PIL seeks probe into ‘fake’ bank guarantees in Thane-Borivali twin tunnels project

A Public Interest Litigation (PIL) has been filed in the Bombay high court seeking an investigation into allegedly fake bank guarantees ​furnished by Megha Engineering Infrastructure Ltd (MEIL) in the ₹16,600-crore contract for the construction of the Thane-Borivali twin tunnels project

MUMBAI: A Public Interest Litigation (PIL) has been filed in the Bombay high court seeking an investigation into allegedly fake bank guarantees ​furnished by Megha Engineering Infrastructure Ltd (MEIL) in the ₹16,600-crore contract for the construction of the Thane-Borivali twin tunnels project.

PIL seeks probe into ‘fake’ bank guarantees in Thane-Borivali twin tunnels project

In his PIL, Ravi Prakash Velicheti, an investigative journalist, claimed to have uncovered details of fake bank guarantees given by MEIL to the Mumbai Metropolitan Region Development Authority (MMRDA). Velicheti said that since July 15, 2024, he had sent a number of complaints to the Ministry of Finance, RBI, CBI, ED, CAG, CVC etc. and other statutory authorities, to take action against MEIL and MMRDA for using allegedly fake bank guarantees to secure the bid for the project.

In September 2015, a proposal for the construction of the twin tube tunnels was floated by the Maharashtra State Road Development Corporation (MSRDC). In January 2023, the tender process was initiated by MMRDA, and MEIL was declared the preferred bidder in May 2023.

Velicheti alleged that the bank guarantees submitted by MEIL on July 11, 2023, were issued by Euro Exim Bank, an entity known as a tax haven in St Lucia in the West Indies. It is neither a scheduled bank, nor a commercial bank, nor a foreign bank recognised by the Reserve Bank of India (RBI), the PIL stated.

“Acceptance of bank guarantees issued by such an unaccredited overseas bank is in complete violation with the contract stipulation, General Finance Rules, 2017, issued by Ministry of Finance, Government of India, as well as RBI circulars”, the petition added.

Euro Exim Bank is regulated by the Financial Services Regulatory Authority in St Lucia, and does not provide any services to any natural person or legal entity of St Lucia. It neither has legal status, nor has the financial strength to issue bank guarantees worth thousands of crores in favour of Indian entities, the petition pointed out.

Furthermore, Euro Exim Bank has allegedly also issued bank guarantees in favour of state governments headed by the Bharatiya Janata Party and other political parties, and the National Highway Authority of India (NHAI). It is believed that these guarantees are furnished mostly by private contractors for government contracts, the PIL added.

The PIL stated that the allegedly fraudulent bank guarantees have been used as a tool by MEIL to obtain advance payments from the authorities, without providing a genuine bank guarantee in terms of RBI guidelines, thereby jeopardising the project and public funds.

Velicheti alleged that MMRDA failed to take any action against MEIL, a gross dereliction of duty on their part. Velicheti called out the alleged inaction of MMRDA and the RBI in preventing such an infraction, despite being competent enough to do so.

In his PIL, he claimed the authorities knew that the bank guarantees were fraudulent but still advanced sums of around ₹1,668.74 crore to MEIL, “in an illegal and unlawful manner”. “The BG is a sham created only to circumvent and play fraud to obtain public funds without providing any secured guarantee, with knowledge that the same could not be realised,” the PIL stated.

Velicheti prayed for an investigation and an immediate termination of the contract. He highlighted the need to appoint an independent agency such as the Central Bureau of Investigation (CBI), Enforcement Directorate, Anti-Corruption Bureau (ACB), or any other appropriate authority, to investigate the entire process of awarding the tender, to determine the “systemic corruption or collusion between the MMRDA officials and MEIL”.