Mumbai's Mallyas: Directors of a firm dupe 10 banks for Rs 2,555 crore

Directors of Varun Industries, Kiran Mehta and Kailash Agarwal, are on the run after duping 10 banks to the tune of Rs 2,555 crore; their office in Byculla and residential properties have been sealed and will be auctioned off

In yet another case of wilful default, a consortium of 10 banks — with Indian Bank as the lead bank— is on the lookout for two missing directors of a firm called Varun Industries for duping it to the tune of Rs 2,555.56 crore.

The Byculla east office of Varun Industries. Pic/Suresh KK
The Byculla east office of Varun Industries. Pic/Suresh KK

Indian Bank issued a public notice on March 4, 2016, against Varun Industries directors Kiran Mehta and Kailash Agarwal stating they owed the Consortium money. It reads: "This is to inform that M/S Varun Industries limited, having its office in Byculla east, having Kiran Mehta and Kailash Agarwal as directors had availed credit facilities aggregating Rs 1,798.37 crore as on July 31, 2013, from the Consortium of banks. Both the directors furnished their personal guarantees, in order to avail the aforesaid credit facilities. However, none of them is available at the addresses given to us, and are not traceable/responding. The company has not furnished several details despite the commitments made by the company in the various consortium meetings and even after repeated follow-up with the company, in this regard."

Public notice issued by the Indian Bank on March 4
Public notice issued by the Indian Bank on March 4

The notice further mentions that the company failed to peacefully handover possession of some of their properties mortgaged to the bank and sought clarification/response from the duo within 30 days from the issuance of the notice. If the firm fails to respond, then the consortium would be constrained to proceed based on prima facie view as borne out by records to report to CBI/CIBIL as non co-operative borrower. Also, Varun industries have been declared as Non-performing Asset (NPA).

"Please take further note that the account has been classified as NPA. The amount due to the consortium as on July 31, 2015, is R2,555.56 crore. Please not that the aforesaid amount doesn't include the legal expenses, other charges borne by the bank so far and interest from August 31, 2015 onwards. The bank reserves the right to claim the legal and other expenses incurred/to be incurred as well as future interest," the notice reads.

Unavailable
When this correspondent visited the Varun Industries office in Byculla, he observed that the locked shutter was splattered with bank notices.

A similar scenario was witnessed at the apartments owned by Agarwal and Mehta in Shankheshwar Darshan building. One of Mehta's neighbours said, "We haven't seen Mehta or anyone from his family for a very long time. We don't know where they stay."

However, the security guard claimed that Agarwal's flat was occupied by a tenant. Upon inspection, the flat appeared to be locked from the outside.

Similarly, two apartments on the 19th and 20th floor at Vardhaman Heights in Byculla (East) — owned by Mehta and Agarwal respectively — were being guarded by a watchman hired by the bank. Upon inquiry, the guard said his job was to inform the bank the moment he sees anyone entering the sealed flats.

When contacted, L Raman, DGM for Indian Bank — who had signed the notices against the duo — refused to divulge details stating that he was not authorised to comment. However, a senior bank official said, "Rules state we have to issue a notice and follow the protocol thereafter. We will auction their properties as scheduled and initiate every legal action to recover our money."

The Consortium
Indian Bank (Consortium lead bank), JMFL (UCO Bank), Central Bank of India, Syndicate Bank, State Bank of India, United Bank of India, Bank of India, Bank of Baroda, ARCIL (IDBI) and Allahabad Bank. About Varun Industries established in 1989 as a small trading house, the company was incorporated as Varun Continental Ltd in March 1996. And was renamed Varun Industries Limited in April 2005. After foraying into steel ware upon inception, the company ventured into exporting stainless steel cookware, raw materials, oil and natural gas, wind energy, uranium, mining, gems and jewellery.

Failed bid
One of the banks in the Consortium tried auctioning 7,682 square meters of land and a building admeasuring 5,184 square meters in Melgaon, Nashik, at a reserve price of Rs 10 crore in February last week. However, the auction turned to be a damp squib owing to a poor response.

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1 Comments

  • Manan Jaiswal14-Mar-2016

    Why cant these defaulters photos be made into posts and shared by all so that any one who spots them can notify these banks.

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