Man, son arrested for cheating Mumbai bank of Rs48 crore

The economic offences wing (EOW) of the Mumbai police on Monday arrested a man and his son duo for allegedly duping a private bank, Laxmi Vilas Bank in Andheri (West)

The economic offences wing (EOW) of the Mumbai police on Monday arrested a man and his son duo for allegedly duping a private bank, Laxmi Vilas Bank in Andheri (West) of Rs48 crore by fraudulently obtaining cash credit and letter of credit facilities.

The two -- Nikunj Kirti Kanakia, 43 and his father, Kirti Manmohandas Kanakia, 70, both residents of Seven Bungalows in Versova -- were arrested five years ago for a Rs140-crore involving the same bank. The duo faces six cases, including some being investigated by the Central Bureau of Investigation.

According to the bank’s complaint, the two availed a cash credit, bill discounting and letter of credit facilities totally worth Rs48.25 crore for their Mahad (Raigad)-based Proteus Pharmaceuticals Private Limited, which has its office at Andheri. The facilities were extended on the basis of application made by company’s directors Alpesh Mehta and Ramesh Mehta.

The Mehtas promised to mortgage company’s raw materials, plots and machineries and company’s Land End building in Mahad against the credit facility. But at the time of making a contract for mortgage, they failed to submit the documents of the building, claiming they lost it. Later, when the company failed to repay the interest and principal amount, in December 2009 the bank declared the said credit account of Proteus Pharmaceuticals Private Limited as non-performing asset (NPA).

In 2010, the bank discovered the company had mortgaged the same building in Mahad with a private finance company, Global Trade Finance Limited, in June 2009 and had taken a loan of Rs10 crore. Mehtas deliberately concealed this information from the bank and knowingly signed a legal contract for mortgage with them, said the complaint.

The fraud was reported to the Andheri police in 2012 and it was transferred to the EOW. EOW during probe found the money that the bank had given to the company was transferred to bank accounts of directors of Lifeline Industries Ltd., Kemp Laboratories Private Ltd, Inland Impex Private Ltd, which were owned by Nikunj Kanakia and Kirti Kanakia. EOW investigators later found that Alpesh Mehta and Ramesh Mehta are Kanakias’ employees.

“Kanakias would open bank accounts of employees, friends, and relatives and later take their signatures on blank cheques and misuse them,” said an EOW officer.