“Tihar jail officials acted in connivance with them. We will take the officials to task… Tihar has become a safe haven for criminals and the jail superintendent is shameless as it is happening in national capital. We will deal with the jail authorities separately,” remarked an indignant bench of Justices D Y Chandrachud and M R Shah, who ordered that the Chandra brothers be shifted to Mumbai and lodged separately in Arthur Road and Taloja jails.
The bench was furious after going through a sealed envelope report, submitted by the Enforcement Directorate, containing details on how the Chandras allegedly threatened witnesses and had managed to operate with a free communications network and were sending instructions from inside the jail. As per ED report, the accused were engaging in illegal activities by flouting the jail manual; and also making transfer of assets and dissipating the proceeds of crime.
Although the bench’s anger was provoked by the subversion of law enforcement by jail authorities in the Chandra case, it trained the spotlight on the nexus between criminals and jail authorities, which has seen the prison complex acquiring the notoriety, as the two judges said, of being a “safe haven for criminals”. The jail administration has been for decades been accused of facilitating criminals, gang leaders wanted for multiple heinous crimes as well as high-profile accused of white-collar offences, for hefty considerations.
Gangsters have been ordering hits and extorting “protection fee” from businessmen using smartphones, which they can procure with remarkable ease.
Additional solicitor general Madhavi Divan, appearing for the Enforcement Directorate, told the bench that the Chandras’ custody has become “useless” with what they are doing from inside jail and sought immediate intervention from the court. She also told the bench that the probe so far done by the ED revealed that the promoters created many shell companies with dummy directors to do illegal “multilayer transactions” for diverting money to overseas destinations. She pleaded that immediate steps needed to be taken to stop the Chandras from interfering in the probe.
The bench then went through the report and said that the allegations against the Chandras were “disturbing and very serious” and attempts were made by them to undermine the jurisdiction of the apex court. The bench also said details of the report could not be disclosed as the probe is still going on.
The court also pulled up the Delhi Police commissioner after being told that ED had written to him on August 16 on the issue but it seemed that no action was taken by him. “It has been 10 days now. Why no probe was initiated. He ought not to have waited for a single day after receiving the communication,” the bench said and directed the Delhi Police chief to conduct the investigation personally and not by his officer. It directed him to file a report in two weeks.
Senior advocate Vikas Singh, appearing for the Chandra brothers, tried to convince the bench that the accused were not provided any special facilities and they are entitled to communicate through letters. He pleaded with the bench not to be “carried away” by the report.
But the bench said the Chandras had to shifted out of Tihar in view of the allegations.
Giving a brief details of the probe done by the ED, Divan said the agency has attached properties worth of Rs 650 crore spread across the country as well as one the Chandras own overseas. She told the bench that the agency had located an “underground” office of the Chandras in South Delhi and the documents recovered from there included 400 original sale deeds.
The court said the ED probe was going at a tardy pace and directed the agency to speed up and conclude it expeditiously. The court brought the anti-money laundering agency into the case after a forensic audit of the company revealed that the promoters had siphoned off thousands of crores of homebuyers’ money and bank loans by diverting them to overseas tax havens.
Unitech took Rs 14,270 crore as deposits from 29,800 homebuyers and secured a loan of Rs 1,805.86 crore from six financial institutions for 74 housing projects. After examining the account books of Unitech Group and its subsidiaries, the auditor in its interim report said Rs 5,063 crore, or 40% of the collections from homebuyers, were not used for the housing projects they were meant for. Outflows worth another Rs 2,389 crore are still being probed.
The report said nearly 40% of the money raised from financial institutions amounting to Rs 763 crore had not been utilised for construction. The auditor filed the report after examining 51 projects and the rest 23 projects have not yet been analysed as the company failed to provide relevant data.
Giving details of potential diversion of funds, the interim audit report said high value investments were made in offshore tax havens, which were later written off. “Between 2007-2010, three subsidiaries of Unitech made investments of Rs 1,745.81 crore in 10 companies in Cyprus. Between 2016- 2018, an amount of Rs 1,406.33 crore or 80% of the total investment value was written off while the remaining amount of Rs 339 crore is appearing as equity investments in the books of accounts,” the report said.
“Similarly, in 2007-2008, Unitech Global Limited, a company registered in Jersey and a subsidiary of Nuwell Limited, another subsidiary, advanced a loan of Rs 294.47 crore to Kortel Limited, another step-down subsidiary of Unitech. Kortel made investments of Rs 292.99 crore in three foreign entities based in Cyprus during 2015-2016. Rs 294.47 crore (100% of total investment value) was written off in the books of Kortel,” it said.