HDIL Promoters To Attend CoC Meeting Via Video Conference From Jail

In a move that would speed up the insolvency resolution process for the debt-ridden HDIL, the Mumbai bench of the National Company Law Tribunal (NCLT) has allowed the company’s jailed promoters to attend the committee of creditors (CoC) meetings through video conference.

To make that happen, the bench has directed the authorities at Arthur Road jail, to make suitable arrangements. It has also asked the interim resolution profession in the case, Abhay Narayan Manudhane, to make available all relevant notices and other documents to Rakesh and Saranag Wadhwan.

“We believe that the applicants are entitled to the notices of the CoC meetings and to attend the meetings,” a division bench of Suchitra Kanuparthi and Shyam Babu Gautam said in its 13-page order.

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HDIL Promoter Named In Another Housing Fraud

In fresh trouble for the embattled HDIL Group, the Mumbai branch of the Economic Offences Wing (EOW), on September 22, 2020, started proceedings to probe promoter Sarang Wadhawan’s role on charges of duping 456 homebuyers.  Wadhawan has been accused of scripting fraud, by way of collecting Rs 131 crores from these buyers and failing to deliver units in a Goregaon-based housing project, named The Meadows. According to the police, the fraud took place between 2010 and 2018.

Only last week, Sarang was also named in a Rs 1,032-crore fraud case, involving allegations of cheating government body Maharashtra Housing and Area Development Authority (MHADA).

The father-son duo and HDIL promoters Rakesh Wadhawan and his son Sarang Wadhawan were earlier arrested in connection with the Rs 4,355-crore Punjab and Maharashtra Cooperative (PMC) Bank scam in 2019 and are already in jail.

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SC Puts On Hold Order To Sell HDIL Assets

The Supreme Court has stayed a Bombay High Court order, which ruled that assets of crisis-hit HDIL be sold to pay off its outstanding liabilities to the scam-hit Punjab and Maharashtra Cooperative (PMC) Bank. Earlier, the Reserve Bank of India (RBI) moved the top court against the HC order, which also stated that a three-member panel be set up to sell HDIL's assets.    

HDIL promoters Rakesh Wadhawan and Sarang Wadhawan, accused in the multi-crore Punjab & Maharashtra Cooperative (PMC) Bank scam, are lodged in Mumbai’s Arthur Jail. In December 2019, the Enforcement Directorate (ED) filed a 7,000-page chargesheet against HDIL's promoters, in connection with their alleged involvement in the Rs 4,355-crore Punjab and Maharashtra Cooperative (PMC) Bank scam. HDIL promoters have been in the ED's custody, since October 2019.

The RBI had earlier imposed financial restrictions on PMC Bank 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 73 per cent of the bank's advances went to HDIL Group, which led to a huge crisis when the Group defaulted on repayment.

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.