The National Company Law Tribunal (NCLT), Mumbai bench, dated 8th October 2020, directed the resolution professional (RP) of Housing Development & Infrastructure (HDIL) to provide all the notices and relevant documents to the promoters of the company in the jail and has also directed the superintendent of the jail to make an arrangement of video conferencing for them to attend the Committee of Creditors (CoC) meetings.
The crux of this bank fraud is that the higher management of the PMC bank has given a huge loan to the Housing Development and Infrastructure Ltd (HDIL) and its group entities. This fraud case is related to the transfer of 70% of the total credit facilities of the PMC bank to HDIL and its associated companies. The total amount of bank fraud was Rs 4,355 cr. The total NPA of the bank had grown to 73%.
The PMC bank allegedly favoured to the promoters of Housing Development and Infrastructure Ltd (HDIL) and allowed them to operate password-protected ‘masked accounts’.
It was found that around 21,049 bank accounts were opened by bogus names to conceal 44 loan accounts. The bank’s software was also tampered to conceal these loan accounts.
Last year, the tribunal had admitted the case under Section 7 of the Insolvency and Bankruptcy Code (IBC) after Bank of India approached it, claiming that HDIL had failed to repay its dues amounting to Rs 522 crore.
Wadhawans, through their lawyer, had approached the tribunal and argued that they are unable to participate in the proceedings and get notices about that since they are in judicial custody since November 2019. The RP of the company, Abhay Manudhane had taken charge of the company in August 2019.
The Appellant argued that:
“Apparently, the respondent has been sending the notice on the email addresses of the applicants of which they have no access and therefore, cannot be termed as legal and valid service.”
Currently, Rakesh Wadhawan is in the judicial custody in the Arthur Road central prison, along with his son Sarang Wadhawan, in alleged connection with a Rs 6,670-crore Punjab and Maharashtra Cooperative Bank scam.
They were arrested on October 3 last year by the Economic Offences Wing (EOW) of Mumbai Police after they were named in the FIR registered by Reserve Bank of India on September 30.
Court’s Observation and Decision
After hearing the contentions, a Division Bench of Suchitra Kanuparthi and Shyam Babu Gautam in its 13-page Order observed that in the case of sharing confidential documents, the lenders can take decisions based on their commercial wisdom.
“We believe that the applicants (Wadhawans) are entitled to the notices of the CoC meetings and to attend the meeting…”
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