Allow HDIL Bosses To Attend Insolvency Meeting: NCLT
The Mumbai bench of the National Company Law Tribunal (NCLT) has directed the authorities at the Arthur Jail Road to make arrangements so that inmates and HDIL promoters Rakesh and Sarang Wadhwan are able to participate in the meetings of the committee of creditors (CoC). The bench has also directed Abhay Narayan Manudhane, the interim resolution professional appointed to oversee the liquidation process of the debt-ridden entity, to make available all relevant documents to the company promoters in prison. The directive by the NCLT came after the counsel appearing for the Wadhwans informed it that his clients were not able to participate in the resolution process, in the absence of any notice. Recall here that the father-son duo are currently lodged in jail, because of their alleged involvement in the Punjab and Maharashtra Co-operative bank scam.
The Economic Offences Wing of the Mumbai Police arrested the two in October 2019, following an FIR by the Reserve Bank of India (RBI) in which the Wadhwans were named as parties involved in the scam.
EOW Seek Custody Of HDIL’s Sarang Over Housing Fraud
The embattled HDIL Group and its promoters faced a further setback on September 22, 2020, as the Mumbai branch of the Economic Offences Wing (EOW) started probing charges of fraud against its promoter, Sarang Wadhwan. According to the EOW, Sarang earned Rs 131 crores from as many as 456 homebuyers for a housing project in Goregaon, which was never delivered.
Sarang Wadhwan, along with his father Rakesh Wadhwan, have been in jail since 2019, on charges of their involvement in the Rs 4,355-crore Punjab and Maharashtra Cooperative (PMC) Bank scam. A year after the RBI dissolved the PMC Bank's board over charges of financial misappropriation, it has yet to find a resolution plan, the banking regulator said, on September 22, 2020. In the meantime, it has also appointed AK Das as the new administrator of the bank, with effect from September 23.
SC Stays Order To Sell HDIL Assets On RBI Appeal
The Supreme Court on February 7, 2020, stayed a Bombay High Court order that said assets held by beleaguered Housing Development and Infrastructure Ltd (HDIL) be sold to pay dues to crisis-hit PMC Bank. The SC order came on an appeal made by banking regulator RBI against the HC order. Earlier, the HC set up a three-member panel that was expected to liquidate the assets held by the real estate developer. HDIL promoters Rakesh Wadhawan and Sarang Wadhawan are currently in jail over fraud charges.
The Enforcement Directorate (ED) on December 16, 2019, filed a charge-sheet against the Wadhawans in connection with the multi-crore Punjab and Maharashtra Cooperative (PMC) Bank scam. They have been under the ED's custody since October 2019, after being booked under various provisions of the Prevention of Money Laundering Act.
Earlier, the PMC Bank came under the RBI's scrutiny, after the banking regulator made the discovery that PMC Bank officials colluded with those at HDIL, to hide large-scale defaults by the Mumbai-based builder. Of the PMC Bank's entire loan book of Rs 8,880 crore, nearly 73 per cent or Rs 6,500 crore, was reportedly extended to the Mumbai-based developer. This is four times the regulatory cap set by the banking regulator. Following the revelation, the RBI imposed financial restrictions on the bank, after the alleged scam came to its knowledge, including curbs on withdrawals.
So far, 12 people have been arrested in connection with the scam.
End of road for HDIL?
The Mumbai-based listed builder, primarily engaged in slum rehabilitation projects in the country’s financial capital, is already in trouble with Bank of India dragging it to the insolvency tribunal over a Rs 522-crore loan default. While the National Company Law Appellate Tribunal (NCLAT) has provided the builder partial relief by accepting its plea challenging the move, it is only a matter of time when the Mumbai-based developer would join the dubious league of several other builders such as Jaypee and Amrapali that are currently facing insolvency proceedings under various provisions of the Insolvency and Bankruptcy Code (IBC).
Apart from the Bank of India, several other financial institutions, including Syndicate Bank, Dena Bank, Corporation Bank, and Indian Bank, have approached the tribunal with similar petitions, indicating that the debt crisis HDIL faces are much deeper. The BSE and NSE-listed developer, which has its presence in residential, commercial, as well as slum redevelopment projects in Mumbai, settled similar petitions moved by the J&K Bank and Andhra Bank in 2016, over dues of Rs 370 crore.
Ensuing trouble at HDIL would delay as many as 10 of its residential projects, which are in various stages of construction. These include the Majestic Tower (Nahur West), Whispering Tower (Mulund West), Residency Park II (Virar), Premier Exotica (Kurla West), Harmony (Goregaon West), Metropolis Residence (Andheri West), Galaxy Apartments (Kurla East), Paradise City (Pahghar), HDIL Hyderabad, etc.