PMC Bank Case: Bombay High Court Appoints Panel For Disposal Of HDIL’s Assets

The Bombay High Court has appointed a committee for speedy disposal of assets of Housing Development and Infrastructure Ltd.—a borrower to crisis-hit Punjab and Maharashtra Cooperative Bank.

The three-member committee, according to the high court’s order, will be headed by retired judge of Bombay High Court Justice S Radhakrishnan, and will determine how proceeds from the sale of the properties will be used.

The high court bench, comprising Justice Ranjit More and Justice Surendra Tavade, also asked HDIL’s directors Rakesh and Sarang Wadhawan and the investigative agencies to cooperate in the process.

The Bombay High Court issued these directions to the committee to ensure recovery of dues...

• The committee will identify the properties mortgaged solely to PMC Bank by companies that are either owned, controlled or managed by the Wadhawans.
• It will collect original property documents from the Enforcement Directorate, Economic Offenses Wing, PMC Bank and the Wadhawans.
• PMC Bank will have to provide details of the amount owed to it by the Wadhawans and their companies and a list of the bank’s depositors along with the amounts due to them. The committee would then proceed with the sale of such properties.
• If the proceeds from sale of properties solely mortgaged with PMC Bank are insufficient to pay off depositors’ dues, the committee can identify and sell the properties of the Wadhawans’ companies that are jointly mortgaged with other institutions.
• The committee can identify and dispose of all unencumbered and personal properties of the Wadhawans and use the proceeds to pay off the depositors.
• The committee will prepare a progress report and submit it to the court on April 30 when the matter will be next heard.

The Bombay High Court’s order stems from a public interest litigation by advocate Sarosh Damania, who sought the court’s direction for setting up of a committee headed by a retired judge for expeditious disposal or auction of HDIL’s properties. The real estate developer, according to the PIL, owes Rs 4,635 crore to the scam-hit PMC Bank.

The petitioner said that the court-appointed committee should ensure that PMC Bank cannot use the monies realised from the sale or liquidation of HDIL’s encumbered and unencumbered properties for any other purpose but repaying depositors. Prioritised disposal of unencumbered properties will ensure expeditious return to the bank’s depositors as no third party will make claims over such properties, the petitioner said.

The Bombay High Court had earlier asked the Wadhawans to disclose details of properties of the companies owned or promoted by them. The bench also directed the Economic Offenses Wing of the Mumbai Police and the Enforcement Directorate to disclose the details of HDIL’s attached properties.

The Enforcement Directorate informed the court that it didn’t attach the properties as allowed under the Prevention of Money Laundering Act, 2002, and it would allow any disposal of HDIL’s assets if it was in the interest of depositors of PMC Bank.

HDIL came into the spotlight after the Reserve Bank of India found that PMC Bank had total exposure of 73 percent to the real estate developer. The RBI imposed regulatory restrictions and withdrawal limitations on the cooperative bank over alleged financial irregularities in September last year. It also directed a forensic audit of the scam-hit lender.

The Economic Offenses Wing then arrested HDIL’s directors Wadhawans in the PMC Bank case. The agency had filed an FIR alleging that the cooperative bank faked loan records to under-report HDIL’s accounts as a non-performing asset. The bank officials allegedly created fictitious accounts of companies and faked reports to escape regulatory supervision, it said. India’s Ministry of Corporate Affairs, too, is examining the book of accounts of HDIL to look for any irregularities.