Rs.75 Crore Fraud in Punjab and Sind Bank, CBI Registers Case Against Former Hotel Directors

In a major action against bank fraud, the Central Bureau of Investigation (CBI) has filed a case against two former directors of Maha Associated Hotels Pvt Ltd. The accused, Yash Deep Sharma and Laxmi Narayan Sharma, both from Gachibowli in Hyderabad, are accused of cheating Punjab and Sindh Bank out of ₹75.44 crore.

The CBI’s Bank Security and Fraud Branch (BSFB), based in Delhi, registered the FIR based on a complaint submitted by the bank’s zonal manager, Avdhesh Narain Singh. The FIR includes charges under IPC Sections 120-B (criminal conspiracy) and 420 (cheating), as well as relevant sections of the Prevention of Corruption Act. Along with the two named directors, some unknown public servants and private individuals have also been included in the case.

What Is the Case About?

According to the bank’s complaint, Maha Associated Hotels Pvt Ltd took a loan of ₹75 crore in 2013 from Punjab and Sindh Bank’s Connaught Circus Branch in New Delhi. The loan was meant to fund the construction of a hotel, an entertainment and food plaza, and a hospitality training academy in Neemrana, Rajasthan.

However, the bank has alleged that instead of using the money for these projects, the funds were diverted elsewhere. Due to poor financial management and non-repayment of the loan, the account was declared a non-performing asset (NPA) on December 31, 2016.

What Happened to the Company?

Even though the case names the directors personally, Maha Associated Hotels Pvt Ltd has not been named as an accused. The company, which is based in Jaipur, went through the insolvency process under the Insolvency and Bankruptcy Code (IBC). On August 13, 2024, the National Company Law Tribunal (NCLT) in Jaipur approved a resolution plan of ₹11.5 crore plus Corporate Insolvency Resolution Process (CIRP) costs. Unfortunately for the bank, this left them with little to no security to recover the remaining loan amount.

How Did the Bank Try to Recover the Loan?

When the loan was first given, the bank had secured it by taking a mortgage on land located in Neemrana and other fixed assets. But after the borrowers failed to repay, the bank took symbolic possession of the property in 2017 under the SARFAESI Act. Despite this, the recovery process is still going on. The bank filed a recovery application in the Debt Recovery Tribunal (DRT) seeking over ₹104 crore. That case is still pending.