Navi Mumbai: Neha Desai, wife of art director Nitin Desai who died by suicide on August 2, has alleged that officials from Edelweiss had mentally harassed her husband in a bid to take over ND Studio at Karjat.
Desai owed Edelweiss ₹252 crore. Neha Desai using the audio recordings that her husband made prior to his suicide claims that he was suffering from depression and extreme mood swings on account of the pressure that was being exerted upon him by Edelweiss officials.
Five top officials of Edelweiss, including Rashesh Shah, have been booked for abetment to suicide.
“Rashesh Shah sweet talked and usurped my studio that I made for the benefit of artists. I have called him hundreds of times, but he never answered. He harassed me a lot with the cheque bouncing case, Economic Offence Wing (EOW), National Company Law Tribunal (NCLT) and Debts Recovery Appellate Tribunals (DRApTs). I had two-three investors ready to invest in the studio, but he did not cooperate,” Nitin Desai is alleged to have recorded in one of his voice notes that he left behind.
He goes on to say: “I was pressured by putting a burden of double and triple the rate of interest. They pressured me in different ways to achieve their own interests and did not accept what I had to offer them. Smit Shah, chief risk officer, ECL Finance, RK Bansal of Edelweiss ARC and one Keyur Mehta, wanted to usurp my studio and hence were working to traumatise me in all ways possible. They made me sell the office, which was so dear to me. They together worked towards pushing me to end my life-that of a Marathi artist. They have forced me to do this even when I did not want to.”
However, when HT spoke to a corporate lawyer, who deals regularly with recovery proceedings before NCLT, he said, speaking on condition of anonymity that there are multiple instruments to deal with loan default.
“Action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act can be initiated by executing the property mortgage deeds and mortgaged properties can be taken possession of and sealed. The Insolvency and Bankruptcy Act has provisions for financial and operational debt defaults. Loans defaults come under financial debts and insolvency proceedings can be initiated under section 7 and a Resolution Professional confirmed by the lenders then takes over the entire company and tries to recover the debt. But just because the financial institution has exercised the option of insolvency proceedings available cannot be construed to be a form of harassment. It is a legal proceeding available to the lender to recover its money.”
The lawyer went on to say one-time settlement (OTS) is also a regular option used mutually by the lender and the borrower. “If there is a ₹180-crore loan to be recovered and if the lender has securities valued at ₹100 crore, why will the lender settle for a lesser amount. But if they sense that the borrower does not have adequate money, they may go for recovery of a lower amount. In any case, OTS are worked out mutually; it is certainly not binding on a lender to opt for an OTS.”
The Khalapur police probing the abetment to suicide case served a notice on the managing directors of ECL Finance and Edelweiss Group seeking information on certain aspects and asked the officials to provide the information in person by August 8, 10 am, Somnath Gharge, Raigad superintendent of police, said.
“The investigating team has also recorded statements of ND Studio’s legal advisor, financial advisor and accountant regarding the loan taken by Desai. A team comprising sub divisional police officials, a police inspector, three assistant police inspectors and four constables are carrying out the investigations and 15 witness statements have been recorded so far,” Gharge added.
Nitin and his wife set up the studio in 2004, which they ran under the name of ND’s Art World Pvt. Ltd. Though both husband and wife were the directors of the company, her husband looked into the operations of the studio. The first loan the couple took was of ₹2.5 lakh for various operations of their newly-established studio and they duly paid off the loan.
Neha Desai told the police in her statement: “Impressed by the work of my husband, in 2016, Rashesh Shah of ECL Finance of Edelweiss Group met my husband and proposed a loan. Through the proposal, he enticed my husband to dream big by promising to invest in the studio and develop new concepts in the studio. Accordingly, my husband took a loan of ₹150 crore on November 2, 2016 and the instalments were being paid by him regularly. On 23 February 2018, he took an additional loan of ₹35 crore. Even after paying the instalments without default, the company pressured my husband to pay an advance instalment of six months in April 2019. My husband had to sell off his office in Powai and pay the advance from May 2019 to October 2019 due to the pressure the company put him under,” Neha Desai said in her statement to the police.
She further told the police business took a hit during the Covid-19 pandemic hit the country and even as the government had asked the banks to go easy on instalments, her husband continued to pay Edelweiss with a few delays. “Since the business had stopped completely, my husband approached the finance company and asked for a one-time settlement (OTS). Without paying heed to the offer, the company officials initiated legal proceedings against him,” the FIR stated.
In January 2021, the finance company emailed Desai about OTS, to which he replied with an option of OTS or restructuring of the loan in a detailed way. Even as the talks on OTS were going on, the company deposited Nitin Desai’s signed cheques without informing him and then sued him for cheque bouncing. “We met Keyur Mehta and Smit Shah at their Kalina office and they told us that it was just a procedure as per RBI guidelines and there was nothing to worry about. Rashesh Shah too did not give us any satisfactory answer,” according to the FIR.
Then all of a sudden, ECL company assigned their loan to CFM Assets without any notice she alleged. “When asked about the same to Keyur Mehta and Smit Shah about it, they said that it was an internal matter. Then in December 2022, they again classified our loan case from CFM Assets to EARC finance company again without informing us. From EARC Finance Company RK Bansal was supervising the loan and kept promising OTS but nothing was done,” Neha Desai alleged.
It was only on July 29, 2023 Nitin Desai told his wife that the NCLT’s Mumbai bench on July 25 declared ND’s Art World Pvt. Ltd. as insolvent and Jitendra Kothari had been appointed as the administrator of the company. “Administrator Kothari sent a mail to the company on July 28 and requested for documents and on subsequent day even when it was a holiday on account of Muharram, Kothari called me and said that he would send his personnel to take over the company on Sunday,” she alleged, adding that all of the legal proceeding and taking over was all planned by ECL to usurp their studio for their own gain.
After the Khalapur police filed the FIR, ECL released a statement: “Edelweiss ARC is deeply saddened by the demise of Nitin Desai under tragic circumstances. In order to clarify some misgivings, we would like to state that Desai’s company was extended financial assistance in 2016 and 2018 for setting up theme park and working capital. The company has encountered financial difficulties since 2020 and various attempts to improve the financial situation of the company did not bear fruit. The company was eventually referred to NCLT in 2022 and admitted to NCLT in July 2023.”
“Edelweiss ARC followed all legal processes as mandated by RBI and has not acted in any manner outside of the legal framework. Neither was the interest rate charged excessive nor was there at any time undue pressure being put on the borrower for recovery. We followed our own detailed procedures through established legal channels at great expense and time to us.”
