CBI searches 8 locations in J&K, Mumbai in J&K Bank building purchase irregularities case

The CBI on Tuesday conducted searches at the premises of former J&K Bank chairman Haseeb Drabu and some other former top officials in connection with the purchase of the bank's office building in Mumbai in 2010, and claimed to have recovered "incriminating documents".

The searches were conducted at eight locations in Mumbai, Srinagar and Jammu after the agency registered an FIR in the purchase of the Akruti Gold Building for around Rs 180 crore by the bank for its integrated office in Mumbai on November 11 last year, officials said.

The FIR was registered following a reference from the Jammu and Kashmir government, they said.

The premises of then bank directors M I Shahdad and Vikrant Kuthiala, and former executive director A K Mehta were also searched on Tuesday, the officials said.

This is the second search in this connection. The four were also members of the estate committee of the bank, they said.

"The Central Bureau of Investigation is today conducting searches at eight locations including at Jammu, Srinagar and Mumbai at the premises of then members of Estate Committee of the Board of Directors including then chairman of J&K Bank, then directors, then executive director. Incriminating documents, articles and electronic evidences, several bank account details and bank locker keys have been recovered during searches," CBI spokesperson RC Joshi said.

The CBI has alleged that the bank had entered into a deal for its branch office at the Bandra Kurla Complex (BKC) with Akruti Gold at a much higher rate than offered by other shortlisted builders causing a loss of over Rs 100 crore to the bank.

The case was earlier probed by the Anti-corruption Branch of the Jammu and Kashmir Police, which had registered an FIR following a preliminary inquiry.

The inquiry report, now part of the FIR, had said an advertisement was issued by the J&K Bank on November 6, 2008, inviting offers for outright sale of integrated office premises at Bandra Kurla, Mumbai, requiring 20,000 sqft space.

Twenty-five builders had responded to the advertisement which were opened by the committee formed for the purpose and out of the offers received, eight properties Ashapura Builders (Hallmark Business Plaza), Topaz Akruti, Crescenzo (BKC), Platin BKC, Naman Centre, Golden Homeland agencies (Wockhardt), Windsor and KRC Towers were shortlisted.

Of these eight, the rates offered by Ashapura Builders were the lowest at Rs 25,000 per sqft, Ashapura Builders on July 28, 2009, made an offer for its building's third floor of 30,000 sqft built up area at Rs 22,500 per sqft chargeable area.

"The application was processed and submitted to then chairman to take a decision but no decision was taken regarding finalisation of contract with Ashapura Builders' owners. A committee was constituted with approval of the chairman to take a view with regard to the offer received. The committee so constituted has done nothing in respect of offers received," the FIR had alleged.

The bank on the instructions of its corporate headquarters published another advertisement on January 14, 2010, seeking office space 25,000-30,000 sqft and residential flats in or around Andheri (15 single BHK 600-800 sqft and 10 double BHK 1000-1200 sqft) it said. The offer was responded to by 23 builders.

"Ashapura Builders again quoted the lowest rate Rs 25,000 per sqft It has been found that no heed once again was paid to the lowest rate...," the FIR alleged.

It has been found that in the board of directors meeting held on february 25, 2010, the director estate committee briefed board members about site inspections of the shortlisted properties conducted by the estate committee, it alleged.

"The members were informed that amongst the short listed properties, Akruti Goki BKC meets requirements of the bank. He further informed the members that total chargeable area of the entire building was around 42,000 sqft at Rs 26,000 per sqft which roughly works out to Rs 109 crore for the entire building and Rs 73 crore for the proposed six floors," the FIR alleged.

It said the board members allegedly gave approval to the proposal and decided that the bank should enter into negotiations with the builders for purchasing the entire building. "Negotiations were held with Akruti Gold BKC and finally the rate was finalised at Rs 26,000 per sqft for nine floors having total chargeable area of 63,776 sqft. A letter of intent was signed with the builder and a token money of Rs 25 crore was paid to developer Vishal Techno Commerce Limited," it alleged.

The FIR said there was sufficient space available with J&K Bank for functioning of its branch at Bandra Kurla, Zonal Office and Treasury and as such there was no requirement of purchasing any additional accommodation.

"The Zonal Office Mumbai, Branch Bandra Kurla and Treasury were already functioning in the bank's own buildings. The advertisements issued were for 20,000 sqft and 20,000-30,000 sqft respectively in response to which, the rates offered by Ashapura Builders were Rs 25,000 and Rs 22,000 a sqft," it alleged.

The CBI alleged that as part of a "criminal conspiracy hatched among the officers/officials of J&K Bank and the owners of Akruti Gold BKC", officers of J&K Bank approved purchase of 65,065 sqft at Rs 26,000 per sqft on highly exorbitant consideration of Rs 180.57 crore "in blatant disregard to the tendering process with consequent loss to the bank exchequer."

Their actions allegedly caused a tentative loss of more than Rs 100 crore to the bank exchequer, it said.