NRI in­vestors claim USD103 mil­lion da­m­ages from ICICI

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Al­leg­ing that they suf­fered huge losses on their in­vest­ments made in Dy­namic In­dia Fund lll (DIF III), a group of 69 NRI in­vestors from about amongst 500 have dragged ICICI and as­so­ci­ated com­pa­nies to the Mau­ri­tius Supreme Court. The pe­ti­tion­ers al­leged that DIF lll, pro­moted by ICICI ven­tures and ICICI Bank, in­vested in real es­tate projects that flopped mis­er­ably, in­stead of world class ones as the mar­ket­ing teams promised. “A plaint with sum­mons was lodged be­fore the Supreme Court of Mau­ri­tius by a group of NRI and for­eign in­vestors against (DIF III), In­ter­na­tional Fi­nan­cial Ser­vices Ltd (IFS), ICICI Ven­ture Funds Man­age­ment Company Ltd (ICICI Ven­ture), ICICI Bank and the Western In­dia Trustee And Ex­ecu­tor Co Ltd,” the le­gal firm han­dling the case, Bany­mand­hup Boolell Cham­bers, said. Ex­plain­ing the losses suf­fered by the in­vestors, the in­vestors said ICICI in­vested in 13 projects in In­dia of which three prop­er­ties in Hy­der­abad and two in Mumbai to­gether con­sumed ap­prox­i­mately 60% of the cor­pus de­spite the orig­i­nal prom­ise that ICICI Ven­ture were to spread its in­vest­ments to projects in var­i­ous ci­ties across In­dia. Even after com­ple­tion of nine years of the in­vest­ments was made, ex­cept for one, none of th­ese were com­pleted as stated in their Re­port of March, 2014. Work on a town­ship project in Chen­nai, in which the Fund in­vested, has not even com­menced after 9 years due to se­ri­ous in­fra­struc­ture prob­lems. Two or three projects are in dire fi­nan­cial liq­uid­ity prob­lems. Only one project in Pune has been ex­ited after eight years and that too con­sid­er­ably un­der- per­formed from pro­jected growth, the in­vestors said. “Thus, it is a clas­sic case of to­tal ne­glect of due dili­gence, re­search of suit­abil­ity tak­ing into ac­count of exit term, out­ra­geous un­der­es­ti­ma­tion of cost and com­ple­tion, al­leged neg­li­gence and overt ma­nip­u­la­tion of the fi­nances for es­ca­lat­ing costs and se­ri­ous blun­ders in judg­ment of se­lec­tion of projects ” the pe­ti­tion­ers aver. The in­vestors are claim­ing for a judg­ment con­demn­ing and or­der­ing DIF III, IFS, ICICI Bank and ICICI Ven­ture to pay jointly, sev­er­ally and in solido the sum of USD 103,699,976, to­gether with in­ter­ests, which com­prise the cap­i­tal in­vest­ment made by the in­vestors in DIF III and the moral da­m­ages. DIFIII is a pub­lic limited company with limited life, in­cor­po­rated in Mau­ri­tius on the 14th April 2005, and holds a Global Business Li­cence Cat­e­gory 1, is­sued by the Fi­nan­cial Ser­vices Com­mis­sion of Mau­ri­tius, a reg­u­la­tory gov­ern­ment body. DIFIII is man­aged by IFS, a man­age­ment limited company in­cor­po­rated in Mau­ri­tius, who acted as Ad­min­is­tra­tor of DIF III apart from be­ing Sec­re­tary. Direc­tors and share hold­ers of IFS also acted as direc­tors of DIF III with con­flict­ing in­ter­ests. DIF III was pro­moted and set up by ICICI Ven­ture and ICICI Bank, as a spe­cial pur­pose ve­hi­cle for over­seas in­vestors to invest through IAF III, in the real es­tate mar­ket in In­dia. Western In­dia is the trustee of IAF III and ICICI Ven­ture is the set­t­lor of IAF III.

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