A loan defaulter bags hospital project in Gujarat’s GIFT City
At least ₹38.75 cr worth of dues pending with a private bank
Updated: Oct 1st, 2023
In a bizarre development, a prominent loan defaulter diamantaire from Mumbai, constructing a mega-hospital in the Gujarat International Finance Tech (GIFT) City, Gandhinagar, is now targeted by a leading private bank to recover its old dues.
The lender, HDFC Bank, slapped a notice to the Trustees of Lilavati Kirtilal Mehta & Family Medical Trust (LKMFM Trust), which runs the famed Lilavati Hospital, Bandra, with reference to the ongoing proceedings before the Debt Recovery Tribunal-II Mumbai.
Way back in 2002, the bank had filed proceedings with the DRT-II against Splendour Gems Ltd (formerly known as Beautiful Diamonds Ltd.) to recover its dues of ₹14.75 crore from Trustee Kishor Mehta, his son Rajesh Mehta, and over ₹23.50 crores from another son and Trustee Rajeev Mehta, plus interest and penalties on these amounts.
Incidentally, Rajeev Mehta is the son-in-law of another prominent diamantaire Bharat Shah, once a top Bollywood financer.
The bank’s attempts at recovering the dues
For 21 years, the bank has been struggling to recover its total dues from these three trustees of the Lilavati Hospital, the defaulters in the Splendour Gems Ltd case before the DRT-II, plus facing proceedings in Supreme Court and cheque bouncing case in Mumbai’s Girgaum Court.
In Feb 2020, the recovery officer ordered arrest warrants against the Mehta trio in Antwerp, Belgium, attachment of their shares, bank accounts and lockers, restrictions on their foreign trips, and forensic audit of their accounts to track the diversion of funds.
The recovery officer’s order was challenged by Kishor and Rajesh Mehta in court, and Kishor Mehta filed an affidavit on the Lilavati Hospital at GIFT City (Gujarat).
Funds for the hospital
In the affidavit, Kishor Mehta said that the Lilavati Hospital, Gujarat, costing around ₹300 crore, would be entirely built on donations/charity from individuals, and claimed he was not involved in any manner with that project, nor investing funds in it - though he is shown as one of the ‘Promoters’.
The bank notice has contended that the Trustees of LKMFM Trust including Kishor Mehta and his wife Charu Mehta, and the Lilavati Kirtilal Mehta Medical Trust (LKMM Trust) with Trustees as Kishor Mehta, his wife Charu Mehta and their sons Prashant and Rajesh, were planning to build the state-of-the-art Lilavati Hospital at GIFT City.
Kishor Mehta and Charu Mehta said that they were instrumental in setting up the Lilavati Hospital in Mumbai, so, with the knowledge and experience, along with their sons Prashant and Rajesh -- all ‘Promoters’ -- are now setting up a world-class multispecialty hospital through the “Lilavati Foundation” at the GIFT City, as per the website.
Lilavati Hospital in Gandhinagar
The Lilavati Foundation is building the 13-floors Lilavati Hospital in Gandhinagar, spread over 5.50-lakh sq.ft, scheduled to be operational by 2025-end, and was sent congratulatory letters from ex-president RN Kovind and ex-vice-president Venkaiah Naidu.
Lilavati Foundation Trustees were not available for their comments on the entire issue.
Notice from the bank and the Trust’s reply
Undeterred, the bank said that since it has to recover its massive outstanding dues from Kishor Mehta and his sons (Rajesh and Rajeev), and Splendour Gems, hence, as the guarantors they are liable to clear its debts.
The bank demanded to know “the relationship between the LKMFM Trust and LKMM Trust, their common Trustees, their role in the functioning of the Lilavati Hospital Mumbai, whether the LKMFM took the initiative to build the Lilavati Hospital, Gujarat, the other details”.
Responding to the HDFC Bank’s notice, the LKMFM Trust made a revelation that its name was changed to ‘LKMM Trust’ way back in 1990.
Moreover, their Trustees Kishor Mehta and Charu Mehta are not concerned with the routine operations of Lilavati Hospital Mumbai “as they are only busy in causing disruption in smooth functioning of the Mumbai hospital”.
Admitting that though Kishor Mehta and Charu Mehta are also LKMM Trustees, they are (independently) setting up the Lilavati Hospital Gujarat along with their sons Rajesh and Prashant.
Willful Defaulters and under investigation
The LKMM Trust declared that Kishor Mehta and his family owe over ₹500 crore to various banks, face various cases for fraud and recovery proceedings, and are declared as ‘Willful Defaulters’.
The LKMM Trust also said that the Phoenix ARC (the resolution professional) had informed them on July 26, 2018, of the frauds committed by Kishor Mehta and his family with various banks, stalling recoveries by frivolous litigations, and face investigations by various central agencies like CBI, ED, FERA and FEMA.
Significantly, in June 2022, the SC made strong observations against Charu Mehta but just stopped short of initiating ‘contempt proceedings’ against her due to her advanced age (78), for suppressing facts and other things.
The LKMM Trust denied knowledge of other queries put up by the bank but expressed willingness to cooperate with them to provide the Trust’s balance sheet and other details.
Other banks are in a queue, too
Besides HDFC Bank, Kishor Mehta and others are facing different kinds of proceedings for defrauding: State Bank of India, IDBI Bank, SICOM Ltd, Al Barr Finance House Ltd, Vysya Bank Ltd, Sumitomo Mitsui Banking Corp, Credit Lyonnais, Union Bank of India, Oriental Bank of Commerce, Dena Bank, Standard Chartered Bank, Mizuho Corporate Bank Ltd, UCO Bank, and Bank of Baroda, to the tune of over ₹500-crores.
(Source: IANS)
-Edited for style
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