"Banks have a responsibility to save public money, not to throw away nearly ₹1,000 crore to unscrupulous elements just like that,” the court said.

Kanishk gold case Madras HC slams banks struggling to recover over Rs 800 cr worth dues
news Fraud Thursday, August 30, 2018 - 10:01

The Madras High Court, on Tuesday, slammed a consortium of 14 banks struggling to recover over Rs 800 crores due from Chennai-base Kanishk Gold Private Limited (KGPL). The banks, headed by the State Bank of India, have sought to quash the Enforcement Directorate (ED) proceedings in the case, which has attached the properties of Kanishk Gold, despite being mortgaged.

According to a report in The Hindu, Justice R Mahadevan asked, “When poor students seek education loans, these banks lay down so many conditions and demand properties worth more than the loan amount to be furnished as collateral. In this case, you have financed a party that had purchased properties with the term loans that you sanctioned and offered them as primary security. What is all this? This court shall order a CBI inquiry against all the bank officials and see to it that they are behind bars. Banks have a responsibility to save public money, not to throw away nearly ₹1,000 crore to unscrupulous elements just like that.”

The court refused to grant an interim stay to the banks.

The popular jewellery chain has been alleged of defrauding a consortium of 14 private and nationalised banks by reportedly falsifying records in order to display an increased working capital. In January 2018, the State Bank of India filed a complaint with the CBI, stating that the jewellery chain was guilty of forgery, cheating and criminal conspiracy to the tune of Rs 824.15 crores.

In March 2018, the CBI raided the properties of KGPL and questioned its promoters Bhoopesh Kumar Jain and his wife, Neeta Jain. In April, assets worth Rs 48 crore belonging to KGPL were frozen by the Enforcement Directorate under the Prevention of Money Laundering Act (PMLA). The ED also attached their fixed deposits worth over Rs 143 crore. Later, in June, 14 immovable properties worth Rs 138 crore were also attached under PMLA.

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