₹1,301 cr fraud: Discharge plea of former IDBI officers dismissed
The court held that the role and complicity of the accused “can be very well ascertained from the allegations levelled against them”
MUMBAI: A special court last week rejected the discharge pleas of four former senior executives of IDBI Bank, including the chairman and managing director, who were arrested by the Central Bureau of Investigation (CBI) for allegedly fraudulently sanctioning loans worth ₹950 crore to liquor baron Vijay Mallya’s now-defunct Kingfisher Airlines Ltd (KAL) and causing wrongful loss of ₹1,301.67 crore to the public sector bank.
The discharge plea was filed by the former chairman and managing director of IDBI Bank Yogesh Agarwal, former executive director of the bank and head of its group corporate banking business Bal Krishna Batra, deputy managing director of OV Bundellu and former executive director of SKV Srinivasan.
An FIR was registered against the four along with Mallya and five others in 2015 for sanctioning loans worth ₹950 crore fraudulently to the airline despite it having a negative credit rating.
As per the prosecution, the four former IDBI Bank employees had allegedly entered a criminal conspiracy with fugitive businessman Vijay Mallya between 2009 and 2010 to fraudulently disburse short term loans worth ₹200 crore and a corporate loan worth ₹750 crore in favor of the now defunct Kingfisher Airlines.
The former bankers claimed they did not violate any rules while sanctioning the loans or receive any personal benefits in lieu of the transactions. The plea also referred to the risk involved due to the financial crunch in the aviation sector in 2009-10 and said the public sector bank had relied on the backing and guarantees from United Breweries, the beverage conglomerate group formerly headed by Mallya.
As per the CBI, the four conspired together with Mallya, the former chairman of KAL, to cause wrongful loss worth ₹1,301.67 crore to the bank, resulting in wrongful gain for Vijay Mallya and his companies. Further investigation revealed that the Kingfisher group diverted over ₹263 crore from the sanctioned amount for wrongful purposes other than what the loan was sanctioned for.
The CBI further claimed that the loans were given to KAL despite its weak financials, negative net worth and low credit rating, thus failing to meet the criteria required for the corporate loan policy of the bank. Mallya allegedly met Agarwal and Batra requesting the short-term loan worth ₹150 crore to meet certain critical obligations.
The proposal was approved by the credit committee without being referred to the risk department. The agency said that a major part of these funds was used to settle overdues of KAL with Bank of Baroda. Another short-term loan of ₹200 crore sanctioned by the bank was also diverted towards other banks and payment of employee salaries.
As per the prosecution, the requirement of KAL was only around ₹400 crore, but the IDBI Bank officers showed undue interest and used their official position to sanction ₹750 crore. The bank officials failed to calculate the net worth of Mallya and flouted the bank loan conditions while approving the loan, the prosecution alleged.
The CBI alleged that Batra, Bundellu and Srinivasan, who were members of the bank’s credit committee conspired with Agarwal to deliberately remove the pledge of collateral securities and failed to recover ₹150 crore from the sanctioned corporate loan of ₹750 crore. The court observed that there is evidence showing meetings were held between Agarwal and Mallya for hasty sanctioning of short-term loans and the officials were responsible for treating the short-term loan of ₹150 crore separately.
Special judge SP Naik Nimbalkar dismissed the pleas, observing that the role and complicity of the accused “can be very well ascertained from the allegations levelled against them.”