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    How JPMorgan helped Amrapali Group divert funds

    Synopsis

    From paying dividend without generating profits to setting up fake companies, Amrapali did it all.

    PTI
    The Supreme Court yesterday scrapped Amrapali’s registration under real estate laws and directed government-owned NBCC India Ltd. to complete all incomplete projects.
    A JPMorgan Chase & Co. unit violated India’s foreign investment rules and helped property developer Amrapali Group divert funds from realty projects, the nation’s Supreme Court said in a ruling and ordered an investigation.

    The court on Tuesday ordered the federal anti-money laundering agency to investigate Amrapali, based in Noida, near New Delhi, for diverting funds overseas with the help of JPMorgan and others. The violations, based on a forensic audit, range from disregarding foreign investment norms, paying dividend without generating profits, setting up fake companies and overvaluing shares.

    JPMorgan’s Singapore-based spokesman Chris Cockerill declined to comment. The biggest U.S. bank is allowed to seek a review of the ruling. Any criminal charges will only be filed in a lower court once investigation is complete.

    Developers, including Amrapali, Jaypee Infratech Ltd. and Unitech Ltd., have been taken to courts by irate homeowners and creditors as apartment sales slumped in the once red-hot South Asian market following the triple whammy of a surprise cash ban, tax reforms and a consumer-protection law for the sector. Home prices in India’s financial capital dropped and unsold inventory rose 14% in first half of 2019.

    Troubled Sectors
    JPMorgan invested around 850 million rupees ($12.3 million) in an Amrapali Group company’s shares and later sold them to an office boy and nephew of the auditor for 1.4 billion rupees, according to the ruling published on the top court’s website.

    “The shares were overvalued for making payment to JPMorgan,” the court’s two-judge bench headed by Justice Arun Mishra said in its ruling, agreeing with the forensic auditor regarding JPMorgan’s role. “It was adopted as a device for siphoning off the money of the home buyers to foreign countries.”

    The ruling can impact lenders’ efforts to recover dues as the court held that home buyers have the first right over the projects rather than banks that have lent funds to the builder.

    The court scrapped Amrapali’s registration under real estate laws and directed government-owned NBCC India Ltd. to complete all incomplete projects.

    The investigations will be done under the court’s supervision by police and the federal anti-money laundering agency.

    “We are not a country in which courts will permit such action and permit a person to go scot-free,” according to the ruling.

    The case is Writ Petition (Civil) No. 940/2017, Bikram Chatterji and others v. Union of India and others in Supreme Court of India.

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    62 Comments on this Story

    alpha 375 days ago
    MNCs in India do not respect local laws and fell go scot free. Govt. shall exercise full powers to check them.
    Hari Kishan Kishan375 days ago
    No project launched after RERA got struck. Because of provisions like builder can sell project after all clearances and permissions, 80% of consumer''s money to be put in escrow account builder can withdraw this money only for project construction only after producing material purchase bills or quotations for purchase. Demand for RERA was strongly raised since 2006 but it is implemented in 2015. Several lakh carores money of middle class home buyers was looted by Neta, Builder and Babu''s of authority nexus . Consumer is wandering in courts for home delivery or refund. But previous government not brought in LAW despite strong demand since 2006, because they might have share in this loot. Legal Agreement clause if buyer delays payment 18% interest will be charged and if builder delays project will pay penalty of 50 Rs/- per sq. feet. For 1000 sq.feet flat 50,000Rs per annum and I have paid 21 lack and paying 2lack interest per annum. It is good for him to never give me flat and enjoy the difference of 1.5 lacks forever. These things were allowed for years despite strong demand for RERA.
    V K Agarwal375 days ago
    Court has reached to correct conclusion whereas
    various parties earlier were diverting the issue in favour of lenders. Lenders were well aware of business and deposits by Home Buyers. Lenders can''t jump and have better position in the deal to kill Home Buyers. Lenders had sanctioned loans for additional business of builders and as a standard practice of documents, include all properties whether movable or immovable, present & future of all types and under that garb acted against the interest of Home Buyers and making double recovery i.e. one from builders and second from Home Buyers as most of them had borrowed from banks. Ultimate sufferers, Home Buyers from both sides leading to bankruptcy at no fault of there under government policy of recovery bad loans. In the process, if it had succeeded,the corrupt would have gained by promotions and sufferer becoming bankrupt in the process of fulfilling lifetime wish of own home to live.
    The Economic Times