PMC bank fraud: Enforcement Directorate attaches HDIL group's shares worth Rs 233 crore

Photo for representational purpose

The Enforcement Directorate (ED) on Thursday said it has attached partly-paid compulsorily convertible preference shares worth Rs 233 crore of HDIL group companies in the alleged multi-crore-rupee PMC bank fraud and money-laundering case.

It said "on the strength" of these shares, HDIL had the rights for allotment of under-construction flats measuring 90,250 square feet FSI (floor space index) in Mumbai's Ghatkopar of developer Aryaman Developers Private Limited.

"The developer has given an undertaking to ensure not to sell, transfer, alienate or create any third-party rights on completion of the project," the ED said.

The agency has filed a money-laundering case to probe the alleged loan fraud in the Punjab and Maharashtra Co-operative (PMC) Bank in October, 2019 against the Housing Development Infrastructure Limited (HDIL), its promoters Rakesh Kumar Wadhawan, his son Sarang Wadhawan, its former chairman Waryam Singh and former managing director Joy Thomas.

The others under the agency's scanner include the promoters and executives of Somerset Construction Private Limited, Serveall Construction Private Limited, Sapphire Land Development Private Limited, Emerald Realtors Private Limited, Awas Developers and Construction Private Limited, Prithvi Realtors and Hotels Private Limited and Satyam Realtors Private Limited.

The father-son duo were arrested by the ED in the case in October, 2019 and they are lodged in a Mumbai jail at present.

"Rakesh Wadhawan and other promoters of HDIL have fraudulently utilised the funds taken from the PMC Bank in various projects by projecting the same as untainted.

Also read: PMC bank case: Enforcement Directorate raids Viva Group, seizes Rs 73 lakh cash

"During 2011-12, an amount of Rs 233 crore was transferred from HDIL group companies to the group companies of Mukesh Doshi of Mumbai and these funds were finally utilised by Aryaman Developers Private Limited in the slum rehabilitation project being developed in Ghatkopar East, Mumbai," the ED said in a statement.

According to the understanding between Rakesh Wadhawan and Doshi, HDIL group companies would be allotted constructed area of FSI measuring 90,250 sq. ft of the carpet area in the proposed building.

"For this project, Aryaman Developers had its own investments, including loans from banks. The funds were utilised for the payment of land premium, rent to slum dwellers, construction of transit camps, fungible premium, construction of rehab and IOD (intimation of disapproval) deposit with the slum rehabilitation authority.

"The promoters of HDIL intended to take a backdoor exit from the project and approached Aryaman Developers for a settlement at Rs 150 crore for not causing hindrance in the ongoing project for slum rehabilitation," the ED alleged.

It claimed that an "undertaking" was taken from Doshi in the form of an affidavit to ensure that the project after development would not fall in the hands of accused Rakesh Wadhawan.

Describing the role of HDIL in the alleged default with the PMC Bank, the ED said its group companies availed loans from the bank from time to time.

"The mode and manner of operation of bank accounts of HDIL clearly indicate the connivance of PMC bank officials with the promoters of HDIL.

"There was misconduct on the part of PMC officials as they ignored all the prevailing procedures to facilitate promoters of HDIL by extending unusual credit facility," it alleged.

Instead of declaring those as non-performing assets (NPAs) for initiating actions for recovery, PMC bank officials chose to "accommodate" the HDIL group, the agency alleged.

"Due to such a criminal act of the promoters of HDIL group companies, the PMC Bank suffered a huge wrongful loss to the tune of Rs 6,117.93 crore," it said.

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