Rs 7,377-crore Bank Fraud: ED Seizes 86 Land Parcels of UP Firm

NEW DELHI:
In fresh action over a Rs 7,377-crore bank fraud, the Enforcement Directorate (ED), Lucknow Zonal Office, provisionally attached 86 land parcels (73.34 hectares) worth Rs 31.94 crore belonging to Shri Lakshmi Cotsyn Limited under the provisions of Prevention of Money Laundering Act (PMLA), officials said on Tuesday.

The immovable properties attached are situated at Bhatapara and Baloda Bazar, Chhattisgarh, and are in the form of agricultural land parcels.

All the properties are registered either in the name of the company or trusted employees and other gullible persons, ED said in a statement.

The case involves an outstanding loan amount to the tune of Rs 7377 crore which has been already declared fraud by RBI and all assets of the accused company Shri Lakshmi Cotsyn have been liquidated by the Resolution Professional (RP) appointed by the National Company Law Tribunal.

The ED initiated an investigation on the basis of the FIR registered by CBI under various sections of IPC, 1860 and Prevention of Corruption Act, 1988 on the basis of a written complaint dated June 1, 2021, received from Rajeev Khurana, DGM, Central Bank of India, Parliament Street, New Delhi.

The complaint was filed against Shri Lakshmi Cotsyn Limited having registered office at 19/X- 1, Krishna Puram, GT Road, Kanpur 208007 (UP); Mata Prasad Agarwal, CMD, Shri Lakshmi Cotsyn Ltd; Pawan Kumar Agarwal, Jt. MD; Devesh Narain Gupta, Dy. MD, Shri Lakshmi Cotsyn; Sharda Agarwal, Director, Shri Lakshmi Cotsyn Ltd and unknown public servants and private persons.

The complaint said the accused committed cheating, criminal breach of trust, criminal conspiracy, forgery, falsification of accounts and criminal misconduct for diversion/misappropriation of public money during the period from 2010 to 2018.

ED investigation revealed that the accused company Shri Lakshmi Cotsyn Ltd approached a consortium of 23 banks wherein the Central Bank of India was the consortium leader, for financial assistance for manufacturing of blended suiting & shirting, quilted fabrics, denim fabrics, technical textile fabrics etc.

Due to non-adherence of financial discipline, the accounts were classified as NPA by the complainant banks individually as per IRAC norms. It was revealed in the forensic audit that the accused company did not comply with the terms and conditions of the loan agreement.

The forensic audit suggested that the company inflated inventory records, improperly organised the auction process, and conducted significant sales with undisclosed related parties, the statement said.

The accused company lacked a formal discount policy but provided significant discounts totalling Rs 207.29 crore to related parties, potentially undisclosed parties, and customers in different industries, as well as to non-existent customers at the addresses listed on sale invoices. Advances to suppliers were written off without any supporting documentation, reflecting the diversion/siphoning of funds in these transactions, the ED said.

The company Shri Laxmi Cotsyn was liquidated on the directions of NCLT and assets worth Rs 265.44 crore were sold by RP to realise the debt.

Further, it was found during investigation that some funds of Shri Lakshmi Cotsyn Ltd were diverted to its other group company Shri Lakshmi Power Ltd.

These funds were further diverted to individual persons through their ICICI bank account at Baloda Bazar and later these funds were utilised for acquiring immovable properties in the form of land in the name of trusted employees of the company and gullible tribal people of Chhattisgarh.