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Birla house can be sold to repay BPSL depositors’ dues: Court

Birla Power Solutions (BPSL) has allegedly defaulted on repayment of deposits it took between 2009 and 2013. The outstanding amount, according to the probe agencies, is estimated to be more than Rs 500 crore and both Birla and the company are being probed by agencies including the Mumbai Police.

, ET Bureau|
Last Updated: Jan 15, 2020, 12.19 PM IST
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The Maharashtra government had argued that the properties initially attached were valued at Rs 552 crore, but there were encumbrances of Rs 1,100 crore on those.
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MUMBAI: A special court has said authorities could sell the heritage Birla House in the city, if the proceeds from the auction of other seized properties belonging to a company linked to industrialist Yashovardhan Birla were insufficient to repay investors in its deposit scheme.

Birla Power Solutions (BPSL) has allegedly defaulted on repayment of deposits it took between 2009 and 2013. The outstanding amount, according to the probe agencies, is estimated to be more than Rs 500 crore and both Birla and the company are being probed by agencies including the Mumbai Police, Serious Fraud Investigation Office and the Enforcement Directorate on allegations ranging from cheating to money laundering. The Mumbai Police’s Economic Offence Wing has filed two charge sheets against them. Birla had denied the allegations against them.

The properties of BPSL attached earlier should be sold first, the Maharashtra Protection of Interest of Depositors (MPID) Act court said in an order in December. The properties attached subsequently, which include Birla House, can be sold if the proceeds are found insufficient, it said.

Birla House is among three immovable properties kept reserved until the other attached properties are sold. The 5,412.27-square-metre property on Mt Pleasant Road at Mumbai’s Malabar Hill is estimated to be worth ₹425.50 crore. Built by Yash Birla’s grandfather Rameshwar Das, the house was a stopover of Mahatma Gandhi, who had often stayed here.

Judge PP Rajvaidya’s order came while hearing a petition filed by Shrinika Infra (SIL), which has claimed that it was the owner of Birla House. Yashovardhan Birla was a director at the company in the past. It argued that it had no financial dealings with BPSL and did not owe any money to any of the accused in the case. According to its petition, Birla House was acquired by SIL in 1946.

“MPID mandates that only if it is transpired that the property believed to have acquired by the accused FE (financial establishment) from the deposits received by it from the depositors is not available for attachment or is insufficient for repayment of the deposits, then only the government can look towards other properties of the FE or its promoter or director or partner of manager,” the lawyer for the firm had argued before the court. SIL now plans to appeal against the order before the Bombay High Court.

The Maharashtra government had argued that the properties initially attached were valued at Rs 552 crore, but there were encumbrances of Rs 1,100 crore on those. Due to this, these were insufficient to repay the depositors, it had claimed, while backing its 2016 decision to attach Birla House and a property each in Juhu and Mahim.

The city police had argued that Birla had transferred his shareholding in favour of Shrikrishna Arpan Trust — which owns 92.92% of SIL — on October 16, 2013, which was after the case was filed.

In its order, the court said this was sufficient for accepting that he had transferred his shareholding to avoid the liability to repay depositors. SIL has not produced any material to show as to who are the actual beneficiaries of its properties and three bank accounts, it said. “Considering those aspects, I would say that there is no substance in the argument of SIL that properties and bank accounts of applicant are illegally attached,” the judge said in the order.

In response to a query sent by ET, Anant Vardhan, president of corporate affairs & communication at the Yash Birla Group, said SIL-owned properties from pre-independence era and had no connection with BPSL.

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