What is the Recent Jagdish Khattar Case About?

Maruti Suzuki India Ltd has been winning its consumer’s hearts since its inception. However, the former Maruti top executive has definitely disassociated himself with the company’s values by indulging himself in unscrupulous behavior.

Yes, we are talking about Jagdish Khattar, who was associated with Maruti Suzuki India Ltd from 1993-2007 as the Managing Director of the company. Read on and understand more about the fraud below.

What are the charges against Mr. Jagdish Khattar?

The Central Bureau of Investigation(CBI) alleged that Mr. Khattar along with "unknown public servants," has duped the Punjab National Bank for an amount of Rs. 110 crores after he failed to repay the same. Therefore, on December 24 2019, the CBI booked Mr. Khattar for alleged criminal conspiracy, criminal misconduct and cheating.

What fraud did Mr. Jagdish Khattar commit?

To understand the history a bit, Jagdish Khattar, on his retirement from Maruti Suzuki India Ltd in the year 2007, created two ventures with the name Carnation Realty Pvt Ltd and Carnation Broking. Carnation was established as a car servicing and repair outlet of various brands. Furthermore, it also dealt with the purchase and sale of second-hand cars.

In its First Information Report(FIR), the CBI stated that for his two ventures, Jagdish Khattar got a loan sanctioned worth Rs 170 crore in the year 2009. The loan, however, was declared as a Non-Performing Asset (NPA) in the year 2015 with effect from 2012.  However, Khattar and his company dishonestly sold the goods hypothecated (pledging of assets as collateral) without the bank's permission and diverted the funds, which indicate a breach of trust and visible fraud, which caused abundant losses to the bank while simultaneously benefitting Khattar's company.

According to Punjab National Bank's forensic audit, Jagdish Khattar has sold fixed assets worth Rs 66.92 crore for a mere amount of Rs 4.55 crore without the bank's approval. The sale proceeds furthermore were not deposited with the bank, and rather they were misappropriated in a way that Khattar used them to extend loans and advances to its sister concerns as well as subsidiaries. In its report, CBI also mentioned the role of bank officials since they failed to do monthly verification of stock and cross-check both the debtors and the creditors.

The bank had even filed a complaint on October 17, 2019, mentioning the names of the five accused persons out of which three companies are guarantors, namely Khattar Auto India, Carnation Realty and Carnation Insurance Broking Company. However, during verification no role of guarantors in committing the fraud with the bank came to light as such they are not named in the FIR," said the FIR.

What does Mr. Jagdish Khattar say?

He called his venture Carnation as a business failure without any wrongdoing done on his part. He said the audit conducted did not find anything fishy. He claimed the bank’s report to CBI just a part of the process. He furthermore stated that the CBI search did not find anything provoking and that he will be clear of the charges once the investigation is complete.

Our Take

In recent times, public sector banks are struggling a lot amidst burgeoning losses. Therefore, finding itself gripped under such fraud is undoubtedly a bummer to the bank. In the past, there have been countless cases where industrialists have resorted to cheat the banks and slip away easily from the hands of the authorities. Therefore, a speedy investigation is the need of the hour to protect the bank from another significant fraud.