Carnation Auto’s Jagdish Khattar responds to cheating allegations

The Central Bureau of Investigation (CBI) has booked Jagdish Khattar, the former managing director of Maruti Suzuki, in relation to a Rs 110 crore bank loan fraud.

In an FIR filed by the CBI officials, Khattar and his company Carnation Auto India have been accused of causing a loss of Rs 110 crore to Punjab National Bank (PNB). Carnation Auto is an independent multi-brand automobile sales and service network.

Khattar worked for Maruti Suzuki from 1993 to 2007, when he retired from the post of managing director. After his retirement, he formed Carnation Auto for which he got a loan worth Rs 170 crore sanctioned in 2009. The loan was subsequently declared a non-performing asset in 2015 with effect from 2012, according to the CBI FIR.

The CBI has further alleged that Khattar’s company dishonestly and fraudulently sold the goods hypothecated to the bank without permission and then diverted the funds, thereby causing criminal breach of trust. It is also alleged that Khattar failed to deposit the sale proceeds to PNB. 

Khattar issues a statement
In a statement issued by Jagdish Khattar in at 5.30pm, he said: “Carnation  Auto was a first-mover to create an open multi-brand auto solutions platform for customers whose cars were outside warranty period and who felt pinched by high maintenance costs. It unfortunately became a bonafide business failure on account of many reasons including cartelisation by auto majors by non-supply of genuine parts.

Carnation was a Board-managed company with the highest ethical standards and best management practices. Some of the most reputed investors in the country including Premji Invest and Gaja Capital were board members who, in their own interest, kept a tight vigil on its operations and finances. Each financial decision was based on comprehensive business plans and approvals. The company was finally sold to Mahindra Group. Post its failure as a business, an exhaustive and detailed independent forensic audit at the behest of the bankers under the resolution professional was conducted by a leading independent auditor and nothing was found amiss. Having found no lapses in operations or financial management, the Bank has referred the matter to CBI as a part of the process followed by them. The company has not indulged in any wrongdoing. A search was conducted by CBI but nothing incriminating was found.

“I had invested my life savings in the company. I understand the bank is following a process. I have always made myself available and will continue to fully cooperate with all the agencies. The claims being made were examined in great detail during the forensic audit and we provided satisfactory replies on each. We were cleared in the forensic audit on each count. I have no doubt we will be vindicated again once the investigation is completed.”