Hubtown MD Vimal Shah arrested in money siphoning case

Vimal (Vyomesh) Shah, managing director of public listed company Hubtown Ltd (formerly known as Ackruti City Ltd), was arrested on Monday evening in connection with fraud in Maharashtra government- controlled Lokshahir Annabhau Sathe Development Corporation, according to several media reports.

The Mumbai Mirror reported that the state criminal investigation department (CID) arrested Shah along with three others in the Rs 400 crore scam.

"Shah was picked up from his Mumbai residence on Monday and will be produced before the designated court on Tuesday," the report quoted Sanjay Kumar, state CID additional director general of police. 

The state-sponsored scheme was meant for the Matang community and its 12 sub-castes and some of the money was siphoned off on the pretext of buying a land parcel for the community students.

Media reports suggest that around Rs 106 crore of corporation’s money was diverted to Hubtown and its sister company Comran Realty. It is alleged that a part of this money was also used by the realtor to buy an 8,000 sq ft plot at Pedder Road in south Mumbai.

“During the investigation, it was revealed that Shah is the disbursement authority at Carmol (where Shah is a key player) which got maximum funds out of the scam,” the Mumbai Mirror report said.

The ex-chairman of the corporation Ramesh Kadam, who belonged to Nationalist Congress Party (NCP), was earlier arrested and has been behind the bars for the last six months.

Others who have been arrested in the case include Kiran Contractor and Suhas Dhumbre, both employees of Hubtown and Comran Realty. Vilas Bhandarkar, who allegedly handled financial transactions of Ramesh Kadam, has also been arrested.

The scam was first flagged in December 2014 in the state assembly. An FIR was lodged in the Dahisar police station and the investigation was later handed over to the state CID.

The head of Hubtown also served as the president of industry body Maharashtra Chamber of Housing Industry (MCHI) till recently. The developer has presence in residential, commercial and SEZ developments with a focus on collaboration with local governments for social infrastructure development projects.

This comes soon after, Sunil Mantri, ex-head of another industry body NAREDCO, was on the radar of the Bombay High Court when it asked an official liquidator to seize all the assets, books and records of the company in connection with cheating and fraud cases filed by a bunch of investors and lenders.

The company is now trying to reach an out-of-the-court settlement.

Legal and judicial bodies have tightened the noose against defaulting realtors as many cases have come to the fore of late. A home buyer along with his partner recently dragged Unitech promoters to court as the developer failed to give possession of the property. It also failed to refund the complete payment under court’s order.

The upcoming real estate regulatory bill is expected to bring more trouble for realtors as it aims to promote transparency and accountability in all the transactions. The bill mandates all projects to be registered with the regulator and as much as 80 per cent of the advances to be kept in a separate escrow account for construction purposes.

Following Shah’s arrest, Hubtown shares tanked both on BSE and NSE on Tuesday.

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