ED Attaches HDIL Properties As Crisis Deepens
Days after carrying out raids across six locations in Mumbai in order to gather evidence in a money-laundering case involving Punjab and Maharashtra Cooperative (PMC) Bank and Housing Development and Infrastructure Limited (HDIL), the Enforcement Directorate (ED) on October 10, 2019, sealed a five-acre bungalow in Vasai owned by a promoter of the real estate company. The agency also confiscated jewellery worth Rs 60 crores, a business jet, 15 cars, two fixed deposits worth Rs 11.50 crores, belonging to the embattled builder.
Meanwhile, finance minister Nirmala Sitharaman has announced setting up of a panel to recommend legislative changes to ensure better governance at co-operative banks in the backdrop of the scandal, as unrest among bank depositors is growing.
Earlier, the Economic Offences Wing (EOW) of the Mumbai Police arrested the bosses of debt-saddled HDIL on charges of their alleged involvement in the PMC Bank fraud. The move came after the father-son duo Rakesh and Sarang Wadhawan failed to give satisfactory responses during an interrogation session earlier in the day on their alleged role in the PMC Bank fraud and financial irregularities at the company, now staring at insolvency. The listed builder’s commercial and residential properties worth Rs 3,500 crores were also attached as part of the EOW action. In its FIR, the EOW revealed that the bank replaced 44 loan accounts of the builder with over 21,000 fictitious accounts, to cover up the defaults by the builder.
According to revelations made by suspended PMC managing director Joy Thomas, the bank’s exposure to the builder stands at Rs 6,500 crores which is 73 per cent of the bank’s entire assets of Rs 8,880 crores. Following the revelation, the Reserve Bank of India (RBI) has earlier imposed financial restrictions on the bank for six months.
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.