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PNB’s $45 million fraud claim dismissed by English court




London, Jan 24: The High Court, England, on Thursday dismissed a $45 million fraud claim by the UK subsidiary of Punjab National Bank (PNB) against seven individuals and two companies based in India and the US.

Zaiwalla & Co, the London-based international law firm representing eight of the defendants, argued that the bank had not made out an arguable case in deceit, that England was not the appropriate forum for the claim, that the Bank misled the court on a number of key issues, and that the Bank failed to properly effect service of the claim which was agreed to by the court.

The claim made by PNB against the nine defendants concerned loans made by the bank totalling $45 million for oil re-refining and wind energy generating projects in the US.

The Bank had claimed that it had been misled and defrauded by the actions of the defendants following the grant of loans amounting to $45 million to companies in the US and India controlled by the individual defendants.

It also alleged that money had been siphoned off and payments due had not been made under the loan facilities and guarantees.

The eight defendants were Ravi Srinivasan, Trishe Resources INC (USA), Vathsala Ranganathan, Pesco Beam Environmental Solutions INC (USA), Pesco Beam Environmental Solutions Pvt Ltd, Anantharaman Shankar, Luke Staengl and Anantharam Subramamium.

All the individual defendants (some of whom have guaranteed loans) are resident in India with the exception of the 8th defendant who is resident in the US. The bank had lent the money from England and operated the loan accounts from London.

The bank, at an ex-parte hearing, obtained permission to serve the proceedings commenced before the English Court and served the proceedings by email on various defendants in India and the US.

In his judgment, Chief Master Marsh commented that “the core components of a claim in deceit are absent” and that “the claims in deceit and misrepresentation do not demonstrate a serious issue to be tried”.

“The failure to draw to the attention of the court the existence of the foreign claims was a serious breach of the claimant’s duty to the court. The proceedings were highly material to the exercise of the court’s jurisdiction to give permission to serve out of the jurisdiction” and that “the failures are such that the court should set those orders aside. I do not consider they are failure which can be overlooked,” Chief Master Marsh observed.

The court criticized the bank’s lawyers for serving substantial amended proceedings which were not approved by the court.

The court decided that the bank has not been able to demonstrate that the English Court is the most appropriate forum for the claims by stating that that there was no good reason why these defendants should be sued in England as well as the US and India.

Reacting to the judgment, Zaiwalla & Co, which represented eight of the nine defendants, commented “The matter raises serious questions about the way bank’s claim has been put before the court and served. English Civil Procedure Rules are very strict in practice.

“It is very important that attention is paid and care is taken when claims are prepared to ensure that the rules are fully complied with. The decision serves as a reminder that serious allegations of fraud have to be supported by cogent facts and evidence: speculative claims will not be permitted to proceed to trial. the decision of the court has saved everyone concerned a great deal of time and money by being dismissed at an early stage, although the bank will still face claims for substantial costs as well as having to pay its own costs.”


Markets open on positive note



Sensex Nifty Equity

Mumbai, Feb 20: The 30-scrip Sensitive Index (Sensex) on Wednesday opened on a positive note during the morning session of the trade.

The BSE Sensex opened at 35,564.93 before touching a high of 35,581.14 and a low of 35,520.21.

It was trading at 35,528.69 up by 176.08 points or 0.50 per cent from its Tuesday’s close at 35,352.61.

On the other hand, the broader 50-scrip Nifty at the National Stock Exchange (NSE) opened at 10,655.45 after closing at 10,604.35.

The Nifty is trading at 10,656.25 in the morning.


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PF funds’ investment in IL&FS bonds have no government guarantee: Finance Ministry



IL&FS Financial Service

New Delhi, Feb 19 (IANS) The provident and pension fund trusts that invested in the IL&FS bonds now fear loss of money as the debt-ridden company’s bonds are unsecured debt, and the Finance Ministry says superannuated bonds do not carry any government guarantee and all such instruments have to face all market-related risks.

“Since these are investments in bonds, the government does not ensure any guarantee on them as such and if these are invested in stock markets, they carry the market risks as applicable. It is between the bond issuer and bond holders…,” the Finance Ministry said in response to IANS queries.

Thousands of crores of money of more than 15 lakh employees of both public and private sector companies have exposure to IL&FS bonds.

However, queries sent to the EPFO Commissioner and Labour Minister Santosh Gangwar remained unanswered.

Over 50 funds that manage retirement benefits of over 15 lakh employees have exposure to IL&FS. PF trusts of state electricity boards, public sector undertakings (PSUs) and banks are among them. The provident and pension fund trusts have filed intervening applications in the National Company Law Appellate Tribunal (NCLAT) stating that they stand to lose all the money since the bonds are under unsecured debt.

Usually, retirement funds have a low-risk appetite and invest in “AAA” rated bonds (which IL&FS bonds used to be once upon a time) and get assured returns with low interest rates.

The worries of pension and provident fund trusts come from the classification of IL&FS profiling its companies as to which can meet the dues obligations. Many important trust managing funds of PSUs like MMTC, IOC, Hudco, SBI and IDBI are among those filing petitions. From private sector, HUL and Asian Paints are among the petitioners.

IL&FS is currently under resolution process at the National Company Law Tribunal (NCLT). The process will decide under Section 53 of the IBC the order of priority for distribution of proceeds of the process.

The beleaguered company has informed the NCLT that of the 302 entities in the group, 169 are Indian companies, out of which only 22 are emerging as those which can meet all obligations (green), while 10 firms can pay to only secured creditors (Amber). There are 38 companies of IL&FS (red) which cannot meet any obligations of payment, and 120 entities are still being assessed.

These PF and provident funds trusts are worried that if payment is limited to secured creditors, then only financial creditors like banks will receive the dues while unsecured bond-holders will be get any payments.

IL&FS bonds attracted investments by PF trusts as it had the shareholding of SBI and LIC giving its bonds the comfort factor.

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Sachin Bansal invests Rs 650 crore in Ola




Bengaluru, Feb 19 (IANS) Internet entrepreneur and Flipkart co-founder Sachin Bansal has invested Rs 650 crore, or about $92 million, in ride-hailing platform Ola in his personal capacity as investor, the company said in a statement on Tuesday.

This investment is part of Ola’s larger Series J funding round. It is also the largest investment by an individual in Ola to date, it said.

“Ola is one of India’s most promising consumer businesses that is creating deep impact and lasting value for the ecosystem. On one hand, they have emerged as a global force in the mobility space and on the other, they continue to build deeper for various needs of a billion Indians through their platform, becoming a trusted household name today,” Bansal said.

He further said he has known Ola founder Bhavish Aggarwal as entrepreneur and friend over the years and that he has great respect for what he and the team at Ola have built in 8 years.

“We are extremely thrilled to have Sachin onboard Ola as an investor. Sachin is an icon of entrepreneurship and his experience of building one of India’s most respected businesses ground up, is unparalleled,” Ola CEO Bhavish Aggarwal said.

Ola integrates city transportation for customers and drivers onto a mobile technology platform ensuring convenient, transparent, safe and quick service fulfilment, the statement added.

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