CBI books Subhash Chandra over Rs 1,322 crore LIC Housing Finance case

The Central Bureau of Investigation has registered a criminal case against Essel Group founder Subhash Chandra and three others over an alleged Rs 1,322 crore fraud on LIC Housing Finance. Officials confirmed the FIR on Saturday. The complaint was filed by the lender. The bureau recorded offences of criminal conspiracy, cheating, criminal breach of trust and criminal misconduct. There was no immediate comment from the accused.

The complaint turns on two 2018 facilities. One was a Rs 500 crore home-entity loan to Vasant Sagar Properties, with Pan India Infra Projects as co-borrower, backed by a continuing guarantee Chandra signed on 28 March 2018. The other was a Rs 480 crore rental-discounting facility to Digital Subscriber Management and Consultancy Services, with Spirit Infra Power and Multi Ventures as co-borrower. Together the sanctioned amount was Rs 980 crore. LICHFL puts the loss, once interest and default are counted, at about Rs 1,322.39 crore.

What the bureau has been asked to test is a gap in the paper. For the Vasant Sagar loan, a net-worth certificate dated 28 March 2018 from DIM and Co put Chandra's wealth at $6,197.62 million, or about Rs 59,113.21 crore, as of 31 March 2017. For the second facility, a certificate from MPJ and Co dated 6 July 2018 put the figure at Rs 40,562 crore. In his personal insolvency case, Chandra later said his net worth in 2024 was Rs 31.79 crore and that it had not exceeded Rs 40,000 crore even in 2017-18. The lender says the earlier certificates were used to get the loans sanctioned.

The criminal case arrives while the insolvency case is already in a special five-member NCLT bench. On 25 August a member had approved a repayment plan under which Chandra would pay about Rs 6.25 crore against admitted personal claims of Rs 22,006.57 crore. LICHFL's slice of that plan was about Rs 38.09 lakh. Canara Bank, Union Bank and others joined the lender in opposing the haircut. On 1 September the larger bench stayed the approval, saying there had been no clear majority, and barred Chandra from selling or encumbering assets. The next hearing is listed for 23 September.

Chandra built Zee Entertainment and a clutch of infrastructure and property companies. The group's debt ballooned after the 2018-19 liquidity crunch in non-bank finance. Personal guarantees that once looked decorative became the only remaining assets. The insolvency numbers show how far the paper wealth has fallen. The CBI file asks a different question: whether the paper was false when the loans were taken.

A net-worth certificate is not a balance sheet. It is an accountant's statement used by a lender that wants comfort from a promoter. If the 2018 figures were honest marks to market on listed stock and property, the later collapse can be explained by price. If they were inflated, the guarantees were induced by a number that never existed. That is the allegation. It is not yet a finding.

LIC Housing Finance is a listed company whose largest shareholder sits in the public sector. A Rs 1,322 crore hole in that book is a public-money story as much as a promoter story. The repayment plan that offered the lender Rs 38 lakh is what pushed the complaint from a credit file into a police file.

Chandra this week also objected to the five-member bench itself. The FIR, registered on 31 August and reported on 5 September, now runs on a parallel track. One forum will decide how much creditors collect. The other will decide whether a crime occurred when the money went out.

Three other names are in the FIR. Their roles have not been fully described in the public versions of the complaint. The companies that borrowed the two facilities are the vehicles. The certificates are the documents. The default is the trigger. The next public act will be searches, statements, or a court date in the CBI court that hears bank-fraud cases.