Contents and Allegation in Second CBI FIR against Mr. Rana Kapoor

CBI FIR No. RC BA1/2020/A0004 dated 12/03/2020

Do Subscribe to our YouTube Channel for more legal updates in Hindi.

Section: 120-B r/w 420 of IPC and 7, 11 & 12 of PC Act, 1988

Accused:

1) Shri Rana Kapoor, then MD and CEO of Yes Bank Ltd.

2) Shri Gautam Thapar, Promoter, Avantha Group of companies

3) M/s. Avantha Realty Ltd.

4) Smt. Bindu Rana, Director M/s Bliss Abode Pvt. Ltd.

5) M/s. Bliss Abode Pvt. Ltd.

6) Unknown others

Allegations:

1.      Shri Rana Kapoor, then Managing Director (MD) & Chief Executive Officer (CEO), Yes Bank Ltd. (YBL) obtained illegal gratification in the form of a property in a prime location in New Delhi at much less than the realizable market value, belonging to M/s. Avantha Reality Ltd. (ARL), for a loan taken by ARL from YBL, for extending concessions, relaxations and waivers in the already existing credit facilities provided to Avantha Group (AG) companies and for advancing new/additional loans to them.

2.      Shri Rana Kapoor, then MD and CEO of YBL entered into a criminal conspiracy with his wife, Smt. Bindu Kappor, director of M/s Bliss Abode Private Ltd. (BAPL) and Shri Gautam Thapar, promoter of AG companies for the purpose of obtaining above illegal gratification.

3.      M/s Avantha Holding Ltd. (AHL) had obtained credit facilities from ICICI Bank Ltd. and Development Credit Bank (DCB) against collateral security of the immovable property at 40, Amrita Shergill Marg, New Delhi. This property is owned by ARL and is a lavish bunglow spread over an area of 1.2 acres approx. in a prime location in Lutyens' Delhi. In the loan books of ICICI Bank this property's valuation was done at Rs. 550 crore.

4.      Both AHL and ARL are part of AG companies. ARL is engaged in the business of renting out owned commercial and residential real estate space to other AG entities.

5.      There was principal outstanding of Rs. 350 crore to ICICI Bank and Rs. 30 Crore to DCB in March, 2016 against charge of above property at 40, Amrita Shergill Marg, New Delhi.

6.      As a part of the conspiracy, Yes Bank Ltd. sanctioned a loan of Rs. 400 crore to ARL in March 2016 as Lease Rental Discounting (LRD) for a period of 10 years. In LRD, discounted values of future lease rentals proposed to be received by borrower by leasing its property are sanctioned as a loan amount. For this purpose, ARL is stated to have entered into a lease rental agreement with M/s BILT Graphics Paper Pvt. Ltd. (BGPPL), another AG company. As per the agreement, a lease rental of Rs.65 crore per year (with 5% escalation every year) was payable by BGPPL to ARL. This lease rental agreement was executed on March 22, 2016, just two days prior to the sanction of above loan of Rs. 400 crore by YBL to ARL. Earlier, the aforesaid property was leased to M/s Ballarpur Industries Ltd. (BILT), another AG company, on a lease rent of Rs. 1.02 crore per annum (Rs. 8.5 lakh per month). The proposed increase of lease rent from Rs. 1.02 crore per annum to Rs. 65 crore per annum was exorbitantly high and intentionally done to deceive YBL to make the loan approval look justifiable without any reasonable basis. These appears to have been done with an intention to get the loan account become stressed for justifying sale of the charged property at 40, Amrita Shergill Marg, by ARL to Shri Rana Kapoor in the name of BAPL. This is supported by the fact that no rent whatsoever was remitted by BGPPL in the account of ARL, post sanction and disbursal of the loan. lt was essentially a sham agreement entered into with an intention to defraud and cheat Yes Bank Ltd. for justifying above loan of Rs. 400 crore to ARL for the purpose of acquiring property as above. Smt. Bindu Kapoor, wife of Shri Rana Kapoor is the director in BAPL.

7.      At the time of sanctioning above loan, ARL was clearly under stress and not eligible for this loan. ARL already had outstanding liabilities of Rs. 690 crore and Rs. 643 crore respectively with YBL and were reporting losses. BGPPL too was under stress with outstanding liabilities of Rs. 643 crore with YBL.

8.      YBL had already extended credit facilities to the tune of Rs. 2500 crore approx. to various AG companies prior to granting of above loan of Rs. 400 crore to ARL. Most of these loans were already under stress and as part of the conspiracy various concessions, relaxations and waivers were extended by Shri Rana Kapoor relating to these credit facilities.

9.      The said loan of Rs. 400 crore was utilized to repay the outstanding loans of ICICI bank and DCB taken by AHL. After above repayment, charge of above property at 40, Amrita Shergill Marg, New Delhi was created in favour of YBL against the said loan of Rs. 400 crore to ARL, The valuation of the Property at the time of sanction i.e. March, 2016 was at Rs. 550 crores (as per Valuation Report with ICICI Bank). Further, as per YBL sanction Credit Appraisal Memorandum (CAM), the estimated value of the property was shown as Rs. 500 crore.

10.    Shri Rana Kapoor, as MD and CEO of YBL was head of the Management Credit Committee (MCC) of the bank, which approved the said loan of Rs. 400 crore to ARL as well as release of property against repayment of loan.

12.    For unexplained reasons the amount of principal loan repayment for the first one year was kept at only Rs. 5lakh per month as per the repayment schedule included in the CAM. This was almost 100 times lower than the lease rental of Rs. 5 crore (approx.) per month to be received by ARL from BGPPL as per the lease rental agreement- A lower sum of Rs. 5 lakh per month appears to have been deliberately fixed for repayment for a period of one year to facilitate account remaining standard for some time as ARL would have found it difficult to service the interest and principal dues in the absence of any actual rental income.

13.    Repayment of principal from the 13th month was to jump from an amount of Rs. 5 lakh to 1.47 crore which would increase from then onwards. Repayment of principal in the 119th month was fixed at Rs. 6.92 crore and the balance of Rs. 1 crore out of total principal loan amount of Rs. 400 crore was to be paid in the 120th month.

14.    Above amount of Rs.5lakh per month against principal outstanding and interest dues were repaid by ARL for a period of 12 months. These payments were made by other group companies and not by ARL as no lease rent whatsoever had been received by it from BGPPL in its account opened with YBL as per the CAM. Though the account had started showing signs of stress from April 1, 2017 onwards, the unpaid interest and principal liability as on June 1, 2017 was only Rs. 12 crore approx. This amount does not appear to be high enough to justify sale of the collateral either at the instance of the bank or the borrower. ln furtherance to the said conspiracy, it was however decided to sale the charged property against the said loan.

14.    In furtherance to the said conspiracy, instead of initiating a transparent process of sale of the charged property by YBL for recovery of its loan as per banking norms, it entrusted this responsibility to ARL itself. ARL in turn did not initiate any transparent process and did not give wide publicity to the proposed sale of the prime property. Strangely, even before the account had become NPA, it had received a purported offer of buying above property from M/s InterGlobe Enterprrses Ltd. (InterGlobe), at a price of Rs, 375 crore, in the month of April 2017. ARL however, applied to YBL for obtaining NOC for selling the property against above offer in the month of June, 2017. Pursuant to the said application and on instructions of Shri Rana Kapoor, YBL gave an NOC to ARL in the month of June 2017 with a condition that full repayment of dues of Rs. 408 crore plus accrued interest towards the outstanding dues of ARL to be credited in the above said loan account of ARL. The above said NOC was issued based on the offer given by InterGlobe. An amount of Rs. 33.82 crore was received in account of ARL with YBL on August 8, 2017 from AHL, with the remaining amount envisaged from the sale proceeds of the said property.

15.    In furtherance to the said conspiracy, on August 29,2017, the purchase offer of InterGlobe was withdrawn for unexplained reasons and immediately thereafter on August 31,2017, ARL received an offer of buying above property from M/s Bliss Abode Pvt. Ltd., at a price of Rs. 378 crore. Smt. Bindu Kapoor, wife of Shri Rana Kapoor, is one of the directors of above company. MCC headed by Shri Rana Kapoor, MD and CEO of YBL readily agreed to the said offer of M/s Bliss Abode P\rt. Ltd. and issued NOC to ARL for its sale on September 6,2017. The property was purchased by BAPL in September, 2017after paying an amount of Rs. 378 crore to ARL.

16.    Above criminal conspiracy amongst above players becomes further evident from the fact that though the offer letter for purchase of above property by Mis Bliss Above Pvt. Ltd. was made on August 31, 2017 and the property was purchased by it in September 2017, M/s Bliss Abode Pvt. Ltd had already obtained a loan of Rs. 90 crore from M/s India Bulls Housing Finance Ltd. (IBHFL) vide loan agreement dated July 13,2017 against charge of property at 40, Amrita Shergill Marg, New Delhi. lt is relevant to mention that Shri Rana Kapoor, MD and CEO of YBL is a co-borrower in this loan of Rs. 90 crore from IBHFL. These facts reveal that acquisition of said property by M/s Bliss Abode Pvt. Ltd. had already been decided in furtherance to the said conspiracy with ARL and obtaining an offer letter from M/s InterGlobe was just a farce.

17.    It is also revealed that a total amount of Rs.375 crore had been received by M/s Bliss Abode Pvt. Ltd. from lndia Bulls Housing Finance Ltd. (IBHFL) including above Rs. 90 crore, taken as a loan vide agreement dated July 13, 2017. This amount of Rs. 375 crore was used by Mis Bliss Abode Pvt. Ltd. to make payment to ARL against sale of above property at 40, Amrita Shergill Marg, New Delhi in the month of September 2017. Loan agreements were however executed between Mis Bliss Abode Pvt. Ltd. and IBHFL much later on October 5,2017 showing balance amount of Rs. 285 crore out of above Rs. 375 crore also taken as loans. Shri Rana Kapoor is shown as a co-borrower in all these subsequent loan agreements dated October 5, 2017 as well.

18.    Facts relating to obtaining loan of Rs 90 crore by M/s Bliss Abode Pvt. Ltd. from IBHFL in July 2017 on a property in charge with YBL and offer letter of above company for purchase as well as the fact of purchase of a property in charge with YBL were not disclosed by Shri Rana Kapoor to MCC and Board of YBL. MCC headed by Shri Rana Kapoor had granted approval for issuance of NOC for the sale of property at 40, Amrita Shergill Marg, New Delhi to BAPL where Smt. Bindu Kapoor, wife of Shri Rana Kapoor is a director. Shri Rana Kapoor was hence under an obligation to disclose his interest in BAPL and above transactions to above committee and to the Board of the bank. There was a situation of conflict of interest and related party transaction and a clear violation of the Bank's code of conduct as well as the provisions of the Companies Act, 2013. This appears to have been done with an ulterior motive to acquire above property as illegal gratification for various favours extended by Shri Rana Kapoor to AG companies.

19.    Two other companies related to Smt. Bindu Kapoor, wife of Shri Rana Kapoor, namely, Mis lmagine Estate Pvt. Ltd. and M/s lmagine Home Pvt. Ltd. took further loans totaling to Rs. 310 crore from IBHFL by placing property at 40, Amrita Shergill Marg, New Delhi as collateral. These loan agreements are dated September 5, 2018. Hence a total loan of Rs. 685 crore had been obtained by companies in which Smt. Rana Kapoor was a director from IBHFL by placing above property as collateral.

20.    YBL headed by Shri Rana Kapoor did not press for sale of any other property of Avantha group companies in its charge kept as collateral for the purpose of recovering outstanding loans even when other loans of AG companies became stressed and NPA. YBL at the instance of Shri Rana Kapoor rather extended further credits of Rs. 515 crore to M/s Oyster Buildwell Pvt. Ltd. and of Rs. 650 crore to M/s Solaris Chemtech lndustries Ltd. after above property at 40, Amrita Shergill Marg had been purchased by M/s Bliss Abode Pvt. Ltd. in 2017. These loans are yet to be repaid to YBL and there is stated to be a total outstanding of Rs. 1900 crore against various credit facilities extended by YBL to AG companies by January 2020.

21.    The above stated facts relating to criminal conspiracy establish obtaining illegal gratification to the tune of Rs. 307 crore by Shri Rana Kapoor, then MD and CEO of Yes Bank Ltd. by acquiring an expensrve property situated at a prime location in New Delhi at 40, Amrita Shergill Marg at a price of Rs. 378 crore against the declared value of Rs. 685 crore by Mrs. Bindu Kapoor and Mr. Rana Kapoor themselves rn lieu of favours extended by YBL to the Avantha group companies promoted by Mr. Gautam Thapar as stated above.

22.    The above said facts and circumstances disclose commission of cognizable offences punishable under sections 120 B IPC rlw 420 IPC and 7, 11 and 12 of the Prevention of Corruptron act 1988 (as on before amendment on July 26, 2018) against Shri Rana Kapoor, then MD and CEO of Yes Bank Ltd., Shri Gautam Thapar, M/s Avantha Realty Ltd., Smt. Bindu Rana, Mis Bliss Abode Pvt. Ltd. and unknown others.

Therefore, an FIR is registered and entrusted to Shri Rajesh Kumar, DSP, CBl, ACB, Mumbai for investigation.

Do Subscribe to our YouTube Channel for more legal updates in Hindi.