2021 (8) TMI 1381 - SC - Indian Laws

Validity of Status report filed by M/s Grant Thornton, who were appointed as Forensic Auditors - report indicates that the auditors were not provided complete access to all electronic records, including those which were in possession of the Chief Financial Officer, Unitech Limited. - HELD THAT - The contents of the communication dated 16 August 2021 and the material which has come on the record indicate that, despite the orders of this Court, irregularities are taking place within the precincts of the Tihar Central Jail where the two accused have been lodged. These activities undermine the authority of the Court and will derail the investigation which has been ordered by the Directorate of Enforcement. It is directed that both the accused, Sanjay Chandra and Ajay Chandra be shifted from Tihar Central Jail to the premises of Arthur Road Jail, Mumbai and Taloja Central Jail, Mumbai, respectively. The video conferencing facility at the Jails to which the accused are being transferred shall be made available so as to enable them to record their presence in the court proceedings where their presence is required. Copies of the interim and final reports of M/s Grant Thornton, forensic auditors appointed by this Court shall be furnished to the Directorate of Enforcement. Copies of the reports shall be handed over in a sealed cover to Ms Shraddha Deshmukh, counsel assisting Ms Madhavi Divan for onward transmission to the Directorate of Enforcement - List the Special Leave Petition after six weeks, and a status report shall be filed by ED on the investigation.

Summary

Issues Involved:
1. Lack of cooperation with forensic auditors.
2. Misuse of jail facilities by the accused.
3. Progress of investigations by the Directorate of Enforcement.
4. Transfer of accused to different jails.
5. Communication and cooperation between various authorities and the court.

Detailed Analysis:

1. Lack of Cooperation with Forensic Auditors:
The court noted that the forensic auditors from M/s Grant Thornton were not provided with complete access to all electronic records, including those in possession of the Chief Financial Officer of Unitech Limited. This lack of cooperation severely undermined and obstructed the auditors' task, hindering the effective implementation of the court's order for a forensic audit.

2. Misuse of Jail Facilities by the Accused:
The court recalled that the accused, former Directors of Unitech Limited, were lodged in Tihar Central Jail and directed that they shall not be entitled to any additional facilities apart from those available in the normal course as per the jail manual. This was communicated to the Jail Superintendent of Tihar Central Jail. The status report dated 16 August 2021 revealed that the accused engaged in illegal activities by flouting the jail manual, making transfers of assets, dissipating the proceeds of crime, influencing witnesses, and attempting to derail the investigation.

3. Progress of Investigations by the Directorate of Enforcement:
The Directorate of Enforcement filed two status reports dated 5 April 2021 and 16 August 2021, indicating the progress of the investigations. The court expressed concern over the irregularities within Tihar Central Jail, which undermined the court's authority and could derail the investigation. The court directed the Commissioner of Police, Delhi, to conduct an immediate enquiry into the contents of the communication dated 16 August 2021 from the Directorate of Enforcement and to hold accountable all officers and staff of Tihar Central Jail complicit in the violation of law.

4. Transfer of Accused to Different Jails:
Given the irregularities and misuse of jail facilities, the court ordered the transfer of the accused, Sanjay Chandra and Ajay Chandra, from Tihar Central Jail to Arthur Road Jail, Mumbai, and Taloja Central Jail, Mumbai, respectively. The court also directed that video conferencing facilities be made available at these jails to enable the accused to record their presence in court proceedings.

5. Communication and Cooperation Between Various Authorities and the Court:
The court directed that copies of the interim and final reports of M/s Grant Thornton be furnished to the Directorate of Enforcement. The court also ordered the Registrar (Judicial) to forward a copy of the communication to the Director General of Police, Maharashtra, for necessary arrangements for housing the accused. The court impressed upon the Directorate of Enforcement to expedite the investigation and to apprise the court of the status within four weeks.

Additional Orders:
- Permission was granted to delete the second respondent from the array of parties in IA No 81660/2021 & IA No 81663/2021.
- Notices were issued to the Ministry of Corporate Affairs and other relevant parties, with specific returnable periods.
- The new Board of Management of Unitech Ltd was directed to file its response to interlocutory applications within three weeks.
- The office report indicated the renewal of an FDR for a further period of one year.

Conclusion:
The court's judgment addressed multiple issues, including the lack of cooperation with forensic auditors, misuse of jail facilities by the accused, progress of investigations, and the necessity for inter-authority communication and cooperation. The court took significant steps to ensure the integrity of the investigation and the enforcement of its orders.