Amid the FIR against Edelweiss' Chairman and Managing Director Rashesh Shah and four others vis-a-vis the suicide of noted art director and ND Studio owner Nitin Desai, the investment and financial services company on Sunday said that the recovery process was as per the guidelines of the Reserve Bank of India and Insolvency and Bankruptcy Code (IBC) and stated that there were no wrongdoings.
The body of Desai (58) was found on August 02 in one of the facilities of the ND Studio near Karjat in Raigad district, adjoining the satellite township of Navi Mumbai.
The Khalapur police station has registered an FIR against Shah and four others under Indian Penal Code Sections 306 (abetment of suicide) and 34 (common intention) based on a complaint filed by Desai's wife Neha, who has alleged that her husband was facing repeated mental harassment in connection with the loans his company had taken and that this was the reason for him ending his life.
Desai left an audio note, which is currently in possession of the Raigad police.
Desai, the promoter of ND’s Art World Pvt Ltd (NDAWPL), had obtained loans of Rs 150 crores and Rs 35 crore in 2016 and 2018 respectively from ECL Finance Ltd (ECLFL).
"These loans were mainly given towards capital expenditure for the theme park and partly for repayment of existing debt, general corporate purposes and working capital needs. We emphasize that NDAWPL was disbursed financial assistance at prevailing market rates. NDAWPL encountered financial difficulties in 2019 and went into default thereafter. Various attempts to improve the financial condition of the company did not bear fruit,” the Edelweiss Group said in a statement.
According to the company, the loans were assigned to CFM Asset Reconstruction Company Pvt. Ltd. (CFM) which had initiated various legal actions under due provisions of law.
“Edelweiss ARC (EARC) acquired a portfolio of assets from CFM under an auction process which included NDAWPL and merely continued with legal actions that were initiated earlier. The company was eventually admitted under IBC by NCLT Mumbai on July 25, 2023,” it pointed out.
Desai’s appeal against the NCLT order was dismissed by the Appellate Tribunal (NCLAT) on August 01, 2023, and he took his life the following morning.
"We would like to state that ECLFL and EARC have acted fully in accordance with the letter and spirit of law and the regulatory framework established by the RBI which prescribes that pursuing recoveries on NPA accounts is not just a right of creditor but also an obligation. The interest rate charged by ECLFL was as per prevailing market rates; legal processes for recovery are elaborately established under RBI and IBC guidelines and were duly followed by EARC. At no time was there any undue pressure being put on the borrower for recovery,” the Rashesh Shah-headed group said.