Mumbai Court Extends Custody Of HDIL Promoters Till October 24

The alleged Rs 4,355-crore PMC Bank-HDIL fraud is seen having widespread ramifications as various government-owned agencies are joining an ongoing probe against the two Mumbai-headquartered entities. In the meantime, a Mumbai court has extended the ED custody of HDIL promoters Rakesh Wadhawan and his son Sarang Wadhawan, arrested in connection with Rs 4,355 crore Punjab and Maharashtra Cooperative (PMC) Bank scam, till October 24, 2019.

The father-son duo was arrested by the Economic Offences Wing (EOW) of the Mumbai Police on charges of their alleged involvement in the PMC Bank fraud. The listed builder’s commercial and residential properties worth Rs 3,500 crore were also attached as part of the EOW action.

In the meantime, the RBI is intensifying its fact-finding pursuit by questioning bank’s top brass. The banking regulator had earlier imposed financial restrictions on depositors, following the discovery that the bank, in cahoots with the HDIL promoters, concealed from the banking regulators' scrutiny huge loan defaults by the latter. Over 70 per cent of the bank's advances went to HDIL group, which led to a huge crisis when the group defaulted on repayment. The limit on withdrawals has caused panic among depositors. Following this, the RBI has now increased the withdrawal limit to Rs 50,000.

The HDIL trouble

Plunging sales and deepening liquidity crisis have already pushed the builder towards bankruptcy, with the National Company Law Tribunal (NCLT) admitting an insolvency plea of Bank of India, against it in August, over a loan default of Rs 522 crore.  The National Company Law Appellate Tribunal (NCLAT), however, accepted the builder's plea, challenging the move. If the builder loses, it would join several other developers based in the National Capital Region (NCR), currently facing insolvency proceedings, including Amrapali, Jaypee, Unitech and 3C.

Apart from Bank of India, several other financial institutions have moved several petitions against HDIL in the Mumbai Bench of the NCLT, over loan defaults, under Section 7 of the Insolvency and Bankruptcy Code (IBC). These include Syndicate Bank, Corporation Bank, Dena Bank, Union Bank and Indian Bank.

In 2018, the developer, which is listed on both BSE and NSE stock exchanges had settled similar petitions filed by J&K Bank and Andhra Bank, in connection with defaults running up to Rs 374 crore.

Once counted among the fastest moving real estate developers in the county, HDIL has completed more than 100 million sqft of construction since its inception in 1996. Apart from residential and commercial real estate, the company is also active in slum redevelopment projects.

HDIL also has at least 10 residential projects, mostly in Mumbai that are in various stages of construction. These include 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 (Palghar), HDIL Hyderabad, etc.