EOW arrests jeweller in ₹42.5 crore bank loan fraud

Mumbai: The Economic Offences Wing (EOW) of the Mumbai Police has arrested the promoter of Tribhovandas Bhimji Zaveri & Sons Retail Private Limited for allegedly defrauding Axis Bank to the tune of ₹42

Mumbai: The Economic Offences Wing (EOW) of the Mumbai Police has arrested the promoter of Tribhovandas Bhimji Zaveri & Sons Retail Private Limited for allegedly defrauding Axis Bank to the tune of ₹42.5 crore.

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The firm has no connection with the renowned jewellery retail brand - Tribhovandas Bhimji Zaveri (TBZ) Ltd.

The accused jeweller allegedly availed cash credit facility from the private bank but failed to repay the loan. Forensic auditing of the firm’s accounts revealed that the firm and its owner used the loan money for a purpose other than what it was availed for, the police said.

The accused jeweller Hemant Vrajlal Zaveri, 63, had sold off his house and was on the run for the past six months. Banking-3 Unit of the BMC finally arrested him on Monday evening from a Mulund West flat, where he was hiding for months.

The Axis Bank lodged a complaint with the Colaba police in March this year against Hemant Brajlal Zaveri, Girish Nayak and Tribhovandas Bhimji Zaveri & Sons Retail Private Limited. The case was later transferred to the EOW for investigation.

Tribhovandas Bhimji Zaveri & Sons Retail Pvt Ltd, was formed in the year 2015 and had an office in Mulund. Zaveri and Nayak were the directors in the firm, which has since closed down.

The bank in its complaint to the police stated that in the year 2015 Zaveri and Nayak had requested for a cash credit facility for the sale and purchase of precious metals and diamonds, and accordingly, the bank had in September 2015 sanctioned cash credit facility of ₹36 crore after the firm agreed to the terms and conditions.

“For the first three/four years, the firm made regular repayment of the monthly instalments to the bank, however it started defaulting in repayments from May 2019,” the EOW sources said.

In August 2019, the bank declared the firm’s account as a non performing asset and the same year appointed a forensic auditor to scrutinise the suspicious transactions of the accused firm.

“The auditor, who submitted its report in February 2021, found several financial irregularities in the firm,” the complainant bank executive stated in the FIR. The firm, according to the report, had diverted loan money to third parties, showed bogus transactions, made falsified financial statements, etc. As the firm allegedly violated prevailing rules and regulations laid down by the Reserve Bank of India, the complainant bank declared the firm’s account a fraud, the FIR stated.

The accused company used the loan money in making fixed deposits and recurring funds. The company after the year 2019 did not furnish financial statements to the bank, auditor and resolutions professional. The financial statements have irregularities and the inventory figures are not matching with that of audited balance sheets and stock statements. Purchase and sell transactions have been shown with those traders who are not into jewellery business, investigation has revealed.

The accused sanctioned unsecured loans to other firms without prior consent from the bank and this is a violation of the terms and conditions, said an EOW officer.

Between September 2015 and February 2019, the firm availed unsecured loan from another firm without Axis Bank’s permission, which was mandatory as per the terms of the loan. The accused firm made a payment of ₹11.78 crore to the said firm, but it did not repay the Axis Bank’s loan, the officer added.

Zaveri has been booked under 420 (cheating), 406 (criminal breach of trust), 409 (criminal breach of trust by public servant, or by banker, merchant or agent), 477A (falsification of accounts) and 120 B (criminal conspiracy) of the Indian Penal Code.

Zaveri is facing multiple cases. He is also booked by the Nagpur police in three cheating and forgery cases registered in 2018. He also has a cheating case registered against him at the Mulund police station.