Met Nitin Desai Only Once Post Loan Disbursal, Taking Legal Action Against Defaulter Not Abetment Of Suicide: Edelweiss Chairman To Bombay HC

Rashesh Shah is the Chairman of Edelweiss Financial Services and Raj Kumar Bansal is the Managing Director and CEO of EARC. The duo have argued that they merely followed the lawful procedure for loan recovery, and mere allegation of initiating legal proceedings to recover dues from a debtor does not make out offence of abetment of suicide.

“The Petitioner has not exercised any unjustified or undue or unlawful coercion or duress or any other form of pressure onto the Deceased. It is well settled that the pursuit of permissible legal remedies for the recovery of legitimate dues from debtors does not amount to coercion or duress or any other form of pressure. Even less so, does it support or sustain any allegation of abetment”, Shah’s petition reads.

Desai, the promoter of ND's Art World Pvt Ltd (NDAWPL), had taken loans of Rs.150 crore and Rs.35 crore in 2016 and 2018, respectively, from ECL Finance Ltd, a Non-Banking Financial Company, promoted by the Edelweiss Group. However, NDAWPL defaulted its loan account was classified as non-performing asset in 2021 and wilful defaulter in July 2022.

According to Shah’s petition, after the disbursement of the first loan, he only met Desai once, two years before his death. “...post the disbursement of the first loan until 02 August 2023 (when the Deceased was found dead), the Petitioner has only met the Deceased once — on 15 July 2021, and there have been no other exchanges either oral or in writing — whether as text (except on 22nd  June 2023)/WhatsApp messages or email or letters”, Shah’s petition states.

Bansal in his petition has claimed he had no dealing with Desai’s account till early 2023, and he met Desai only once, on June 26, 2023, when he informed Desai that his One Time Settlement proposal could not be approved due to non-compliance with the relevant RBI circular.

In December 2020, ECLF assigned the debt to the highest bidder, CFM Asset Reconstruction Pvt. Ltd., and EARC acquired the NDAWPL debt from CFM in December 2022, as per Shah’s petition. Both Shah and Bansal have claimed that EARC merely continued the proceedings already initiated by CFM, which it had inherited as the assignee of the debt, in usual course of business. Thus, they did not put extraordinary pressure on Desai and his wife by commencing various proceedings under Negotiable Instruments Act, with the Economic Offences Wing, before the NCLT under IBC, and under SARFAESI, their petitions argue.

Shah and Bansal have submitted in their petitions that they were not concerned with day-to-day operational level issues of ECLF, EARC, and the other Edelweiss group entities. Thus, the question of not co-operating with Desai or giving him false assurances does not arise, according to their petitions.

Shah said that he did not induce Desai into applying for the loans. Rather, it was the Desai who approached ECLF with a request for loan to retire debt that NDAWPL had previously incurred from other lenders, and made representations as to the robustness of the business model and prospects of NDAW, as per his petition. Prior to the proposal for sanction being put before the Investment Committee, Shah had no occasion to meet or speak or otherwise deal with Desai, according to the petition.

Shah and Bansal have argued that no prima facie case is made out against them as the FIR does not disclose any proximate actions with the required intent (mens rea) on their part to push Desai to commit suicide.

Background

On July 25 2023, National Company Law Tribunal admitted EARC’s plea to initiate Corporate Insolvency Resolution Process and appointed an interim resolution professional Jinendra Kothari (also an accused). Desai’s appeal against this order was dismissed by the National Company Law Appellate Tribunal on August 1, 2023.

The next day Desai, who has worked on various Bollywood films like 1942: A love Story, Lagaan and Jodha Akbar, was found dead within the premises of his own studio at Karjat. The autopsy report confirmed death by hanging. He left behind a series of voice notes detailing the circumstances that led to his death.

On August 4, Desai’s wife – Naina – approached the Khalapur police station to register an FIR into Desai’s death. Following this an abetment of suicide case was registered against Shah, Bansal, Kothari and two others under Sections 306, 34 of the IPC.

The Bombay High Court on Friday issued notice to the State on the quashing petitions by Shah, Bansal, and other accused but refrained from granting interim protection. The court said the prayer for interim reliefs of “no coercive steps” will be considered on August 18, the next date of hearing.