Mumbai: Radius Group MD Sanjay Chhabria sent to CBI custody till May 6 in Yes Bank-DHFL case

A special court in Mumbai on Friday remanded city-based realtor Sanjay Chhabria in Central Bureau of Investigation (CBI) custody till May 6 in connection with a case of alleged corruption against Yes Bank founder Rana Kapoor and DHFL. Chhabria of Radius Developers was arrested by the CBI on Thursday. The central probe agency produced him before special judge S H Gwalani and sought his 14-day custody for further probe into the matter.

In March 2020, CBI had registered a criminal offence against DHFL and others on the allegations that Rana Kapoor, the then Promoter Director and CEO of Yes Bank Ltd had entered into a criminal conspiracy with Kapil Wadhawan, Promoter Director of DHFL and others to extend financial assistance to the said M/s DHFL in lieu of substantial undue benefits to himself and his family members through the companies controlled by the family of Rana Kapoor.

It was alleged that Yes Bank invested Rs 3,983 crores in Short Term Non-Convertible Debentures (NCDs)/Masala Bonds of DHFL during the period of April-June 2018, shortly after which Kapil Wadhawan paid a kickback of Rs 600 crores to Rana Kapoor and his family members in the garb of a builder loan of Rs 600 crores sanctioned by DHFL to M/s DOIT Urban Ventures (India) Pvt Ltd, a wholly-owned subsidiary of M/s RAB Enterprises (India) Pvt Ltd, in which Kapoor's wife Bindu was a Director.

The Kapoor family held 100% shares in the said M/s DOIT company. It was further alleged that Yes Bank also sanctioned a term loan of Rs 750 crores to M/s RKW Developers Pvt Ltd, another DHFL group company for their Bandra Reclamation project, which was siphoned off by Kapil Wadhawan and Dheeraj Wadhawan by way of transfer to M/s DHFL without making any investment in the said Bandra project. Later charge sheets were filed in the case.

"During further investigation of the case, the criminal complicity of Sanjay Chhabria emerged as an accused and it had been revealed that immediately after the Yes Bank investments of Rs 2,700 crores in NCDs of DHFL in the first week of June 2018, DHFL appraised and sanctioned loans of Rs 1,100 crores and Rs 900 crores to M/s Radius Estate Projects Pvt Ltd (REPPL) and Sumer Radius Realty Pvt Ltd (SRRPL) respectively, two companies controlled by Chhabria. Kapil Wadhawan also disbursed loans amounting to Rs 416 crores to M/s Radius Estates and Developers Pvt Ltd (REDPL) and REPPL without any appraisal or risk assessment of the said Radius Group concerns. It was revealed that pursuant to the sanction of the loan of Rs 750 crores by Yes Bank to M/s Belief Realtors Pvt Ltd (BRPL), an amount of Rs 632 crores was diverted by the said BRPL to the accounts of DHFL and a major part of the said amount was thereafter transferred by DHFL to M/s Flag Industries India Pvt Ltd and other companies owned by Chhabria on September 29, 2018," the agency alleged in their remand application submitted before the court.

"The said disbursement of BRPL loan was also facilitated by Chhabria by way of execution of a Development Management Agreement dated 10/08/2018 with the said M/s BRPL through another company controlled by Radius Group viz Raghuleela Builders Pvt Ltd (RBPL). It is relevant to mention that execution of the said DM Agreement was a prerequisite condition for the loan sanctioned by Yes Bank to M/s BRPL. The significant amounts from the aforesaid loans have been diverted and it is essential to interrogate the accused with regard to the utilization of the said funds and the whereabouts thereof. The custodial interrogation of Chhabria is necessary to ascertain the end-use of aforesaid loans aggregating to Rs 3,094 crores, for recovery of material evidence pertaining to the said transactions and the related issues. Chhabria during his examination by CBI remained uncooperative," the CBI alleged in its application.

However, advocate Vaibhav Krishna, who appeared for Chhabria, contended that his client always cooperated with the investigation. "Two of the loans were assigned by DHFL and due diligence was done before disbursal of the loan," he said, adding that all utilization happened by cheques and not by cash.

Advocate Krishna added that when the probe into the DHFL case began in 2019, he (Chhabria) was called as a witness by the probe agency and he has given hard copies of all details and documents and pen drive as well as bank statements.

Similarly, when the accused was called for an investigation by the Serious Fraud Investigation Office (SFIO), he provided them with about 10,000 pages of documents, Krishna submitted. "The entire case against me is based on documents. Nothing attributed to my personal knowledge," the lawyer added.

After hearing both sides, the court sent Chhabria to the custody of CBI till May 6.