Former Yes Bank CEO Rana Kapoor, Sudhir Valia booked in a fraud case by the Mumbai Police

Mumbai: In fresh trouble for former Yes Bank Ltd co-founder, Rana Kapoor, the Mumbai Police have registered a fresh FIR against Kapoor, investor Sudhir Valia, and several unnamed bank officials in connection with an alleged ₹1,000-crore fraud involving loan assignment and the undervalued sale of mortgaged assets.

In April 2024, Kapoor was released from Taloja Central Prison, after being granted bail in all eight cases filed against him by the Enforcement Directorate (ED) and Central Bureau of Investigation (CBI) in the alleged irregularities pertaining to Yes Bank. He had been in custody since his arrest in March 2020.

The instant case has been filed under Sections 420 (cheating) and 120-B (criminal conspiracy) of the erstwhile Indian Penal Code based on a complaint lodged by 65-year-old builder Lakhminder Dayal Singh, a suspended director of Sapphire Land Development Pvt Ltd, a subsidiary of Housing Development and Infrastructure Limited (HDIL). The city police’s Economic Offence Wing (EOW) investigating the said matter has also investigated multiple multi-crore fraud cases involving Housing Development and Infrastructure Ltd (HDIL) and its promoters, Rakesh and Sarang Wadhawan.

According to the FIR, the alleged fraud dates back to September 2016, when Sapphire Land Development secured a ₹150-crore credit facility from Yes Bank’s Nehru Centre branch in Worli for a real estate development project spread across 16 acres in Virar.

The FIR adds that as collateral for the loan, the HDIL group mortgaged several high-value commercial and residential properties, including Dreams Mall in Bhandup, Harmony Mall in Goregaon, Annex Mall in Kandivali, and extensive land development rights. The total market value of these assets was estimated at nearly ₹1,000 crore.

Kapoor and Valia were not immediately available for a comment.

The complainant has alleged that despite a mutually agreed repayment period of 36 months, Yes Bank prematurely transferred the recovery rights of the loan to Suraksha Asset Reconstruction Company (ARC) within just 10 months of sanctioning the loan, invoking provisions under the SARFAESI Act.

Singh claimed that the transfer was carried out without the loan account being properly classified as a Non-Performing Asset (NPA) and without any independent valuation of the mortgaged assets.

The FIR further alleges that the bank withheld a 15 percent margin amount of ₹22.50 crore from the sanctioned loan and routed it through multiple internal trust accounts linked to Suraksha ARC to facilitate the transfer.

According to the complaint, this led to prime mortgaged assets being sold at heavily undervalued rates, resulting in an estimated financial loss of nearly ₹1,000 crore to the company.

“A deliberate conspiracy was hatched to usurp our company’s prime mortgaged lands,” Singh stated in his complaint, alleging collusion between senior bank officials, ARC executives, and others involved in the transaction.

The complainant also referred to findings from Yes Bank’s 2019 Special Audit Report, claiming that the questionable asset transfers had been flagged internally. “... As of now the focus of the probe is on allegation pertaining to the elaborated in the FIR but the audit report is being studied to find out if there was a pattern and if other assets were also transferred in a similar manner,” said an official privy to the development.