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EOW probes Rs 2,100-cr PSU loan to Manish Mehta's power venture

N Sundaresha Subramanian & Samie Modak/New Delhi/Mumbai 19 Nov 12 | 12:38 AM

In a sensational submission that casts a cloud on the loan approval process of public sector lenders, the economic offences wing of the Maharashtra Police has told the Bombay High Court it is probing a Rs 2,110-crore loan sanctioned by a consortium of five lenders to a power plant floated by Nagpur-based businessman Manish Mehta.

Mehta is said to be the owner/promoter of several companies that hold nearly 80 per cent shares in Purti Power and Sugar, promoted by Bharatiya Janata Party (BJP) President Nitin Gadkari.

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In November 2010, JinBhuvish Power Generations, the company floated by Mehta and his associates, proposed to establish a power plant in the Yavatmal district of Maharashtra. This project was said to be under progress on 501 acres situated at Mouje Bijora of Mahagaon taluk in Yavatmal, eastern Maharashtra.

  • JinBhuvish proposed a power plant in Mahagaon, Yavatmal
  • Tells financial institutions and govt authorities that it has acquired 500 acres for the purpose
  • Five institutions sanction loans totalling Rs 2,110 crore in 2010-11
  • Secures water supply, coal linkage and pollution clearances for project
  • EOW finds in August 2011 that no such land existed in JinBhuvish name
  • EOW probing matter, to submit final report to court soon
Loan book  (Rs crore)
REC: 1,500
PTC India: 160
Andhra Bank:  100
Indian Overseas Bank: 200
LIC: 150

Based on these details, Rural Electrification Corp Ltd, a state-run financial institution, sanctioned a loan of Rs 1,500 crore. Following this, PTC India Financial Services Ltd (Rs 160 crore), Indian Overseas Bank (Rs 200 crore), Andhra Bank (Rs 100 crore) and Life Insurance Corp of India (Rs 150 crore) also sanctioned loans between April and August 2011.

EOW officials, who came across this deal while investigating a different set of allegations against JinBhuvish and its promoters, sought details of the land acquired by the company from the tahsildar of Mahagoan.

“Fax messages were sent to the tahsildar, Mahagaon, Yavatmal. However the tahsildar replied that no such land is in existence in the name of the said company as per their record vide his letter on August 1, 2011," the agency’s officials said in an affidavit filed before the court in July this year. This was in response to a petition filed by Mehta and his brother, Nilesh Mehta.

EOW has also sent questions to all the above lenders, seeking details of the project, loan sanctioned and details of the land. “However, none of the financial institutions has provided with the land property of JinBhuvish Power, as required by the investigating agency," they said in the affidavit.

Emails sent to each of these financial institutions seeking comments did not elicit any response till press time. Manish Mehta and his associates did not answer calls. Further, investigations are also on how the company was able to secure water supply and coal linkages for the power plant without having acquired the land.

The document further added that “it prima facie appears" the company is “in existence only on paper".

The agency said it was investigating “without having any land property of the said company in existence how the financial institutions/bank authorities have granted such credit loan facility."

The company had even acquired clearances from the Maharashtra Pollution Control Board (MPCB) for the project. This involves a public hearing on environmental issues that the proposed project may give rise to.

The investigating agency “is also trying to find out without having landed property… how the authorities from MPCB, and district collector have conducted such environment public hearing."

The court has directed EOW to complete investigation in the JinBhuvish matter and file a final report.

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