India's financial crime fighting agency said on Thursday it has arrested the former chairman of real estate company Jaypee Infratech, Manoj Gaur, for alleged diversion of funds collected from home buyers.
The company's real estate projects included residential townships in the northern city of Noida, and developing the Yamuna Expressway, a 165-km (100-mile) highway linking Noida with Agra. The residential projects have since been taken over by real estate firm Suraksha Group.
The probe by the government's Enforcement Directorate (ED) into the company and its officials followed multiple police complaints filed by home buyers in Delhi and neighbouring Uttar Pradesh state alleging cheating and criminal breach of trust.
Jaypee Infratech did not immediately respond to a request for comment. Manoj Gaur could not be reached for comment.
Jaypee Infratech, part of the Jaypee Group, was once among India's largest conglomerates but its debt mounted after 2010, eventually leading to bankruptcy, and prompting the government to amend insolvency laws to protect homebuyers stuck in stalled projects.
The agency's investigation has found that 146 billion rupees ($1.66 billion) funds raised from home buyers was diverted for non-construction purposes and "siphoned off to related group entities and trusts," the ED said in a press statement.
"The investigation has established the central role of Manoj Gaur in the planning and execution of the fund diversion," it said.
In May, the agency searched 15 locations including the offices and premises of Jaypee Infratech, seizing documents and digital records tied to the case.
Further investigation is ongoing, the agency statement said.