Producers of Bollywood films including Lamhaa and Hello Brother, Guneet and Jaspreet Walia, are being investigated by India’s Central Bureau of Investigation in relation to IDBI Bank. The bank alleges the pair’s firm GS Entertainment caused INR115 crore ($15.5m) in losses to the bank. IDBI claims it loaned the accused company money to make the movie Lamhaa in 2008, but the account later turned into a non-performing asset. The CBI has since registered an alleged bank fraud case against the firm.
Mumbai: City-based entertainment firm GS Entertainment Pvt Ltd (GSEPL), run by producers Guneet Walia, also known as Bunty Walia, and Jaspreet Walia, known for producing films like Lamhaa, Hello Brother, Pyaar Kiya To Darna Kya, are on the Central Bureau of Investigation’s radar for causing a loss of ₹115 crore to IDBI Bank.
The CBI has registered an alleged bank fraud case against the firm. The First Information Report (FIR) is based on a complaint filed by IDBI Bank alleging it had given a loan to the accused firm for making a Hindi movie, Lamhaa, in 2008 but the account later turned into a Non – Performing Asset (NPA) and later reported to the Reserve Bank of India, CBI sources said.
GSEPL had allegedly been sanctioned by the bank assistance of foreign -currency loan, then equivalent to 10 crore and a term loan of ₹4.95 crore in June 2008 under a film-financing scheme for the production of Lamhaa with leading actors and actresses in the star cast. “The film was to be released in May 2009 as per the original schedule but the release got delayed, seemingly due to a dispute between the promoters and the exhibitors from March 2009. Consequently, the loan account turned into an NPA on September 30, 2009,” a CBI official said, referring to the bank’s complaint. “A written complaint, dated February 24, 2022, addressed to the CBI, Mumbai, has been received from the IDBI Bank Ltd, Mumbai, against GS Entertainment Pvt Ltd, and its two directors, Jaspreet Walia and Guneet Walia, and a chartered accountant, unknown public servants and unknown private persons,” the CBI official said.
“The facts and circumstances mentioned in the accompanied complaint, prima facie, disclosed the commission of offences punishable under sections of the Indian Penal Code and the Prevention of Corruption Act including those related to criminal conspiracy, cheating and public servant’s criminal misconduct,” the CBI official said.
The CBI official said, “The alleged fraud was detected as per the bank’s complaint on the observations of a forensic audit for the period from July 1, 2008, to December 18, 2019. It was observed from the forensic audit report dated June 18, 2020, that GSEPL submitted fraudulent utilisation certificates dated June 30, 2008, issued by its statutory auditors.”
The forensic audit report found allegedly that the project’s cost was overestimated to get more bank finance and that there was variation between the provisional and audited balance sheets.
“In view of the findings, the IDBI Bank declared the loan account as fraud on March 31, 2021, and reported to the RBI on April 20, 2021. The total loss to the IDBI bank till the declaration of the account as a fraud was ₹115.62 crore (including interests as on April 1, 2021),” the bank’s complaint to the CBI alleged.
Since the account has become NPA, the bank made efforts for the recovery of its dues but as the company was allegedly not responding to any of its communications, it was decided to conduct a forensic audit to examine the diversion of funds, the complaint read.
Since GSEPL allegedly failed to release the film, Lamhaa, IDBI Bank had taken the initiative by releasing the film by appointing a sole distributor for the release of the film worldwide, subject to the execution of a suitable tripartite agreement between GSEPL, the distributor and the IDBI Bank, as also a commitment from the distributor for investing an amount for meeting necessary expenditure on print and publicity and completion of the balance post-production work, according to the bank’s complaint. However, the distributor had allegedly failed to honour its commitment as it had supposedly incurred losses, according to the complaint.
When contacted by HT, Guneet Walia denied all allegations of wrongdoing, saying, “These are fabricated allegations, coming 13 years after the release of the movie. The bank and its forensic auditor have colluded to make it appear as if GSEPL is a wilful defaulter, which it is not, so that the IDBI can request the CBI for a criminal proceeding. This matter is currently with the Debt Recovery Tribunal. The audit was done during the Covid pandemic and yet we had replied to all the queries and gave required documents, and yet our explanation has not been considered.”
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