Amrapali: What Supreme Court held against MS Dhoni and what are its implications?

The Supreme Court delivered a 270-page verdict against Amrapali Group.

The judgment has issued a slew of directions including direction to the National Buildings Construction Corporation (NBCC) to take over and complete the stalled projects of the Amrapali group.  The Court also directed for the group’s registration to be cancelled.

Interestingly, the judgment of the Supreme Court seems to be rather unfavourable for someone from Cricketing world – former Indian Captain Mahendra Singh Dhoni.

So what exactly does the judgment have about Dhoni?

The judgment sets out a forensic audit report submitted by auditors, Pavan Kumar Aggarwal and Ravinder Bhatia.

The forensic audit speaks about the following two companies:

Amrapali Mahi Developers Pvt Ltd.

As per the forensic audit report, this company received share capital in cash and all the expenses were paid in cash only. Mahendra Singh Dhoni, husband of Sakshi Singh Dhoni (Director of the company) was the brand ambassador of Amrapali group and carried out a number of transactions with respect to the endorsement of Amrapali group’s projects. He entered into agreements with other group companies.

Amrapali Sapphire Developers Private Limited

In Amrapali Sapphire Developers Private Limited a Flat (Flat No – TCP04) has been booked in the name of Rhiti Sports Management Private Limited by passing an adjustment entry. However, Sanjay Pandey of Rhiti Sports Management Pvt Ltd denied booking of any such flat. He also confirmed that neither the company nor any individual has any flat in Amrapali Group.

Pandey confirmed that no due diligence was carried out before accepting the brand endorsement though he informed that brand value and paying capacity was seen. No Agreement was provided though it was agreed that it would be provided by March 11, 2019.

Expenses were reimbursed to Rhiti Entertainment Private Limited a group company, without any agreement. As per the Forensic Audit, the Company Amrapali Sapphire Developers Private Limited paid a sum of Rs. 6.52 Crores out of the total amount of Rs. 42.22 Crores paid from the Amrapali group of Companies to Rhiti Sports Management Private Limited during the years 2009 – 2015.

This sum was paid on account of Agreements executed by Anil Kumar Sharma, CMD for and on behalf of Amrapali Group of Companies with Rhiti Sports Management Private Limited. There is no resolution on record authorizing Anil Kumar Sharma, CMD to enter into an agreement on behalf of all Amrapali group of Companies.

There were various agreements as per details given below:

a) Endorsement Agreement dated 22nd November, 2009

According to this agreement, Mahendra Singh Dhoni will make himself available to the Chairmen for three days along with one representative of Rhiti Sports. There are no documents held on record for compliance of this condition.

b) According to the Agreement for sponsorship dated March 20, 2015, Amrapali Group of Companies got right to advertise as Logo Space at various places in the IPL 2015 for Chennai Super Kings. It is observed that this Agreement is on plain paper and executed only between Amrapali and Rhiti Sports Management Private Limited and there are no signatories on behalf of Chennai Super Kings to this Agreement. No Resolution in favour of Shri Arun Pandey, Signatory of Rhiti Sports Management Private Limited is attached with the said Agreement.

The forensic audit report concluded that the above facts clearly showed that the Agreements were made for payment of amounts to Rhiti Sports Management Private Limited Company were Sham Agreements and made just for making payments to Rhiti Sports Management Private Limited.

The significant conclusion recorded by the Forensic Auditors states that Homebuyers’ money was wrongly diverted to Rhiti Sports management and should be recovered from them.

“We feel that Home Buyers money has been diverted illegally and wrongly to Rhiti Sports Management Private Limited and should be recovered from them as the said Agreement in our opinion do not stand the test of Law”, the Audit report said.

Supreme Court Accepts

The Supreme Court judgment goes on to accept the findings of the Forensic Report with respect to the following:

Amrapali Mahi Developers Private Limited: It received share capital in cash and all the expenses were paid in cash.

Amrapali Media Vision Private Limited: It was created for making movies. There was no necessity of creation of this company for advertising. It was created to divert funds to make movies. Rhiti Management Private Limited was paid Rs. 24 crores for professional charges and advertisement expenses etc

Implications: Supreme Court directions

Though no specific direction has been issued by the Supreme Court with respect to any of the above companies of Dhoni, the following directions could apply to them.

• Direction to Enforcement Directorate and concerned authorities to investigate and fix liability on persons responsible for FEMA violation and other fraudulent activities.
• Direction to various Companies/ Directors and other incumbents in whose hands money of the home buyers is available as per the report of Forensic Auditors, to deposit the same in the Court within one month from today and to do the needful in the manner as observed. Failure to do the same would result in appropriate action against them.