointed out several instances in this regard: (i) Between 2009-2011, Unitech sold five wholly owned subsidiaries to three undisclosed related parties at an amount of INR 493.72 crores for which as on 30 November 2018, a balance of INR 294.30 crores is receivable. (ii) During March 2011 and October 2013, Unitech advanced INR 237.63 crores to a related party, Millennium Construction Private Limited, for the acquisition of the shares of a company by the name of Grandeur Buildwell Private Limited. No shares of the company were allotted to Unitech and the entire advances are still receivable. (c) There is a diversion of funds through transactions with undisclosed related parties. The Forensic Auditors have indicated the following instances in this regard: (i) In 2011-2012, Unitech and two subsidiaries entered into transactions with Arkhion Design Private limited for availing of architectural services of a value of INR 108.92 crores. Emails indicate that Unitech employees were involved in the management of operations of the said company. The Forensic Auditors have not been provided supporting documents pertaining to these transactions; (ii) Between 2012-2018, Unitech and its two other subsidiaries entered into transactions with Febiana Design and Construction Private Limited for availing of services related to civil work aggregating to INR 291.89 crores. The Forensic Auditors have not been provided supporting documents pertaining to these transactions; (ii) Between 2012-2018, Unitech and its two other subsidiaries entered into transactions with Febiana Design and Construction Private Limited for availing of services related to civil work aggregating to INR 291.89 crores. The financial information available on the website of the Ministry of Corporate Affairs indicates significant variances in the reported financial information vis-a-vis aggregated transactions carried out with Unitech and its two subsidiaries. Febiana had entered into transactions aggregating to INR 273.58 crores with Unitech Group between 2012-2013 to 2016-2017. However, the documents uploaded by Febiana on the website of the Ministry of Corporate Affairs shows its reported income as INR 106.82 crores only. (iii) The third instance is that between 2015-2018, Unitech had entered into transactions pertaining to the sale of land and other development expenditure in the value of INR 446.40 crores with five entities related to Trikar Group. These transactions were potentially not at arm’s length. Certain employees of Unitech were shifted/transferred on the payrolls of Trikar Group of Companies which have been managed by the promoters of Unitech. Multiple emails indicate that these entities appeared to be associated with the Unitech Group. (iv) There is a potential diversion of funds from the personal bank accounts of Mr Ajay Chandra, between 2013-2018. Unitech had given corporate loans to Platinum Buildmart Private Limited aggregating to INR 126.43 crores of which INR 63.50 crores is still appearing as a receivable. This company had between 2010-2012 transferred INR 71.27 crores to two personal bank accounts of Mr Ajay Chandra. (v) Unexplained High Value of payments through a subsidiary of Unitech: QNS Facility Management Private Limited, a subsidiary of Unitech, made payments aggregating to INR 224 crores to (i) entities based in Abu Dhabi/Dubai aggregating to INR 55.45 crores and (ii) potentially undisclosed related parties to the tune of INR 168.55 crores. (vi) High value receivable balances written off: On 31 March 2018, Unitech had written off receivable balances aggregating to INR 198 crores pertaining to 26 parties involved in transactions relating to the sale of steel/purchase of scrap with Unitech. No supporting documentation was provided by the Management. (vi) High value receivable balances written off: On 31 March 2018, Unitech had written off receivable balances aggregating to INR 198 crores pertaining to 26 parties involved in transactions relating to the sale of steel/purchase of scrap with Unitech. No supporting documentation was provided by the Management. (vii) Potential manipulation in the books of accounts Between 2007-2010, Unitech sold 22 wholly owned subsidiaries valued at INR 26.10 crores to six related parties and four undisclosed related parties for an amount aggregating to INR 1,463 crores, booking a profit on these transactions of an equivalent value. In subsequent years, these companies were re-purchased at an aggregate amount of INR 1,555.98 crores, thus making a loss of INR 92.90 crores across both the legs of the transaction. 17. Apart from making the above findings, the Forensic Auditors have stated in their interim report that there has been a serious mis-representation by Unitech IT team relating to the availability of electronic information. This pertains to information which has been held by Sunil Keswani, Ex-CFO, Manoj Popli and by the promoters, Ramesh Chandra, Ajay Chandra and Sanjay Chandra. 18. The material which has been placed before the Court by the Forensic Auditors highlights: (i) Siphoning off of funds which were received from the home buyers for purposes unrelated to the 74 projects; (ii) Diversion of funds to off-shore tax havens; (iii) Entering into transactions with undisclosed and disclosed related entities; (iv) Diversion of funds to related companies. 20. The material which has been placed before the Court indicates that large amounts which have been obtained from the financial institutions have not been used for the purpose for which the loans have been obtained and have been diverted for extraneous purposes. 21. In the background which we have noted in terms of the interim report of the Forensic Auditors, we are clearly of the view that the Union of India must step in forthwith by suspending the management of Unitech Limited and appoint independent Directors to take over the management. The sorry state of affairs to which the home buyers have been reduced is a direct consequence of acts of commission and omission on the part of the management of Unitech Limited and its subsidiaries. The Forensic Auditors have done a commendable job despite the fact that they were not placed in possession of full information and data. The sorry state of affairs to which the home buyers have been reduced is a direct consequence of acts of commission and omission on the part of the management of Unitech Limited and its subsidiaries. The Forensic Auditors have done a commendable job despite the fact that they were not placed in possession of full information and data. The data which has been analysed by the Auditors would indicate that the actual extent of mis-appropriation, siphoning and diversion of funds may be much higher than of what has been estimated in the Report, which has been presented on the basis of available data. 22. We are also of the view that these acts of commission and omission involved not only acts of wrong doing in relation to the home buyers, but towards the banks and financial institutions. The issue in regard to the element of criminal wrong doing must, in our view, warrant a proper investigation by the law enforcement machinery, both from the angle of money laundering and other related facets. We accordingly direct that the report of the Forensic Auditors be made available to the learned Attorney General for India so that a copy of the Report may be made available to all concerned agencies of the Union of India for further action. 23. Dr Abhishek Manu Singhvi, learned senior counsel made a fervent plea for releasing the promoters who are presently lodged at Tihar Jail. 24. The Report of the Forensic Auditors would indicate that there are serious acts of commission and omission on the part of the promoters of Unitech Limited. Moreover, the Forensic Auditors have made a serious grievance of the non-cooperation of the promoters and other managerial personnel of Unitech Limited. 25. We take serious note of the fact that despite successive orders of this Court, full data and information have not been provided to the Forensic Auditors. We have, therefore, no hesitation in rejecting the applications (IA Nos 182059 of 2019 and 182062 of 2019 in SLP (Crl) Nos 5978-5979 of 2017) for grant of bail which are accordingly dismissed. 26. We take serious note of the fact that despite successive orders of this Court, full data and information have not been provided to the Forensic Auditors. We have, therefore, no hesitation in rejecting the applications (IA Nos 182059 of 2019 and 182062 of 2019 in SLP (Crl) Nos 5978-5979 of 2017) for grant of bail which are accordingly dismissed. 26. We would now expect the Union of India to act pro actively in the matter and inform this Court on the next date of hearing on the steps which it initiates to replace the existing management and ensure that the management of Unitech Limited is handed over to an independent group of directors who can fulfill the mandate and responsibility of attending to the concerns of the home buyers by completing the remaining projects. Equally, we are affirmatively of the view that the Union of India must take all necessary steps to ensure that a proper investigation is carried out by the law enforcing machinery since large amounts which have been collected both from the home buyers as well as from the financial institutions have been prima facie found to have been diverted, siphoned off and mis-appropriated. 27. The office report dated 17 December 2019 indicates that an amount of Rs 7,99,50,000 has been deposited. The amount be kept in a fixed deposit of a nationalized bank offering higher rate of interest for a period of one year. As per the office report, three fixed deposits are maturing on 24 January 2020 and 27 January 2020. These be also renewed for a period of one year with a nationalized bank offering higher rate of interest. 18. List the matters on 17 January 2020.