Second FIR against Cox & Kings after IndusInd Bank alleges ₹284-crore fraudUpdated: Oct 27, 2020, 00:16 IST
The economic offences wing (EOW) of the city police has registered its second first information report (FIR) against global tours and travel company Cox & Kings based on a ₹284-crore fraud complaint filed by IndusInd Bank. The executives of the firm have been booked for payment default, cheating, criminal breach of trust and forgery.
The FIR, filed on October 23 after a complaint by Audley Thomas Luis, vice-president, IndusInd Bank Ltd, names 10 people as accused – Ajay Peter Kerkar, CEO and group director; Urrshila Kerkar, ABM Good; Anil Khandelwal, Abid Khan, Subhash Nautiyal, Sagar Deshpande, Ajit Pimplikar, Rashmi Jain and Arup Sen. Sagar Deshpande was found dead in mysterious circumstances on railway tracks near Titwala, 55km from Mumbai, on October 12. His name will be dropped at a later stage if he is found not guilty, said an EOW official. The FIR was first registered at Andheri police station and was later transferred to the EOW’s banking unit-2 for investigation.
The first FIR was filed after a complaint from Kotak Mahindra bank, alleging defrauding of ₹170 crore. EOW is also carrying out preliminary inquiry into a third complaint of ₹1,030-crore fraud filed by Axis Bank.
According to EOW sources, in February 2015, promoters and directors of C&K approached IndusInd Bank and requested a commercial card facility on an unsecured basis. The bank approved it with a limit of ₹25 crore on personal and corporate guarantees. The card limit was later increased to over ₹350 crore over a period of three years. “For initial years, things went smoothly, however, since June 2019, IndusInd Bank observed that C&K defaulted on its payments like GST and TDS. IndusInd bank then immediately cancelled cash credit and bank guarantee to C&K,” said an EOW official.
However, as per the complaint, C&K defaulted on repayments and the total amount crossed over ₹250crore.
EOW has already issued lookout circulars (LoCs) against six accused as they were previously named in the Kotak Mahindra Bank case. C&K and some of its office-bearers are also under the Enforcement Directorate (ED) lens. ED had in June carried out searches at five locations connected to C&K in the Yes Bank case. Cox & Kings had reportedly borrowed ₹3,642 crore from Yes Bank. ED had arrested Anil Khandelwal, CFO of Cox and Kings Group, and Naresh Jain, internal auditor of Cox & Kings Group. According to ED, C&K is accused of routing the money from Cox & Kings, Ezeego and its other entities into shell companies and siphoning it off abroad. The irregularities and misappropriation of funds were confirmed after the banks – SBI, Axis Bank, Kotak Mahindra Bank and IndusInd Bank -- did their forensic audits. The banks informed the RBI, the apex bank, and then approached EOW.
Cox & Kings, too, has lodged counter complaints. Promotor Kerkar lodged two FIRs blaming directors, CFO and other executives of his companies for siphoning off the money and framing him. Investigations in these complaints are also underway. Responding to queries, Kerkar said, “It is indeed surprising that an FIR would be registered against me when I have already registered an FIR against IndusInd for cheating Cox & Kings as early as the 3rd of September.” IndusInd Bank spokesperson said, “The bank declared the account as fraud on December 30, 2019 and filed a complaint with the appropriate regulatory agencies...The Bank has initiated legal proceedings and filed its claim with the Interim Resolution Professional appointed under insolvency proceedings initiated before National Company Law Tribunal, Mumbai.”
Cox and Kings’ statement given by Kerkar
“With reference to the cash balance we have a registered FIR against IndusInd bank and officials for knowingly portraying a false picture of our cash balances as of March 2019. The bank had falsely claimed that there was no Lien on these cash balances and has given our statutory auditor a no dues certificate to attest to this fact. We feel that this was done to dupe credit agencies, the board of directors of Cox and Kings and other lenders into believing that the actual financial health of the company was better than it actually was. This was done as Indusind has profited by several hundred crores in terms of illegal fees charged to the Cox and Kings group through credit card charges and they were resolute in their desire to perpetuate this income stream. However they have recently stated that this was a mistake and they have copies of a true certified copy of a finance committee meeting provided by Rashmi Jain the ex Company Secretary stating that we had asked for a temporary overdraft of several hundreds crores which they agreed to. There was no finance Committee meeting ever conducted. It is inconceivable that the bank would have made a mistake on giving a confirmation for several hundred crores. It is pertinent to note that we have no proof of any board minutes or finance committee meetings that authorised requests for further limits from IndusInd bank. Ms Rashmi Jain and Anil Khandelwal have both admitted to the PwC audit team that was commissioned by the COC Of Cox and Kings that no finance committee meetings were recorded for two years. It is therefore surprising how Indusind has possession of these minutes when clearly Mrs Jain has already stated that there were none in existence. The conspiracy of the KMP of Cox and Kings is evident from the fact that the accused CFO of Cox and Kings Ltd, i.e. Mr Anil Khandelwal and accused Mr Naresh Jain; Internal Auditor did not report the debt of Rs. Six hundred crores incurred due to credit card transactions to the Board of Directors of Cox and Kings limited. The accused Anil Khandelwal and the accused Arvind Kumar Singh and other unknown officers of IndusInd perpetuated a massive fraud on the other lenders, Board of Directors of Cox and Kings Ltd, the statutory auditors (DTS and Associates) and the shareholders of Cox & Kings Ltd. by giving a confirmation of unencumbered cash lying in Indusind bank account of Cox and Kings Ltd amounting to Rs. Six hundred two crores as of the 31st of March 2019. The accused officers of Indusind Bank gave this confirmation to DTS and Associates, the statutory auditors of Cox and Kings Ltd physically at the Indusind BANK branch. The confirmation given by Indusind Bank to the statutory auditors of Cox and Kings Ltd confirms that no dues are pending from Cox and Kings Limited to IndusInd Bank as of the 31st of March 2019 concerning any loan and or credit facility and a balance of Rs 74 crores is held in the Fixed Deposit account of Cox and Kings Limited and the balance of Rs 602.58 crores is the deposit credit lying in the current account of Cox and Kings limited with IndusInd Bank. The said confirmation, given in May 2019 to DTS and Associates the Statutory Auditors of Cox and Kings Ltd clearly shows the complicity of the accused Bank Officers in the aforesaid crimes.”
Kerkar added that the said manipulated confirmation was given by the accused officers of the Bank to the statutory auditors of Cox and Kings with a malafide intention to keep the promoters/directors/shareholders and other shareholders in the dark so that the fraud perpetrated by them in collusion with the KMP of Cox and Kings is not exposed.
“The fraud played upon the promoters, and other stakeholders of Cox and Kings as well as Ezeego is not only limited to them. The scam has been virtually played upon the stakeholders of Indusind Bank also. The fraud is evident from the facts that to cover their dirty tracks, the management of Indusind Bank gave misleading confirmation of credits balance to the Statutory Auditor of Cox and Kings. To bolster the misleading credit balance confirmation, Induslnd credited the bank accounts of Cox and Kings with approximately Rs. Five hundred thirty-five crores on the 31st of March 2019. When the aim of misleading the statutory auditor of Cox and Kings was achieved, IndusInd Bank, debited the said Rs. Five hundred thirty-five crores back to its own account on the next working day, i.e. 2nd of April 2019.”
The bank’s reply
IndusInd Bank spokesperson said, “The Bank does not comment on matters that are under investigation. The Bank is cooperating and working with all investigating agencies with regard to the ongoing Cox & Kings investigations. The Bank declared the account as fraud on December 30, 2019 and filed a complaint with the appropriate regulatory agencies. The Bank has also initiated necessary legal proceedings against Cox and Kings and others, and filed its claim with the Interim Resolution Professional appointed under insolvency proceedings initiated before the National Company Law Tribunal, Mumbai. We would like to reiterate that IndusInd Bank conducts its business with the highest level of compliance to legal and regulatory requirements.”