In 2015, Union Bank of India and Bank of Maharashtra rejected Rs 41 crore as a full and final settlement from a company that had defaulted on Rs 49.29 crore. Three years later, the banks inexplicably settled for Rs 25.5 crore from the same company. Ideally, the settlement amount should have increased. But it seems the rules of a normal universe do not apply if one of the guarantors in the company is also in charge of the Maharashtra's Ministry of Labour, Skill Development and Entrepreneurship.

Sambhaji Patil Nilangekar, guardian minister of Latur, who was inducted into the cabinet of Devendra Fadnavis in 2016, is listed as one of the guarantors of M/S Victoria Agro Food Processing Pvt. Ltd, which was incorporated on 1 May, 2008. In merely three years, the company became a willful defaulter. The directors of the company include Ashish Marwah, brother-in-law of Nilangekar and Prajaktha Marwah, sister of Nilangekar, among others. Prajaktha Marwah is also a guarantor, and so is Nilangekar’s brother Arvind.

The summary by the recovery department of Bank of Maharashtra dated 31 March, 2015, notes that Marwah offered to settle the matter by paying Rs 41 crore to both the banks. It was rejected by the head office, which “tried to convince the guarantor and key personal Mr Nilangekar to improve the offer” but he did not. The document also noted the properties of Nilangekar in Delhi, Gurgaon and Jaipur, which are not mortgaged to the bank, and which are valued at approximately Rs 100 crore, meaning he is capable of paying more than just 41 crore.

However, the same recovery department of Bank of Maharashtra issued a letter on 16 February, 2018, noting that Rs 12.75 crore was to be “accepted in full and final dues of M/S Victoria Agro Food Processing Pvt. Ltd.” It wrote off the ledger balance of Rs 7.31 crore, unapplied interest of Rs 12.79 crore and processing fee of Rs 6.37 lakh, meaning the company now owed Bank of Maharashtra approximately Rs 32.91 crore. The letter also stated that Union Bank of India, which is the lead bank in this consortium, is subject to similar sanction.

The share of Union Bank of India is 50.05 percent, while Bank of Maharashtra’s share is 49.95 percent. Therefore, the amount owed by M/S Victoria Agro Food Processing Pvt. Ltd. in 2018 to Union Bank of India would also be around the same it owed Bank of Maharashtra. A questionnaire sent to the managing director of Bank of Maharashtra went unanswered. This reporter also attempted to reach Nilangekar, but he was in a meeting during the day, and the phone was later unreachable. The story will be updated if a response is received.

M/S Victoria Agro Food Processing Pvt. Ltd. was incorporated in 2008 as a grain-based distillery unit to manufacture grain-based alcohol. The registered office address and the address for communication is the Nilangekar Bungalow in Latur. The first credit facility was sanctioned on 2 July, 2009, and on 30 June, 2011, it became a Non-Performing Asset (NPA). In fact, since January 2011, the unit stopped commercial production. The reasons behind the account becoming an NPA cited by the Bank of Maharashtra are “initial bottlenecks in fine tuning of machinery”, along with “scarcity of resources resulting in mismatch of cash flow” due to wastage of “raw material and inputs”.

On 12 September, 2011, and 14 December, 2011, the two banks conducted Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) actions, which allow banks and other financial institutions to auction residential or commercial properties to recover bad loans. But the banks did not take anything into possession because of “protest by the borrowers/guarantors”. The primary security with the bank was the land and building of factory in Sakol, Latur, and the collateral security consisted of a theatre, shopping complex and residential unit in Nilanga. When these properties were valued, its realisable value was pegged at Rs 60.38 crore, but the distress sale value was Rs 39 crore as of March 2015.

In February 2012, the case was with the divisional magistrate, which was then transferred to the sub-divisional magistrate of Nilanga, where it made little progress till 2015, because the post was vacant. Eventually, a complaint was lodged with the Central Bureau of Investigation (CBI) on 8 February, 2014, and subsequently with the Banking Securities and Fraud Cell. The CBI booked Nilangekar for “being party to a criminal conspiracy for cheating the Union Bank of India and the Bank of Maharashtra to the tune of Rs 49.30 crore”.

Newspapers reported in 2016 that the CBI’s claim was that “they had allegedly tampered with a couple of pages of the 2009 mortgage deed for illegally substituting the mortgaged property with another property of a lesser value.” Meanwhile, Mahendra Kumar Jajoo, one of the guarantors, filed a case against RBI and Union Bank of India in Delhi High Court for declaring him a willful defaulter.

However, as per the Bank of Maharashtra letter dated 16 February, 2018, the guarantor/borrower will “withdraw all the suits, claims, counter claims, writ petitions” filed against the banks unconditionally, but the settlement “shall not in any way be construed as a settlement of ongoing criminal/CBI case/proceedings pending in the court against the borrowers/guarantors”. The full and final settlement is slated to go through before 31 March.

Updated Date: March 28, 2018 09:47:30 IST

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