The Supreme Court has said that money given by the investor to complete a particular project cannot be used for other projects as it amounts to criminal misappropriation. A bench comprising justices Arun Mishra and U U Lalit observed this while it was hearing a matter related to embattled real estate major Amrapali Group. The apex court observed that if builders were diverting money invested by a person in a particular housing or commercial project to complete other projects, it, prima facie, amounted to misappropriation and criminal breach of trust.
“This (diversion of funds) is the malady which is affecting all the builders. We want to stop this nonsense once and for all,” the bench said. The bench wondered as to how Rs 2,765 crore fund was allegedly diverted by the Amrapali Group for carrying out works in its other projects.
The top court said alleged diversion of funds by the group, prima facie, amounted to criminal breach of trust and it would deal with the issue after hearing the parties. The bench pulled up the group for not following its orders and said “serious kind of fraud” has been played by the firm not only with the investors but also with the top court.
The court ordered attachment of all bank accounts and movable properties of 40 firms belonging to the group and also directed it to place before the bench details of all its bank accounts from 2008 till today.
The company had earlier told the court in an affidavit that it was not in a position to complete the projects and hand over possession of flats to over 42,000 home buyers in a time-bound manner.