J&K Bank fraud case: Ambience Group failed to make mandatory contribution of Rs 462 cr for hotel project

New Delhi, April 23 (IANS) Law Enforcement Directorate (ED) investigation has revealed that Ambience Group failed to make the mandatory contribution of Rs 462 crore for the construction of a project. 1,272 crore luxury hotel at Shahdara in the nation’s capital, breaching the loan terms of a consortium of banks, led by Jammu & Kashmir Bank.

The sighting came to light during the recent bail plea hearing of Raj Singh Gehlot, chairman of the Ambience business group, who was arrested by the ED for allegedly defrauding banks that provided a loan of Rs 810 crore.

Denying Gehlot’s bail, the court also noted that the loan amount disbursed by the bank had been misappropriated by certain entities, which were found to exist only on paper.

Aman Hospitality Pvt Ltd (AHPL), an entity of Ambience Group, purchased commercial land in Shahdara at an open auction organized by the Delhi Development Authority on March 3, 2006 for the construction and development of a hotel.

After technical evaluation, the cost of the hotel project was estimated at Rs 867 crore, in which the developer’s contribution was set at Rs 287 crore and the loan at Rs 580 crore.

Based on this estimate, the group approached the Ansal Plaza branch of J&K Bank with a proposal in 2009 for the sanction of a loan of Rs 75 crore and a bank guarantee of Rs 15 crore for the financial close.

Later, the development strategy was changed and it was decided to build one luxury hotel, instead of two lower category hotels. The step resulted in cost escalation, and the feasibility of the project, cost and source of finance were reassessed by PNB (NS:) Investment Services Ltd., and the loan amount was calculated at Rs 810 crore and The developer’s contribution was set at Rs 462 crore.

Thus, the total cost of the project has been estimated at Rs 1,272 crore. In due course, a loan of Rs 810 crore was sanctioned and disbursed to the group by a consortium of banks, led by J&K Bank.

When the company went into default, the consortium of banks sanctioned an interest funded term loan of Rs 165.82 crore to restructure its loan. However, AHPL has still not fulfilled its obligations and as a result, J&K Bank declared the company’s loan account an NPA on June 30, 2018.

According to the ED, it was discovered during their investigation that out of the bank loan of Rs 810 crore, Rs 781 crore was funneled by the accused through an escrow account of J&K bank, in which the loan amount was been disbursed.

The sums received by the 25 non-contracting parties were transferred to two companies which then transferred the funds to the companies of the Ambience group, the money having therefore been used to settle the loans of the companies of the Ambience group and to meet the expenses of the applicant, family and friends. .

On the other hand, the group argued that the transactions were part of a turnkey contract, calling the prosecution’s complaint “baseless allegations”.

Even before the loan amount was disbursed, the developers had invested Rs 267.33 crore, and this was utilized in the construction of the hotel, which has 480 rooms with an area of ​​10 lakh sq ft with a banquet area of 30,000 square feet, and has been fully functional since its inauguration.

The completion of the hotel project and its full operation indicates that there has been no embezzlement, let alone generation of “proceeds of crime”, the group argued.

The court noted that the lending banks had failed to seek remedies under the SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Collateral Act 2002) and had opted to initially opt for a single settlement.

It was of the view that the conversion of part of the debt into equity, in accordance with the strategic debt restructuring plan, resulted from the misuse of the loan amount by the applicant and that this did not erase the criminality related to the underlying transaction, by which public money under the cover of the loan was diverted and siphoned off.

“Given the parameters of s. 45(1) PMLA, I find no reasonable grounds to believe that the applicant is not guilty of the alleged offence. and in light of the seriousness of the alleged offences, it also cannot be said that the applicant is not likely to commit such an offense while out on bail,” the court said while dismissing the application. release on bail from the promoter of Ambience.

(Jaison Wilson can be reached at [email protected])



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