According to the executive director of a public sector bank with loan exposures to Transstroy (India), the company was tagged as a wilful defaulter in 2018, after the fraud investigation report was studied by the consortium.

As per the RBI’s regulations, a wilful default is said to have occurred under three conditions. The first is if the borrower has the capability to repay its lenders but has not, the second when the defaulting borrower has not used the funds extended to it for the specific purposes laid out in the loan contract and third, when the funds extended by lenders have been siphoned off from the entity they were extended to.

Lenders had also initiated insolvency proceedings against the company in October 2018, which eventually led to Transstroy (India) going under liquidation, on the orders of the Amaravati bench of the National Company Law Tribunal in September 2019. According to data available on the company’s website, its resolution professional has admitted claims worth Rs 8,217 crore from financial creditors and Rs 38 crore from operational creditors.

Separately, bankers to the company are pursuing legal action against the promoters to recover personal guarantees provided by them, the public sector banker cited earlier said.

According to the CBI’s FIR, the agency is also investigating why it took time for banks to file a complaint against the company after they were aware of the fraudulent activities in 2018.

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