MCA unearths Rs 700 cr scam in Unitech, says funds diverted to 16 shell cos

Company believed to have siphoned off huge amounts of money to various shell companies

The ministry of corporate affairs (MCA) has unearthed a scam of around Rs 700 crore in troubled real estate company Unitech. The office of the regional director – north – has found that Unitech siphoned off huge amounts of money to various shell companies, a senior government official told Business Standard.

MCA is in the process of examining the findings to decide the next course of action in the matter.

Unitech promoters Sanjay Chandra and his brother Ajay Chandra are in Delhi’s Tihar Jail since August 2017 for allegedly siphoning off homebuyers’ money.

The Chandra duo was arrested by the economic offences wing (EOW) of the Delhi Police in April 2017. They were accused of duping buyers, who had booked flats in their Greater Noida residential project.

Further investigation ordered into Unitech revealed that money has been diverted to some 15-16 shell companies. All the findings, along with evidence, have been submitted to the government.

“Unitech promoters took out money from the main company and created assets such as land banks and buildings under various shell companies. It is public money that belongs to shareholders and banks which has been diverted,” the government official said.

Section 224 of the Companies Act empowers the MCA to take action in pursuance of the inspector’s report.

The MCA recently submitted a proposal in the Supreme Court for taking over the management of the troubled real estate company. 

In its note to the apex court, the government has proposed names for the board of director positions for what was once the largest real estate firm in the country.

The Chandra family, father Ramesh and sons Ajay and Sanjay, were ranked seventh in ‘The Billionaire Club’, Business Standard’s annual ranking of the country’s wealthiest people in 2007, with a net worth of over Rs 30,000 crore.

Riding the real estate boom, Unitech expanded rapidly between 2005 and 2007 with multiple projects launched across the country.

The apex court had refused to grant bail to the promoters as they had not complied with its October 30, 2017, order directing them to deposit Rs 750 crore. 

Earlier, in December, the Supreme Court had ordered a forensic audit of the company’s books and assets.

Forensic auditors reported that Rs 14,270 crore was collected by Unitech from 29,800 home buyers. Of this, Rs 13,364 crore has been traced in bank statements.

Of the 16,000 homebuyers affected by Unitech’s pending projects, nearly 4,700 want a complete refund. The other 9,400-odd buyers want either refund or their flat.