AC Muthiah, co-promoter and former Chairman of First Leasing Company of India has been declared a ‘wilful defaulter’ by IDBI Bank after First Leasing defaulted on a payment of Rs 508.40 crore. The bank declared the same in a public notice, stating that Muthiah and Farouk Irani, promoter director of First Leasing are in default of Rs 508.40 crore as of August 27, and that the bank is following the ‘due process of law’.
First Leasing has been under the scanner of various law enforcement agencies such as the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI), which are investigating fund diversions by the company. The company, co-promoted by the former BCCI (Board of Control for Cricket in India) Chairman and Farouk Irani, undertook leasing of assets.
In June 2018, the CBI filed a chargesheet against Muthiah for allegedly cheating Syndicate Bank for a sum of Rs 102.87 crore. The company was allegedly showing inflated income and assets since 1998 and that Muthiah and Irani along with seven shell companies had allegedly cheated Syndicate Bank by submitting forged financial statements to be eligible and receive high credit limits. The duo allegedly then siphoned off these funds, causing the bank a loss of around Rs 102.87 crore.
Both Muthiah and Irani were charged with criminal conspiracy, cheating, forgery and destruction of evidence.
Prior to that, in December 2017, CBI filed three chargesheets in the Court of Additional Chief Metropolitan Magistrate, Chennai against Muthiah, Irani and others for allegedly cheating three banks to the tune of Rs 665 crore. According to the 2017 chargesheets, they allegedly cheated IDBI to the tune of Rs 273.99 crore by taking various loans and credit facilities based on forged financial reports. They also reportedly cheated UCO Bank by availing working capital credit and short-term loans based on forged documents, causing the bank a loss of Rs 142.94 crore. They allegedly did the same with SBI, causing the bank a loss of Rs 248.46 crore.