Fraudulent transactions of Rs 6,182 crore in DHFL unearthed

The Administrator of Dewan Housing Finance Company Ltd, appointed under the Insolvency and Bankruptcy Code, 2016 to carry out the duties under it, obtained assistance from  reputed professional agency, Grant Thornton to conduct investigation of the affairs of the company in respect of transactions qualified under sections 43 to 51, and sections 65 and 66 of the Code.

Accordingly, the Administrator of the Company received an initial report from the professional agency appointed as the transaction auditor, indicating that there are certain transactions which are undervalued, fraudulent and preferential in nature, falling under the aforesaid sections of the Code, as per a filing.

On basis of the investigation and observations of the transaction auditor, the Administrator has filed an application before the Mumbai bench of the National Company Law Tribunal (NCLT) under Section 45, Section 60(5) and Section 66 of the Code on February 20, 2021 in respect of disbursement made to certain entities as other large project loans (OLPL), against Kapil Wadhawan, Dheeraj Wadhawan, Creatoz Builders Pvt Ltd, Ikshudip Fincap Pvt Ltd, Rite Developers Pvt Ltd and certain other entities. It is to be noted that further filings may be undertaken, in due course.

The nature of fraud is in relation to irregularities in disbursement of OLPL loans by the company in the past. As per the transaction auditor report shared with the Administrator, the monetary impact of the above transactions covered under the application amounts to Rs 5,381.90 crore towards outstanding principal, Rs 589.36 crore towards accrued interest and Rs 210.85 crore towards notional loss of interest on account of charging lower rate of interest. Thus, the total impact of such transactions, as detailed in the transaction auditor's report, has been sought from the relevant entities involved, along with the interest for the relevant period, through the said application filed with NCLT.

As per the report prepared by the transaction auditor, the concerned transactions occurred over a period of time, detailed in the report.

Based on the report, the application has been filed with NCLT, Mumbai against 33 respondents, including Kapil Wadhawan, Dheeraj Wadhawan, Creatoz Builders Pvt Ltd, Ikshudip Fincap Pvt Ltd, Rite Developers Pvt Ltd and certain other entities.

The preliminary estimation included in the application places the monetary impact of the concerned transactions at approximately Rs 6,182.11 crore (which includes Rs 210.85 crore towards notional loss of interest on account of charging lower rate of interest).

All relevant details regarding these proceedings have been included in the application filed before the National Company Law Tribunal, Mumbai and is presently pending consideration.