DGP to initiate appropriate criminal action against Managing Director for misappropriation: TNRERA

Therefore, a copy of this Order is forwarded to the Director General of Police, Tamil Nadu and to the Commissioner of Police, Chennai for initiating appropriate criminal action against Thiru Antony Sahayaraj, erstwhile Managing Director of the 1 Respondent Promoter Company by obtaining Complaints from the Liquidator of this Company as well as the Allottees and the Association of Allottees of these two Real Estate Projects. (Para 35)

Le NID Flat Owners' Welfare Association v. M/S Antony Projects Pvt. Ltd.

Tamil Nadu Real Estate Regulatory Authority (TNRERA)

21st January 2021.

Counsel for the Applicants/home buyers association: L.V.Shyam Sundar

Counsel for the first respondent/liquidator: Jayanth Viswanathan, K.K.Vijay Vigneshwar.

The present complaint before the TNRERA was decided by Thiru K.Gnanadesikan, S.Manohar and V.Jayakumar and for the first time in Tamil Nadu criminal action was instituted against the Managing Director for misappropriation.

The Le NID Flat Owners' Welfare Association in the project "Le NID had filed complaints against the Respondent Promoter M/s. Antony Projects Pvt. Ltd. at No.9/20, "AA" Block, 3rd Street, Anna Nagar, Chennai – 600 040 regarding the undue delay in completing and handing over the flats and cheating. The Managing Director of this Respondent Promoter Company is one Mr. Antony Sahayaraj.

The Complainant Association has stated that (i) about 140 allottees have been cheated by the Respondent Promoter which is a Real Estate development company. Based on an advertisement in the year 2012, they had booked the flats and had paid the sale consideration by way of various installments. The flats were not completed even after 4 years and the construction came to a complete halt in the year 2014. (ii) the 1st Respondent Company was ordered for liquidation on 22.01.2019 under Section-33 of the Insolvency and Bankruptcy Code, 2016 by the Hon'ble NCLT. (iii) Due to the inactions of the Respondents, the Complainant is now incurring a total cost of Rs.8.30 crores for the purpose of completion of the project by engaging M/S.KPN Promoters Private Limited and the net additional amount incurred by the Complainant amounts to approximately Rs.4.30 crores.

Finally, the Complainants Association has prayed that the 1st and the 2nd Respondents jointly be directed to pay the amount incurred by them to complete the project and that the project may be registered with the available documents.

In the Counter Affidavit, Mr. Ramji Mahadevan, the Liquidator of the 1st Respondent Company has submitted (i) that the 2nd Respondent Mr. Antony Sahayaraj, the Managing Director of the erstwhile liquidated Company has to pay approximately Rs.8,85,91,608/- to the 1st Respondent Company as he has failed to provide the required information sought by the Liquidator. (ii) The Liquidator of the 1st Respondent Company has filed an Affidavit in August, 2019 stating that the 2nd Respondent upon questioning by the then Insolvency Resolution Professional demanding explanation for transaction with the related parties amounting to Rs.8,85,91,608/-, the 2nd Respondent had produced a set of papers claiming the same to be invoices for supply of furniture to the 1st Respondent Company. The 2nd Respondent has neither submitted proper explanation for the invoices raised without any sales/service tax nor has given any details of the flats to which furniture was supplied or to which flat the interior work was undertaken by M/s. Antony Furniture Pvt. Ltd. (iii) Since no details or explanations were received from the 2nd Respondent in support of his statements and the invoices it is very much clear that the erstwhile Promoter has siphoned off the monies of the Company for his personal gains. Thereupon, the erstwhile Liquidator had passed orders directing the 2nd Respondent to repay the sum of Rs.8,85,91,608/- back to the Company. The 2nd Respondent has neither paid the money nor provided any response to the erstwhile Liquidator.

Finally, the Liquidator has prayed that the Police Authorities be directed to identify Mr.Antony Sahayaraj, the 2nd Respondent and recover the siphoned monies of Rs.8,85,91,608/- to ensure that the creditors of the Company are settled.

After perusing in length the Affidavit filed by the "Le NID" Flat Owners' Welfare Association and the Affidavit filed by the Liquidator of the 1st Respondent Promoter Company, Complaints filed by the Rejoice Flat Buyers Association and 16 allottees of project Rejoice and Affidavits filed by the Rejoice Flat Buyers Association carefully, the Regulatory authority observed the following:

It is seen that Thiru Antony Sahayaraj the erstwhile Managing Director of the 1st Respondent Promoter Company ordered to be liquidated by the Hon'ble NCLT on 22.01.2019 has not appeared during the hearings of this Authority in spite of sending notices for hearing to him by post as well as through the Commissioner of Police, Chennai City. Therefore, this Authority would proceed to pass orders on this Complaint ex-parte in respect of the 2nd Respondent Thiru Antony Sahayaraj erstwhile Managing Director of the 1st Respondent Promoter Company. *Para 27)

Placing reliance on the request on behalf of the Association of Allottees of Le NID project for registration based on the available records, the Authority observed the following:

In view of the special circumstances in which the project is being completed by the Association of Allottees, this Authority would register this project based on the available records. Therefore, the Complainants Association of Le NID project is directed to contact the Additional Director (Project), TNRERA for appropriate action by this Authority. (Para 32)

Answering the contentions of the complainants and placing reliance on the directions issued by the liquidator for the recovery of Rs.8,85,91,608/- from Thiru Antony Sahayaraj the erstwhile Managing Director of the 1st Respondent Promoter Company for not providing satisfactory account for this sum of expenditure by the 1st Respondent Company, the Authority observed the following:

The explanation of Thiru Antony Sahayaraj that he had spent this sum for purchase of furniture for this project has not been accepted by the Liquidator as he has not furnished supporting documents such as sales tax payments/sales tax returns, delivery challans and the details of furniture supplied including the details of flats for which the furniture was supplied, etc.

► Therefore, it is clear that Thiru Antony Sahayaraj, erstwhile Managing Director of the 1st Respondent Promoter Company has not utilized the above sum of Rs.8.86 crores for the project construction and completion and has misappropriated the above money for his pecuniary gains amounting to criminal breach of trust and cheating the Allottees. Therefore, a copy of this Order is forwarded to the Director General of Police, Tamil Nadu and to the Commissioner of Police, Chennai for initiating appropriate criminal action against Thiru Antony Sahayaraj, erstwhile Managing Director of the 1 Respondent Promoter Company by obtaining Complaints from the Liquidator of this Company as well as the Allottees and the Association of Allottees of these two Real Estate Projects. The Authority also orders that Thiru Antony Sahayaraj the erstwhile Managing Director of the Respondent Promoter Company shall refund Rs.8,85,91,608/- to the liquidated 1st Respondent Company to ensure that the allottees of incomplete projects undertaken by this Company who have paid in excess of the actual value of construction and undivided share of the land and other creditors are settled.

► The Authority also directs that the Inspector General of Registration shall take follow up action on the Demi Official letter addressed by this Authority on 19.12.2019 and ensure that the excess undivided share registered by the 1st Respondent Promoter Company in the Sub Registrar office, Guduvancheri is cancelled and a report sent in this regard to this Authority by 31.03.2021. (Para 35)

On these directions these Complaints were disposed of.

Judgment: Le NID Flat Owners' Welfare Association v. M/S Antony Projects Pvt. Ltd.

Kalidharun K M