The Central Bureau of Investigation (CBI) has booked former Maruti Udyog executive for alleged bank fraud. Jagdish Khattar, who after retiring from his position as Managing Director of Maruti Udyog in 2017, started his own venture under the name ‘Carnation Auto India Limited’. The CBI has filed an FIR recently naming Khattar and Carnation for allegedly causing a fraud of Rs 110 crore to Punjab National Bank.
Jagdish Khattar joined Maruti in July 1993 as Director of Marketing, and was later appointed as Managing Director in 1999. He then retired from the position in 2007. Prior to joining Maruti, Khattaer served as an IAS officer with more than 37 years of experience. Following his retirement, in 2008, Khattar started his own venture which was called ‘Carnation’ bringing in his experience from the 14 years he spent with Maruti. The vision for his Carnation business was to offer a third-party multi-brand automotive sales and service network – a first of its kind in India.
Carnation had also collaborated with Dilip Chhabria of DC Designs to promote customised mass segment cars in India and also started an online used car marketplace. In addition to offering multi-brand sales and service, detailing services and products, roadside assistance, Carnation was also offering door-step car service facilities to its customers.
In 2009, Carnation was sanctioned a loan of Rs 170 crore. However, the business venture could not bear any fruit as it seemed to be an idea that was well ahead of its time. With the company collecting losses, the loan was declared a non-performing asset in 2015 with effect from 2012 as claimed by the FIR.
As reported by PTI, the CBI has booked Khattar under the Indian Penal Code sections related to criminal conspiracy and cheating based on a complained filed by Punjab National Bank. CBI alleges that Khattar and the company dishonestly and fraudulently sold the goods hypothecated to the bank without its permission and diverted the funds thereby causing criminal breach of trust and cheating that caused wrongful loss to the bank and gain to Khattar and his company.
A forensic audit conducted by Punjab National Bank alleges that fixed assets of the value of Rs 66.92 crore were diluted for a considerable amount of Rs 4.55 crore without its approval, they said. The bank also alleges that the proceeds were not deposited with the bank and fraudulently extended loans and advances to its sister concern/subsidiaries.
The FIR added that the role of bank officials will also be taken into consideration. The bank accuses five persons in it complaint which includes -Khattar Auto India Pvt Ltd, Carnation Realty Pvt Ltd and Carnation Insurance Broking Company Pvt Ltd who are the guarantor companies. however, their direct role has not been verified, but it will be investigated further.
Khattar’s Response
Following the FIR and its details that have come to light, Jagdish Khattar released a statement that says that the Carnation, the venture became a bonafide business failure on account of many reasons including cartelization by auto majors by non-supply of genuine parts.
He went on to say that the company was managed by a board that practised the highest ethical standards and best management practices. Its investors Premji Invest and Gaja Capital were board members who, in their own interest, kept a tight vigil on its operations and finances.
Khattar said, “Each financial decision was based on comprehensive business plans and approvals. The company was finally sold to Mahindra Group. Post its failure as a business, an exhaustive and detailed independent forensic audit at the behest of the bankers under the resolution professional was conducted by a leading independent auditor and nothing was found amiss. Having found no lapses in operations or financial management the Bank has referred the matter to CBI as a part of the process followed by them.”
The company has not indulged in any wrongdoing. A search was conducted by CBI but nothing incriminating was found. Khattar confirmed in his statement.
Khattar assured his continued cooperation with the authorities and parties concerned and said that he had invested his entire life savings in the company. Khattar concluded by stating, “The claims being made were examined in great detail during the forensic audit and we provided satisfactory replies on each. We were cleared in the forensic audit on each count. I have no doubt we will be vindicated again once the investigation is completed.”
