Since last two days, Chetan Shah, the diamond merchant and now also known as "fake Interpol agent" was interrogated by the officials of Enforcement Directorate (ED) in Mumbai. Currently, Shah is being investigated for Rs 342 crore loan default case, under FEMA.
On Monday night, Shah was arrested by Mumbai police under section 419 for creating a fake identity card with Interpol logo, but next day, he managed to get the bail from local Court. Without any delay, the ED decided to interrogate him.
On Wednesday, Shah was summoned and questioned for at least 6-7 hours. Next day, he was again called and interrogated for about 3-4 hours. At one point of time, Shah, who is also known for living a lavish lifestyle was seen dosing inside the ED office.
BANKS GEARED UP WITH SARFAESI ACT
Just few days before the ED conducted searches on Shah's premises on April 1, 2017, the consortium of four banks had decided to release a public notice in all the leading newspapers, informing that Chetan Shah and his company Decent Dia-Jewels Pvt Ltd., could face an action under SARFAESI Act.
India Today has the copy of that public notice in hand. The notice was issued under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI - Act).
The notice was basically to inform the borrowers/guarantors/mortgagors that in case they do not pay back the entire amount of around Rs 342 crore within 60 days, then banks would auction all the collaterals (assets of these entities/individuals) deposited while taking the credit limit.
The main borrower of this loan is Decent Dia-Jewels Pvt Ltd, promoted by Chetan Shah and his wife Hema Shah. The guarantors of this loan amount were: Chetan Shah, Hema Shah, Ramniklal Shah, Shailesh Shah, Diamar Construction Pvt Ltd, Nakshatra Fin Lease Pvt, Diacentre Finance & Leasing and Fortune Intech Pvt Ltd.
Last year, the notice under SARFAESI Act was sent to these individuals/entities, but only few of them had acknowledged it. "Due to non-payment of dues and non-fulfillment of terms and conditions of the loan, a default has been by the borrower/guarantor. Thus, the loan account has become NPA, as per the RBI guidelines," the notice said.
The collaterals which were deposited before the banks while taking the credit limit of Rs 342 crore were:
1. Commercial flats of Shreeji Building in Surat (owned by Decent Dia Jewels)
2. Office in Bharat Diamond Bourse at BKC (owned by Decent Dia-Jewels)
3. Residential flats in Urmi Cooperative Building, Worli, Mumbai (owned by Nakshatra Finlease Pvt Ltd.)
4. Office in Laxmi Finance at BKC with four car parkings space (owned by Dia-Centre Finance and Leasing Pvt Ltd)
5. Office premises at Kamla Mills Compound, Mumbai with one parking lot (owned by Shruti Re-rollers Pvt Ltd also known as Fortune Intech Pvt Ltd)
Deadline of 60 days has been given to these borrowers/guarantors to pay the loan amount with interests. "Failing which the banks will be constrained to enforce its security interest without intervention of the Court/Tribunal by taking recourse to one or more of the measures under Chapter III of the Act," the notice warned. The action includes selling off all the properties mortgaged before the banks.
Dena Bank is heading the consortium of all four banks, with highest exposure of Rs 146 crore. While, Union Bank of India (Rs 80.2 crore), Central Bank of India (Rs 25.7 crore) and Syndicate Bank (Rs 90.19 crore) had sanctioned the credit limits with an expectation that "Shah would never default the payment of those banks with whom he had a relation with since last 15 years".
BANKS COULD FILE A CRIMINAL COMPLAINT
Few days back, consortium of all banks had done a meeting to decide the fate of Decent Dia Jewels and Chetan Shah & Co., in order to recover its loan amount. Unilaterally, it was to file a suit against the company and directors.
But if sources from these banks are to be believed then there is a high possibility that the consortium could file a criminal complaint against Chetan Shah to support the hands of investigative agency for the strong action.
"Even the ED has been suggesting these banks to come forward and file a criminal complaint against Decent Dia Jewels and borrowers/guarantors. It would help the agency to investigate the matter under stringent act of money laundering i.e. PMLA," one ED official said.
At present, the case is getting probed under FEMA, having less stringent actions.
OPERATIONS OF DECENT DIA-JEWELS
In 2014, rating agency Brickwork Ratings had reaffirmed "BWR A3" rating for existing and enhanced bank credit facilities aggregating to Rs 331.90 crore of Decent Dia-Jewels Pvt Ltd.
Decent Dia-Jewels (DDJ) was set up in 1995 as a partnership firm by Chetan and Hema Shah. It got reconstituted in 2010 as a private limited company. DDJ was involved in polish and trading of rough diamonds. The company claimed to derive its entire revenue through exports to Hong Kong, the Middle East, Europe and USA. The company has its manufacturing facility in Surat.
The investigative agency suspects that Chetan and Hema Shah who are the directors of at least dozen of shell companies are involved into diversion and laundering of money showing fake exports.