Mumbai, Oct 1 (IANS): In a bizarre development, a prominent loan defaulter diamantaire from Mumbai -- constructing a mega-hospital in the Gujarat International Finance Tech (GIFT) City, Gandhinagar -- is now targeted by a leading private bank to recover its old dues.

The lender, HDFC Bank, slapped a notice to the Trustees of Lilavati Kirtilal Mehta & Family Medical Trust (LKMFM Trust), which runs the famed Lilavati Hospital, Bandra, with reference to the ongoing proceedings before the Debt Recovery Tribunal-II Mumbai.

Way back in 2002, the HDFC Bank had filed proceedings with the DRT-II against Splendour Gems Ltd. (formerly known as Beautiful Diamonds Ltd.) to recover its dues of Rs 14.75 crore from Trustee Kishor K. Mehta, his son Rajesh K. Mehta, and over Rs.23.50 crores from another son and Trustee Rajeev K. Mehta, plus interest and penalties on these amounts.

Incidentally, Rajeev K. Mehta is the son-in-law of another prominent diamantaire Bharat Shah, once a top Bollywood financer.

For 21 years, the HDFC Bank has been struggling to recover its total dues from these three trustees of the Lilavati Hospital, the defaulters in the Splendour Gems Ltd case before the DRT-II, plus facing proceedings in Supreme Court and cheque bouncing case in Mumbai’s Girgaum Court.

In Feb 2020, the Recovery Officer ordered arrest warrants against the Mehta trio including Rajesh K. Mehta who is living in Antwerp, Belgium, attachment of their shares, bank accounts and lockers, restrictions on their foreign trips, and forensic audit of their accounts to track the diversion of funds.

The Recovery Officer’s order was challenged by Kishore K. Mehta and Rajesh K. Mehta in court, and Kishor K. Mehta filed an affidavit on the Lilavati Hospital at GIFT City (Gujarat).

In the affidavit, Kishor K. Mehta said that the Lilavati Hospital, Gujarat, costing around Rs 300 crore, would be entirely built on donations/charity from individuals, and claimed he was not involved in any manner with that project, nor investing funds in it - though he is shown as one of the 'Promoters'.

The HDFC Bank notice has contended that the Trustees of LKMFM Trust including Kishor K. Mehta and his wife Charu Mehta, and the Lilavati Kirtilal Mehta Medical Trust (LKMM Trust) with Trustees as Kishor K. Mehta, his wife Charu Mehta and their sons Prashant and Rajesh, were planning to build the state-of-the-art Lilavati Hospital at GIFT City.

Kishor K. Mehta and Charu Mehta said that they were instrumental in setting up the Lilavati Hospital in Mumbai, so, with the knowledge and experience, along with their sons Prashant and Rajesh -- all ‘Promoters’ -- are now setting up a world-class multispecialty hospital through the “Lilavati Foundation” at the GIFT City, as per the website.

The Lilavati Foundation is building the 13-floors Lilavati Hospital in Gandhinagar, spread over 5.50-lakh sq.ft, scheduled to be operational by 2025-end, and was sent congratulatory letters from ex-President R. N. Kovind and ex-Vice-President Venkaiah Naidu.

Despite repeated attempts by IANS, the Lilavati Foundation Trustees were not available for their comments on the entire issue.

Undeterred, the HDFC Bank said that since it has to recover its massive outstanding dues from Kishor K. Mehta and his sons (Rajesh and Rajeev), and Splendour Gems Ltd., hence, as the guarantors they are liable to clear its debts.

The HDFC Bank demanded to know "the relationship between the LKMFM Trust and LKMM Trust, their common Trustees, their role in the functioning of the Lilavati Hospital Mumbai, whether the LKMFM took the initiative to build the Lilavati Hospital, Gujarat, the other details".

In a deep dive, the HDFC Bank sought the funding details of the Lilavati Hospital Gujarat, vide FCNR/CSR, donors' list, remuneration/fees payable to LKMFM Trust’s Trustees, in which bank accounts, the details of the Bank Guarantor Trustees Kishor K. Mehta, Prashant Mehta and Rajesh Mehta, their medical expenses, foreign travel bills, the Balance Sheets and IT Returns of LKMFM Trust.

Responding to the HDFC Bank’s notice, the LKMFM Trust made a shocking revelation that its name was changed to ‘LKMM Trust’ way back in 1990.

Moreover, their Trustees Kishor K. Mehta and Charu Mehta are not concerned with the routine operations of Lilavati Hospital Mumbai "as they are only busy in causing disruption in smooth functioning of the Mumbai hospital".

Admitting that though Kishor K. Mehta and Charu Mehta are also LKMM Trustees, they are (independently) setting up the Lilavati Hospital Gujarat along with their sons Rajesh and Prashant.

Throwing their hands up, the LKMM Trust declared that Kishor K. Mehta and his family owe over Rs 500 crore to various banks, face various cases for fraud and recovery proceedings, and are declared as ‘Willful Defaulters’.

Exposing them further, the LKMM Trust said that the Phoenix ARC (the resolution professional) had informed them on July 26, 2018, of the frauds committed by Kishor K. Mehta and his family with various banks, stalling recoveries by frivolous litigations, and face investigations by various central agencies like CBI, ED, FERA and FEMA.

Significantly, in June 2022, the SC made strong observations against Charu Kishor Mehta but just stopped short of initiating ‘contempt proceedings’ against her due to her advanced age (78), for suppressing facts and other things.

The LKMM Trust denied knowledge of other queries put up by the HDFC Bank but expressed willingness to cooperate with them to provide the Trust’s balance sheet and other details.

Besides HDFC Bank, Kishor K. Mehta and others are facing different kinds of proceedings for defrauding: State Bank of India, IDBI Bank, SICOM Ltd, Al Barr Finance House Ltd, Vysya Bank Ltd, Sumitomo Mitsui Banking Corp, Credit Lyonnais, Union Bank of India, Oriental Bank of Commerce, Dena Bank, Standard Chartered Bank, Mizuho Corporate Bank Ltd, UCO Bank, and Bank of Baroda, to the tune of over Rs 500-crores.