PMC Bank fraud: ED disputes valuation of HDIL properties mortgaged with bank

A day after the Housing Development and Infrastructure Limited (HDIL) claimed before the Bombay high court (HC) that their properties worth ₹11,102.57 crore have

A day after the Housing Development and Infrastructure Limited (HDIL) claimed before the Bombay high court (HC) that their properties worth ₹11,102.57 crore have been, partly or fully, mortgaged with the fraud-hit Punjab and Maharashtra Co-operative (PMC) Bank, the Enforcement Directorate (ED) disputed the valuation of the properties.

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ED’s lawyer Hiten Venegaonkar pointed out land admeasuring 840 acres cannot fetch such a large amount. Apart from being encumbered, these properties are not fully owned by the realty group and the valuation presented by them to the court will go down once other claimants come forward, Venegaonkar added.

He was responding to a public interest litigation (PIL) filed by advocate Sarosh Damania, seeking directions for the expeditious disposal of HDIL group assets and properties attached by the economic offences wing (EOW) of Mumbai Police and repayment to the depositors of PMC Bank at the earliest.

Damania’s lawyer Anoop Patil also doubted the valuation of the properties as on most of the properties construction projects are going on and third-party rights might have been created in the properties.

Counsel for HDIL, senior advocate Vikram Chaudhry, however, maintained that the liquid asset value was calculated on the basis of ready reckoner rates. But he agreed to the petitioner’s suggestion of forming a committee to properly ascertain value of mortgaged HDIL properties. “We do not have any objection to selling the mortgaged properties and will extend all cooperation to achieve a committee,” said Chaudhry. “We also want to fetch the best price for our properties,” he added.

Pursuant to directions of the bench, HDIL promoter Sarang Wadhawan on Tuesday filed an affidavit filed disclosing a list of 69 immovable and 33 movable properties belonging either to HDIL and 26 of its subsidiaries.

The affidavit also disclosed that the realty group had other assets worth ₹6,360.28 crore mortgaged with other banks and financial institutions and yet other unencumbered properties worth ₹2,435.70crore.

Although Venegaonkar disputed the valuation of these unencumbered properties as well, he said HDIL should first agree to sell their unencumbered properties and the PMC Bank can sell the properties if the HDIL promoters give their consent to do so. The bench of justice Ranjit More and justice Surendra Tavade agreed with the suggestion unencumbered properties can be sold easily and expeditiously.

Chaudhry, however, expressed reservations about the idea. “How can the bank sell unencumbered properties, properties which are not mortgaged with it,” he said and reiterated that the group had no objections to sell the encumbered properties and recover the dues payable by them to the fraud-hit bank.

The bench has now closed the matter for order.

According to RBI, PMC bank had masked problematic 44 loan accounts involving advances to the tune of ₹7,457.49crore, including HDIL loan accounts, by tampering with its core banking system, and the accounts were accessible only to limited staff members. The bank had created 21,049 fictitious accounts in order to ensure its master data tallies with these loan disbursals.