Delhi HC Denies Anticipatory Bail To Project Promoter For Misappropriating, Siphoning Off Funds Collected From Homebuyers; Withdraws Interim Protection

The Delhi High Court on Monday denied anticipatory bail to a construction project promoter in the two FIRs registered over misappropriation and siphoning off of funds collected from homebuyers by the company. The Court also withdrew the interim protection granted to the promoter.

Siddharth Chauhan, Managing Director of M/s Sidhartha Buildhome Pvt. Ltd, had filed two anticipatory bail applications in two separate FIRs. He was holding 97% shareholding in the share capital.

Justice Manoj Kumar Ohri was of the view that Chauhan had been attempting to mislead the Court in the name of making efforts at settlement instead of making any serious effort at addressing claims of the aggrieved homebuyers.

Noting that he also tampered with the evidence and threatening the witnesses in the matter, the Court said:

"Notably, the grant of anticipatory bail in a case of such large magnitude is further likely to have an adverse impact not only in the progress of the case, but also on the trust reposed by the society in the criminal justice system. This Court also cannot discount the fact that in case the applicant is granted the concession of anticipatory bail, he may again tamper with the evidence/witnesses and/or threaten them, as has been the case in the past."

"The magnitude of misappropriation and gravity of the offence also necessitate his custodial interrogation, to unearth the money trail of the siphoned-off amounts and to prevent him from attempting to tamper with the evidence and threaten the witnesses. He already has shown scant regard for the Court orders by threatening the witnesses while on interim protection."

While one bail plea related to the FIR registered with respect to a project namely "Estella", housing 850 residential units in 16 towers, the other bail plea related to an to FIR registered with respect to a project namely "NCR One", housing total of 552 residential units in 10 towers and 5 executive floors, both located in Gurugram.

It was submitted on behalf of the complainants that Chauhan had duped about 833 homebuyers and despite having surplus funds since the last 7 to 8 years, he had not invested any money in either of the projects since 2016.

The Court noted that it was apparent that total funds of Rs. 338.06 crores were collected for infusion into project "Estella", even though the cost of the project was initially projected as Rs.248 crores and later revised to Rs.273 crores.

"Thus, the accused Company had surplus funds to the tune of Rs.65.06 crores under project "Estella"," the Court noted.

"Similarly, for project "NCR Green, Phase-2", a total sum of Rs.224.59 crores was collected for infusion in the project, while the estimated cost of construction was Rs.192.78 crores. In view of the same, it is discernible that excess amount to the tune of Rs.31.81 crores was secured under project "NCR Green, Phase-2," it added.

Perusing the Forensic Audit report, the Court was of the view that Chauhan not only collected surplus amounts from the homebuyers, but also obtained loans from Banks over and above.

"Out of the total funds accumulated, interest-free advances were given to associates/sister concerns of the accused Company, instead of investing them in the projects," the Court said.

The Court observed that the investigation and audits conducted by various authorities in the matter revealed that the money collected from the homebuyers as well as the loans taken from the Banks were not utilized appropriately in the construction of the two projects.

"The present case involves allegations of inducement of about 833 homebuyers to invest in housing projects, on a promise of time-bound delivery of possession, and subsequent misappropriation and diversion of money collected from them and funds obtained from Banks. The case is not simpliciter of delay in construction. The homebuyers had paid money out of their life savings and/or obtained loans from Banks, subsequent to which possession of the promised flats was not delivered," the Court said at the outset.

While dismissing the bail pleas, the Court also withdrew the interim protection granted to Chauhan in the matter.

Title: SIDHARTH CHAUHAN v. STATE (GOVT. OF NCT OF DELHI) THROUGH SHO

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