No undue pressure was put on Nitin Desai over loan: Finance firm

In a filing with the stock exchange on Sunday, Edelweiss said, “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. We will cooperate fully with the authorities.”

The FIR was filed at Khalapur police station on August 4 against five persons, including Rashesh Shah, chairman and managing director of the company, after the national award-winning art director was found hanging in his studio on August 2. An audio note left behind by Desai blamed them for his poor financial condition, according to police.

On Saturday, police sent notice to the managing director of ECL Finance, seeking information on various aspects pertaining to loans sanctioned to art director Nitin Desai. The MD of the company was asked to be present at the police station to submit the information by August 8.

In its stock exchange filing, the company said, “..We would like to place on record the following facts, which will establish that there was no wrongdoing of any nature. Shri Nitin Desai was the promoter of ND’s Art World Pvt Ltd (NDAWPL), which had obtained loans of Rs 150 crore and Rs 35 crore in 2016 and 2018 respectively from ECL Finance Ltd (ECLFL).”

Stating that the 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, Edelweiss said that while NDAWPL was given financial assistance at prevailing market rates, “NDAWPL encountered financial difficulties in 2019 and went into default thereafter.”

It added that various attempts to improve the financial condition of the company went in vain, and stated, “The loans were assigned to CFM Asset Reconstruction Company Pvt Ltd (CFM), which had initiated various legal actions under due provisions of law. Edelweiss Asset Reconstruction Company (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.”

While the company was eventually admitted under Insolvency and Bankruptcy Code (IBC) by NCLT Mumbai on July 25, 2023, the statement said that “Shri Nitin Desai’s appeal against the NCLT order was dismissed by the

Honourable 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 Non Performing Assets (NPA) accounts is not just a right of creditor but also an obligation”.