Doubtful recovery of ₹11.9 crore: Private company given undue benefit by Jammu and Kashmir Bank, reveals CAG report

The CAG in its report has highlighted how a private company was given undue benefit by J&K Bank by pointing out a doubtful recovery of ₹11.98 crore in J&K Bank in favour of M/s Ace Engineering Infratech Private Limited without obtaining adequate security cover and release of credit facility without complying with the pre-disbursement condition.

CAG in its report said the J&K Bank in December 2012 took over (Decfrom Indian Overseas Bank (IOB) the credit facilities of ₹ 11.50 crore favouring M/s Ace Engineering Infratech Private Ltd (Company) and enhanced (December 2012) the same to ₹14 crore. The credit facilities were sanctioned against primary security of hypothecation of all kinds of stock and assignment of book debts. Further, the facilities were collaterally secured by way of mortgage of two immovable properties valuing ₹8.06 crore. Personal guarantees of mortgagor and third party were also obtained. The bank got the properties revalued at ₹14.03 crore in February 2013.

The report further said that the bank also sanctioned an additional secured overdraft (SOD) in September 2015

facility of ₹4 crore against assignment of receivables and existing primary/

collateral security valuing ₹14.03 crore for completing supply order (17 April 2015)

for ₹ 16.14 crore received from 107 Engineer Regiment C/o 99 APO. “Subsequently, 107 Engineer Regiment intimated (May 2017) that the company had not executed any work order for the regiment. Audit observed that as per the pre-disbursement condition of sanction order, the business unit of bank was required to obtain document regarding assignment of receivables duly acknowledged by the concerned department. However, the BU disbursed the SOD of ₹4 crore without fulfilling the pre-disbursement condition,” the report said.