PMC Bank Crisis: Bombay HC Allows Auction Of HDIL Assets

In a huge relief for the account holders of crisis-hit Punjab and Maharashtra Co-operative Bank, the Bombay High Court on Wednesday allowed a public interest litigation filed by one Sarosh Damania seeking auction of all Housing Development and Infrastructure Limited (HDIL) assets either mortgaged with the bank or attached by the Economic Offences Wing, Mumbai.

Division bench of Justice Ranjit More and Justice SP Tavade approved the appointment of a 3-member committee headed by Justice S Radhakrishnan for speedy disposal of HDIL's assets. The committee will submit a report on or before April 30.

Court has also directed the promoters Rakesh Wadhwan and his son Sarang, who are in jail to be placed under house arrest with four guards in order to ensure they co-operate in the process of recovery and set April 30 as the next date of hearing.

In December last year, the bench had reserved the order noting that repayment of loan to PMC bank would be in the interest of depositors and lenders of the bank.

Damania's PIL sought to restrain lower courts to process any bail application of the respondent accused persons (Wadhwans) until the amount defrauded is recovered.

In an affidavit in another PIL filed by depositors of PMC, RBI referred to its own inspection report of PMC bank dated March 31, 2018, which stated -

"The bank submitted fraudulently manipulated data to RBI for sample checks, the sample of accounts picked for inspection did not contain undisclosed HDIL related accounts. The disclosed HDIL accounts were seen and majority of them were assessed as NPA's.

Conflict of interest of Shri Waryam Singh as Chairman of PMC Bank and as a former Managing Director of HDIL was also commented upon in the report along with the attempt by the bank to show disclosed accounts of HDIL group as standard by sanction of new loans to close old NPA accounts in non-adherence of RBI Master Circular dated July 1, 2015 on IRAC norms. Consequently, the assessed NPA's of the bank were significantly higher than the reported NPAs."

Promoters (Wadhwans) had told the Court that they had no objection if all the encumbered properties are sold for recovery of money payable to the bank.

HDIL's counsel Vikram Chaudhari had argued that the total value of encumbered properties is Rs.11,000 crore and as per EOW's FIR, the total dues to PMC bank are Rs.4355 crore, hence the properties that are already attached by the EOW or are mortgaged with the bank can be liquidated and there was no need to auction or attach unencumbered properties.