ED summons MNS chief Raj Thackeray and son of Sena leader in IL&FS default case

The Enforcement Directorate has summoned Maharashtra Navnirman Sena chief Raj Thackeray and senior Shiv Sena leader Manohar Joshi's son Unmesh Joshi to record their statements as part of its probe into alleged money laundering related to Infrastructure Leasing & Financial Services (IL&FS) payment default case.

The MNS chief has been summoned on August 22, while Unmesh Joshi, who appeared in the ED's office on August 19, is scheduled to appear Tuesday again.

"Both Raj Thackeray and Umesh Joshi have been summoned to the ED's office in Mumbai for questioning. Joshi reached the office at around 11 am today. He has joined the probe," said a senior ED officer in Delhi.

The agency is probing alleged irregularities relating to loans, and equity investment worth over Rs 225 crore by IL&FS group in Kohinoor CTNL Infrastructure Company, which was a subsidiary of the Kohinoor Group promoted by Unmesh Joshi. The company was developing Kohinoor Square, a mega tower with both residential and commercial properties in Dadar area.

Kohinoor CTNL Infrastructure, in which Unmesh, Raj and builder Rajan Shirodkar were shareholders, was initially developing the property, but it had to give up the development rights later to Edelweiss ARC.

Kohinoor CTNL had bought Kohinoor Mills in Dadar for Rs 421 crore. Later in 2009 Raj Thackeray got out of the partnership. Kohinoor CTNL Infrastructure began construction of the premium residential and commercial establishment in 2009.

According to sources, IL&FS group had made an investment of Rs 225 crore in Kohinoor CTNL, and thereafter the latter surrendered its shares for Rs 90 crore and booked a loss in 2008.

Subsequently, Raj Thackeray got out of the consortium by selling his shares.

The ED probe also revealed that Kohinoor CTNL could not repay loans to IL&FS, and in 2011 the former sold some commercial-residential premises to IL&FS and settled Rs 500 crore pending loan.
Thereafter, IL&FS lent another Rs 135 crore to Kohinoor CTNL, on which it defaulted.

The Rs 2,000-crore Kohinoor project is now being completed by Sandeep Shrike and Associates (SSA), a Prabhadevi-based architectural firm, and financed by Edelweiss ARC.

The occupation certificate for 25 floors of Kohinoor, a residential-cum-commercial development, has been given to Edelweiss Asset Reconstruction Company last month.

The occupation certificate is for the commercial wing of the project which has been mired in litigations and construction was stalled in 2012.

Edelweiss had moved the National Company Law Tribunal a few years back after Kohinoor group failed to repay a mounting debt of Rs 1,000 crore to banks and financial institutions, including IL&FS in 2017.

The NCLT court allowed SSA to take over the project after the resolution professional S V Ramkumar proposed the architect's name.

The project has been mired in litigations and construction was stalled in 2012.

Lenders like Bank of Baroda and IL&FS own some units in the commercial premise in lieu of unpaid loans.

Edelweiss first bought the debt from various banks, and after aggregating the debt, infused additional finance of Rs 300 crore and late another Rs 175 crore to complete part of the project.

"In the next few months, a part of the commercial tower of the building will be getting the occupational certificates to be handed over to the investors," said a source at Edelweiss ARC.

The initial plan was to build a five-star hotel, the largest in Asia. But later on, the plan was revised to have two towers of 52 floors and 32 floors which will have both commercial and residential spaces.

The construction was on schedule but litigation over the floor space index (FSI) in 2012 slowed down the project.

This is one of the rare instances when an asset reconstruction company has taken over the debt from a clutch of banks and financial institutions to revive the incomplete realty project.

The ARC did not just take over the Rs 1,000-crore debt but also infused money into the project so that it could be completed.

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DNA Analysis

It could work in Raj's favour

The ED summons to Raj Thackeray may come as manna for his nativist party which has seen its fortunes head south. This will help project Raj as a victim of BJP's vendetta, while also ironically serving to fracture Shiv Sena's Marathi vote base if BJP snaps its alliance with Sena. BJP and Sena are engaged in a tug-of-war over seat sharing terms for assembly polls. There are speculations that BJP may pull the plug on the alliance. Such a scenario will lead to multi-corner fights, and with the ED summons, help generate sympathy for Raj, while taking votes away from Sena's core constituency, helping BJP sail through in close contests. The strategy may be deployed in Mumbai, Thane, Pune and Nashik, where the MNS has some base.