HC appoints panel to recover PMC Bank’s dues from HDIL

Committee to be headed by retired justice S Radhakrishnan

MUMBAI: The Bombay high court (HC) on Wednesday appointed a three-member committee, headed by retired justice S Radhakrishnan, to ensure a speedy recovery of dues for the fraud-hit Punjab and Maharashtra Cooperative (PMC) Bank from Housing Development and Infrastructure Limited (HDIL). The court has sought a progress report from the committee on April 30.

A division bench of justices Ranjit More and Surendra Tavade said justice Radhakrishnan will choose other two members and the three-member committee will expeditiously identify all properties mortgaged solely with PMC Bank, and owned by HDIL or other companies in the HDIL group. These assets would then be sold to recover dues payable to the multi-state cooperative bank.

Acknowledging the plight of depositors, the court said, “Such an extraordinary situation would warrant extraordinary measures so as to ensure speedy recovery of moneys from the companies of respondent nos. 4 and 5 [Rakesh Kumar and Sarang Wadhawan, promoters of HDIL].” The Wadhawans have claimed HDIL properties worth ~11,102.57 crore have been mortgaged fully or partly with PMC Bank. According to the first information report, the fraud at the bank is valued at ~4,355 crore. “The amount realised from the sale would be made available for direct distribution to depositors in a manner devised by the committee,” said the bench.

If there is a shortfall after the sale of HDIL properties mortgaged solely to the bank, the committee will sell properties partially mortgaged to PMC Bank, to the extent of their mortgage proportion. If there is still a shortfall following this, the committee may sell other, unencumbered properties belonging to the realty group. The Wadhawans have claimed their unencumbered properties are worth ~2,435.70 crore.

Acting on a public interest litigation (PIL) filed by advocate Sarosh Damania, the court has also directed the Wadhawans to make office space available to the committee, bear its cost and extend full cooperation to it. The bench also directed PMC Bank to provide the outstanding dues of HDIL to the committee as well as a list of all depositors.

In his PIL, Damania had sought the expeditious disposal of HDIL assets and properties attached by the economic offences wing (EOW) and repayment to the depositors of PMC Bank. Mumbai Police’s EOW, on September 30, 2019, registered a purported fraud at the PMC Bank. According to the Reserve Bank of India, the bank had masked 44 problematic loan accounts (most of which belonged to HDIL) involving advances to the tune of ~ 7,457.49 crore.