PMLA court grants bail to car designer Dilip Chhabria, his sister

A special Prevention of Money Laundering Act (PMLA) court on Monday granted bail to renowned car designer Dilip Chhabria, his sister Kanchan, and three others. They were accused of acquiring ₹18.13 crore through illegitimate means between January 2016 and September 2018

MUMBAI: A special Prevention of Money Laundering Act (PMLA) court on Monday granted bail to renowned car designer Dilip Chhabria, his sister Kanchan, and three others. They were accused of acquiring ₹18.13 crore through illegitimate means between January 2016 and September 2018.

Dilip Chhabria Dilip Chhabria Design Pvt. Ltd. (DC) at his Corporate Office in mumbai. For Shally’s story shoot happened on 2/03/12, pic by hemant mishra/mint.

While granting bail to Dilip, his sister Kanchan, Nihal Bajaj, national sales manager of Dilip Chhabria Design Pvt Ltd (DCDPL), and two other sister companies, special judge MG Deshpande directed them to execute a PR bond of ₹1,00,000 each.

Earlier this month, the court took cognizance of the chargesheet filed by the Enforcement Directorate (ED), investigating a money laundering case against car designer Dilip Chhabria and his family members, revealing that the total illegitimate funds acquired through wrongful means between January 2016 to September 2018 were ₹18.13 crore. Subsequently, the court issued a summons to the seven accused, directing them to be present on Monday.

Chhabria had manufactured 127 DC-Avanti cars from 2018-2021, of which the firm had sold 120 in India, including some Bollywood personalities and sportsmen. The case came to light after comedian Kapil Sharma accused Chhabria of cheating him of ₹5.3 crore ($716,000).

The ED in its chargesheet against Dilip Chhabria, his sister Kanchan Chhabria, three companies associated with them, and two others associated with the company, outlined the modus operandi which stated that the company (DCDPL) would obtain finance from M/s BMW Finance in the name of DC Avanti Car (just by providing Engine no and/or Chassis no) or by showing the same as ‘Demo Car’ i.e. without any registration or temporary registration documents. Subsequently, the money received from M/s BMW Finance would either be used in making a DC Avanti Car or would be utilised for other business/personal expenses.

If part of the money was utilised in the manufacturing of the DC Avanti Car, the same would be subsequently sold to a customer (with the concealment of information that the same is financed by M/s BMW India Financial Services and hypothecated to BMW India Financial Services), who would again avail financing of the vehicle from other finance institution bank, the chargesheet added.

Since the Registration Certificate of the manufactured car was never submitted to M/s BMW Finance, the CERSAl system would allow hypothecation of the vehicle in the name of the refinancing institution.

The ED further detailed a grand scheme of deception through its chargesheet that not only misled customers and creditors but also disadvantaged other shareholders of M/s Dilip Chhabria Design Pvt Ltd (DCDPL). The chargesheet asserted that Chabbria diverted significant profit-generating projects of DCDPL to its sister concerns, namely DC Motor Works and DC Autosoft, to the detriment of DCDPL’s interests, ultimately leading to the company’s insolvency proceedings in 2019.

These sister concerns, who were also granted bail on Monday, were operated by the Chhabria family and reaped substantial benefits from the diverted projects, while DCDPL suffered. Transactions disguised as dummy stock sales and salary payments were employed as part of this scheme. Furthermore, instances were noted where DCDPL’s resources were utilised for the operations of the sister concerns, exacerbating the financial strain on DCDPL.

The ED said that Dilip Chabria had admitted raising invoices to DCDPL for ₹3 lakh a month, towards rental payments against the required payment of ₹30,000 a month to the actual owner of the premises, misusing his position of being Managing Director of the company and by same, siphoning of funds from DCDPL in the guise of exuberantly hiked salary, 2016 onwards (increase of 777.67% in salary from FY 2014-15 to FY 2018-19) as well as in form of exceptional hiked rental receipts from DCDPL (from ₹3.6 lakh per annum in FY 2017-18 to ₹36 lakh per annum from 2018 onwards).