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2019 (12) TMI 859 - HC - Companies LawSiphoning/defalcation/diversion of funds - Vacation of restraint on related party to transfer, selling or alienating of the properties purchased - related party companies - intermediate companies - sister concern - HELD THAT:- There has been siphoning off of funds from Respondent No.1. The balance sheet for the period ending 31.12.2009 also reflects that inter-corporate deposits have been written off by Respondent No. 1. Appellants, thus, have a good ground to say that the amounts invested by them were diverted by Respondent No. 1 to Intermediate Companies which were further diverted to Related Party Companies who have purchased the subject land. The Related Party Companies have a nexus with Dr. Rajesh Aeren, the Managing Director of Respondent No. 1. There is also material on record to prima facie show that in all Related Party Companies, AEZPL and Dr. Rajesh Aeren were the beneficiaries. In fact, the annual return of Aeren R. Enterprises Pvt. Ltd., reflects that Dr. Rajesh Aeren, his wife and his son and daughter are the shareholder and the ultimate beneficiaries. The Related Party Companies have entered into various transactions with Respondent No.1. Therefore, it cannot be ignored that there is a trail of money which ultimately results into the purchase of subject land by Dr. Rajesh Aeren through sister concerns of Respondent No. 1 in the names of the sister concerns. There is sufficient material on record which, prima facie, shows that there has been siphoning off of funds from Respondent No.1. The balance sheet for the period ending 31.12.2009 also reflects that inter-corporate deposits have been written off by Respondent No. 1. Appellants, thus, have a good ground to say that the amounts invested by them were diverted by Respondent No. 1 to Intermediate Companies which were further diverted to Related Party Companies who have purchased the subject land - The Related Party Companies have entered into various transactions with Respondent No.1. Therefore, it cannot be ignored that there is a trail of money which ultimately results into the purchase of subject land by Dr. Rajesh Aeren through sister concerns of Respondent No. 1 in the names of the sister concerns. The routing of funds is central to the scheme of layering the tainted money, which is always a challenge for unearthing fraud and tracing the source and the trail. The volume of funds pushed into purchase and acquisition of properties in question can only be estimated at this stage with the existing information. It will, of course, require detailed scrutiny of accounts to reach to a definite conclusion. The arms of the law are long enough to chase the fraudulently, ill gotten wealth, and to chase the fraudsters, even after they change their faces/identities by resorting to transfer of funds/layering. There seems to be no justification for Respondent No. 1 not utilizing the funds collected by it from different sources for the “Project Mall‟, and for diversion of the funds into the Intermediate Companies. There is no basis for the writing off of the advances made. Clearly, the promoters/management of Respondent No. 1 acted fraudulently, and were charitable towards the Intermediate Companies at the expense of, inter alia, the investors, including, the Appellants. The interim directions/orders are required to be passed under Section 339, since it is reasonable to assume on the basis of the facts shown to us that Dr. Rajesh Aeren had a direct nexus with the Related Party Companies which emerges from the pattern/trail of funds which has been discovered by the Investigating Agency - appeal allowed.
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