MESCO ‘forgets’ 2.8 cr of 3 cr loan from charity fund

Two-and-a-half-year after a one-year loan of Rs 3 crore was extended to it from charity money collected for welfare of ex-servicemen, the Maharashtra Ex Servicemen Corporation Ltd (MESCO) is yet to repay Rs 2.8 crore.

The loan to MESCO from the Department of Sainik Welfare (DSW), apparently given without appropriate sanction, was to be returned by October 11, 2011 at 8.5% interest. Interestingly, Col (retd) Suhas Jatkar, the director of DSW is also the Managing Director of MESCO, thus making him responsible for extending as well as repaying the loan.

The Indian Express had reported how MESCO has been given a loan of Rs 3 crore from the Flag Day Fund without approval of the chief minister/ Governor, the competent authorities to decide disbursement of Flag Day Fund. This fund is a charitable contribution from citizens for welfare of ex-servicemen and gets tax exemption under the Income Tax Act. The figures were accessed through RTI.

The loan to MESCO on October 11, 2010 was to be repaid by October 11, 2011. On January 25, 2011, MESCO paid Rs 20 lakh as interest. However, Rs 2.8 crore is yet to be paid to DSW. The loan was for buying land at MIDC.

Jatkar is director of DSW (the agency that extended the loan) and MD of MESCO (the agency to which the loan was extended). In a letter dated January 1, 2011, Jatkar, in his capacity as MESCO MD had written to the chief minister seeking government funding of Rs 7 crore. It was not granted but Jatkar said in the letter that MESCO is burdened with an additional expense of Rs 2.12 lakh per month as interest on the Rs 3 crore loan. Given that Rs 2.8 crore is pending till date, the unpaid interest itself amounts to a whopping 61.2 lakh which could have gone into welfare scheme for ex-servicemen and their families.

On July 23, 2011, R G Kulkarni, general manager, MESCO wrote to Jatkar to waive the Rs 2.8 crore but it was not done. Interestingly, there has been no communication between the two agencies asking MESCO to repay the loan. The communication, if done, was not part of the files shown to The Indian Express.

When asked about the repayment, Jatkar said, "It does not matter. I consider that instead of putting that money in fixed deposit as savings, I put it in MESCO. Therefore there is no loss. Even if the project (at MIDC) does not succeed, the appreciation of the land will make up for the lost interest."

A former DSW official, however, said MESCO and DSW are different entities, with different accounts and repayment of loan is a simple accounting requirement which the two agencies are not adhering to. It may be noted that as reported by this paper earlier MESCO has not been audited for years.

OUTSTANDING Loan: R 3 crore extended on October 11, 2010 at 8.5% interest

Repayment deadline: October 11, 2011; not repaid till date

Total pending: 3.4 crore plus (Rs 2.8 cr and Rs 61.2 lakh as unpaid interest)

Salary Cut

According to RTI reply to a city-based ex-serviceman, as of February 7, 2013, there were 174 employees of MESCO who did not get salary for two months, and 19 for three months. There were 128 who had not received salary for four months or more. MESCO claims to employ 6,500 ex-servicemen.

The MESCO turnover is claimed to be 65 crore and profits 21.5 cr. It has never been audited.

Please read our terms of use before posting comments
TERMS OF USE: The views expressed in comments published on indianexpress.com are those of the comment writer's alone. They do not represent the views or opinions of The Indian Express Group or its staff. Comments are automatically posted live; however, indianexpress.com reserves the right to take it down at any time. We also reserve the right not to publish comments that are abusive, obscene, inflammatory, derogatory or defamatory.