Prithvi Realtors Moves NCLT, Alleges PMC Bank Held Property Without Full Loan Disbursal
In a case concerning Prithvi Realtors and Hotels Private Limited and the Punjab and Maharashtra Co-operative (PMC) Bank, several questions have been raised regarding the alleged non-disbursement of significant mortgage overdraft facilities, and the bank allegedly holding on to the mortgaged property despite no disbursal of the corresponding loan amount.
Audit Report Flags Lack of Disbursement
Audit reports examining Prithvi Realtors and Hotels Private Limited’s mortgage loan transactions with PMC Bank reviewed key documents, including applications for mortgage overdraft limits, registered deeds of mortgage, and statements of affairs spanning from March 10, 2007, to October 10, 2019.
A document accessed by The Free Press Journal states: “Upon review of the Statement of Account of M/s Prithvi Realtors and Hotels Private Limited, it appears that there have been no disbursements or utilizations recorded post 31st October 2012. Based on the said Statement of Account, only interest has continued to accrue since that date, with no further transactions reflecting disbursement, utilization, or repayment activity thereafter.”
Only Rs 30 Crores Disbursed, Claims Officer
The report concludes that, “Based on the review of the Statement of Account, it appears that no disbursements or utilizations have been recorded after 31st October 2012. In light of the above, and as per the records reviewed, it may be inferred that the facilities sanctioned — including the Application for Mortgage Overdraft of Rs 10 crores dated 17th January 2013, the Application for Rs 10 crores dated 3rd April 2017, and the subsequent enhancement of the overdraft limit to Rs 77.5 crores dated 5th April 2017 — do not appear to have been disbursed, as no such disbursement is reflected in the Statement of Account.”
Speaking on condition of anonymity, an officer associated with the preparation of the audit report clarified that the initial loan amount was Rs 10 crores, which was increased from time to time, and the loan remained active with regular transactions up to a total disbursed amount of Rs 30 crores. This Rs 30 crore amount was duly disbursed by the bank. However, the enhanced loan of Rs 87.5 crores—which was to be secured by additional mortgaged property—was never actually disbursed by the bank.
Property Mortgaged Despite No Loan Release
“The property was mortgaged against the enhanced loan facility, even though there was no actual disbursement. In 2017, another sanction letter of Rs 87.5 crores was issued against the same property, but again, there was no disbursement,” the officer stated.
PMC Bank Accused of ‘Evergreening’ Loan
The report further reveals that PMC Bank renewed or issued fresh sanction letters and mortgage deeds for the loans existing between 2010 and 2013, despite no new disbursements taking place. “What the bank essentially did was attempt to ‘evergreen’ the loan,” the officer said.
Evergreening refers to the practice of avoiding classification of a borrower’s account as a Non-Performing Asset (NPA) by artificially showing that the loan is performing—typically by issuing new loans or restructuring the existing ones.
“In this case, Prithvi Realtors had already stopped servicing the loan—no interest or EMI payments were made after the initial Rs 30 crore loan. After 90 days of non-payment, the account should have been classified as an NPA, and technically, the bank should have stopped disbursing any further credit. But instead, PMC kept sanctioning facilities in tranches of Rs 5 crores, claiming interest was being served, when in fact, it was not. They kept adding the accrued interest to the principal, inflating the loan figure to Rs 87.5 crores,” the officer added.
Prithvi Realtors Seeks NCLT Intervention
Now, Prithvi Realtors is contesting the mortgage of its property for amounts ranging from Rs 30 crores to Rs 87.5 crores, none of which were actually disbursed by the bank beyond the initial Rs 30 crores. The company has approached the National Company Law Tribunal (NCLT), seeking the release of its mortgaged property and action against the bank for what it alleges is wrongful holding of assets without corresponding disbursal.
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