Explainer| Here's how Tirupati Infraprojects duped a consortium of banks of Rs 289 crore

The complaint alleges that the accused has taken loans from a consortium of banks for the construction of a hotel at Paschim Vihar, New Delhi, and the development of commercial spaces.

But the accused sold several commercial/retail/office spaces of the said hotel-cum-commercial building to various parties without informing the lender banks, and the funds obtained thereby were diverted, alleges the complaint.

Following two meetings of the lenders – first on December 14, 2019, and then on December 14, 2021, Bank of India, the consortium leader, was given the mandate by the other lenders to lodge a complaint.

The project and how it slipped

According to a copy of the letter sent by the banks to CBI, seen by Moneycontrol, Tirupati Infraprojects was incorporated on January 5, 2007, and registered with the Registrar of Companies (RoC), New Delhi.

The main activity of the company is the development of hotels. The hotel project in this case is the Radisson Blu, located in Paschim Vihar, New Delhi.

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Since 2009, the company has been availing loans from these banks. Later, the limits were enhanced under the Corporate Debt Restructuring (CDR) Mechanism, with a cut-off date of April 1, 2012.

Initially, in December 2008, the term loan portion was set at Rs 300 crore, against the total project cost of Rs 541.03 crore.

All the loans granted by the consortium of banks have been secured by moveable and immovable assets worth Rs 496.71 crore and personal guarantees.

The complaint to the CBI states that the company started witnessing stress in 2012. Following this, on March 20, 2013, it requested the consortium of lenders for additional funds through term loans under the CDR Mechanism. The banks then extended term loans to the company, and an agreement was executed on March 20, 2013.

But one year later, the loan account started slipping, Bank of India, Union Bank of India, and UCO Bank declared this account an NPA on September 30, 2014. The outstanding amounts as of the date of the NPA were Rs 46.72 crore, Rs 94.95 crore and Rs 60.13 crore, respectively.

Similarly, Canara Bank and Bank of Baroda declared these accounts as NPAs on August 16, 2012, and March 25, 2013, respectively.

Recovery efforts by banks

Following the stress, the lenders to Tirupati Infraprojects started their recovery process. In 2015, Bank of India sent a demand notice to the company under the SARFAESI Act, requesting it to discharge its liabilities in full within 60 days.

After this, various other steps were taken to recover the funds and take possession of the property in question.

Finally, in 2017, the case was admitted to the National Company Law Tribunal (NCLT), where the bench appointed Anil Kohli as the Insolvency Resolution Professional (IRP).

In 2018, the Committee of Creditors (CoC) decided to conduct a transaction review audit of the company, and the task was assigned to Rajan Beri and Associates.

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The report by Rajan Beri and Associates alleged that the company diverted the income generated from the project.

Based on this report, a CBI complaint was filed by Bank of India on December 14, 2020.

The CBI directed the lead bank to get a forensic audit conducted prior to the NPA classification of the accounts. Subsequently, a forensic audit was conducted by PVRN & Co. for the period January 1, 2009 to March 31, 2015.

The forensic audit found that the company had sold two units for Rs 66.94 crore to HBN Dairies & Allied Ltd and K Sera Sera Digital Cinema Pvt Ltd. Both transactions were done without informing the lenders.

Further, the company had maintained accounts with non-lending institutions but had not provided a statement of the accounts maintained with these banks.

Also, the company lent money to other parties without the approval of the lenders. As on March 31, 2015, the outstanding loan was Rs 8.04 crore, and the forensic audit believed that funds had been diverted by the management through loans to other parties.

It was also alleged that there was a net deletion of tangible fixed assets (land and buildings) to the tune of Rs 71.09 crore. In the financial year 2014-15, there was a deletion of Rs 4.39 pertaining to vehicles.

Bank of India’s letter to the CBI put the quantum of loss accrued to the consortium at Rs 979.85 crore as of December 31, 2021. This includes principal outstanding principal plus interest.