BackCBI books ex-Maruti MD Jagdish Khattar for cheating PNB
Denying any wrongdoing, Khattar said that Carnation had to be shuttered due to malpractices by other firmsJagdish Khattar started Carnation Auto India following his superannuation from Maruti Suzuki India
PremiumNew Delhi: The Central Bureau of Investigation (CBI) has booked former managing director of Maruti Suzuki India Ltd (MSIL) Jagdish Khattar for alleged criminal conspiracy, criminal misconduct and cheating Punjab National Bank (PNB) to the tune of ₹110 crore. Khattar denied the charges.
In a case registered by the probe agency on 20 December, based on a complaint by PNB, CBI has alleged that Khattar, along with “unknown public servants", cheated the bank of the amount, after he failed to repay the same.
Khattar, a former IAS officer, worked in MSIL from 1993 until his retirement in 2007. He became the managing director in 1999.
Following his superannuation, Khattar started Carnation Auto India Pvt. Ltd for which he received a loan of ₹170 crore in 2009. The loan was declared a non-performing asset in 2015 with effect from 2012, according to CBI’s first information report (FIR).
Carnation Auto was established as a car servicing and repair outlet of various brands. It also dealt in sale and purchase of used vehicles.
“The accused borrowers dishonestly and fraudulently in order to cheat the bank... sold the goods hypothecated to the bank without its permission and diverted the funds, thereby causing criminal breach of trust and cheating causing wrongful loss to the bank and corresponding gain to themselves," said the agency’s FIR.
CBI said it has started an investigation into the matter. A look-out circular against Khattar has not been issued yet.
The probe agency has also alleged that PNB’s forensic audit found that Khattar had fraudulently sold fixed assets worth ₹66.92 crore for a mere ₹4.55 crore without the bank’s prior approval—assets which had actually been furnished to the bank as collateral. Khattar, CBI alleged, did not deposit the sale proceeds with the bank.
Denying any wrongdoing by either him or his company, Khattar said in an interview that Carnation had to be shuttered due to malpractices by other companies.
He said Carnation Auto India was the first to start a multi-brand service network for automobiles with around 25 outlets across the country, but met with stiff resistance from original equipment manufacturers, which refused to supply spare parts to the company.
“This made my project unviable," he said.
Carnation, whose investors included Azim Premji, Gaja Capital, PNB and IFCI, had to be sent for resolution under the new Insolvency and Bankruptcy Code and was subsequently liquidated, with the Mahindra group taking over the business, said Khattar.
“All this was finished around six-eight months back and now suddenly we find this new development," Khattar said. “The bankers have taken a lot of information from us. We will wait to see now what happens."
He said a detailed audit of his company by K.G. Somani and Co. had concluded that theirs was a genuine business failure and there was nothing wrong with it.
“The bank has now referred it to CBI as part of the process followed by them," Khattar said. “Search was conducted by CBI but nothing incriminating was found. We will be vindicated once the investigation is completed."
He also highlighted that a Competition Commission of India order dated August 2014 had found 14 automobile companies guilty of anti-competitive conduct and imposed a fine of ₹2,500 crore for price manipulation and restricting free availability of spare parts.
“Unfortunately, by then it was too late to rescue our business," he added.
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