Complaint on builder-bank-police collusion for fraudulent loan revived

A Mumbai court revived a complaint against HDIL, Yes Bank, and EOW officials for collusion in a ₹500-crore loan for a slum project lacking permits.

MUMBAI: The sessions court on Thursday revived a criminal complaint alleging collusion between officials of Housing Development and Infrastructure Ltd (HDIL), Yes Bank and the Economic Offences Wing (EOW) of Mumbai police with regard to the sanction and disbursal of a ₹500-crore loan for a slum rehabilitation project in Kurla East which lacked the requisite commencement certificates from the Slum Rehabilitation Authority (SRA).

Complaint on builder-bank-police collusion for fraudulent loan revived

Additional sessions judge Mujibodeen S Shaikh held that the material on record disclosed cognisable offences warranting criminal action. Quashing a 2019 magistrate’s order dismissing the complaint, the court directed restoration of proceedings against the EOW officers under sections 217 and 218 of the Indian Penal Code, which pertain to public servants disobeying directions of law and preparing incorrect records to save persons from punishment.

According to the complainant in the case, Kamlakar Ratnakar Shenoy, Yes Bank disbursed and HDIL obtained a ₹500-crore loan for the Galaxy Apartment project in Kurla East, even though the project lacked requisite commencement certificates from the SRA. While the loan was sanctioned on June 29, 2015 and disbursed by October 9, 2015, there was no record of a formal loan application from HDIL to the bank, the complainant alleged.

If further said that authorities at Yes Bank, without scrutinising all necessary documents, sanctioned and disbursed the ₹500 crore loan. “Therefore, prima facie, the HDIL and Yes Bank officers are involved in misusing the public funds for their personal gain,” the court held.

The court also criticised the EOW for failing to register an FIR despite the allegations disclosing cognisable offences. Referring to the Supreme Court’s ruling in Lalita Kumari v Government of Uttar Pradesh, the judge reiterated that FIR registration was mandatory where cognisable offences were disclosed.

The EOW officers had “avoided to register the FIR under the garb of jurisdiction of the high power committee” constituted for SRA disputes, the court said. EOW officers had used “a clever ploy” to shield HDIL directors and Yes Bank officials from criminal action, it added.

Speaking to Hindustan Times after the order, Shenoy said EOW officers had “manipulated and made incorrect records to save the accused who have committed hundreds of crores of fraud”.