ED attaches two companies properties worth Rs 105.5 crore& Rs.65.53 Crore in Bank fraud case

Pramesh S Jain & Yogesh K Porwar

The Directorate of Enforcement (ED) has provisionally attached immovable and movable properties worth Rs. 105.5 Crore including residential sites,commercial properties and Farm House located in Bengaluru worth Rs.104.90 Crore and Cash seizure of Rs.14.5 Lakh belonging to Bharath Infra Exports and Imports Ltd in a bank fraud case.

The ED initiated investigation on the basis of FIR registered by CBI,Bank Securities Fraud branch, Bangalore against Bharath Infra Exports-Import Pvt Ltd and its promoters and directors under various sections of IPC,1860 and Prevention of Corruption Act.

The company allegedly engaged in the trade of construction materials and availed cash credit limits from the State Bank of India. Later,the cash credit account of the said entity was classified as a Non-Performing Asset (NPA),on January 2017 due to non-repayments of the bank’s dues and outstanding of Rs.113.37 Crore.

Investigation revealed that Bharath Infra Exports and Imports Ltd opened 10 Letter of Credits between 2016-17 financial year and thereafter transactions were made fraudulently to convert the Non-Fund Based LC to increase Fund-based Cash Credit availability in the bank accounts of other companies .

This is to indulged in circular trading and falsely showed the increased turnover in these companies Bharath Infra Exports and Imports Ltd hatched a conspiracy with Aradhya Wire Ropes Pvt Ltd,Aradhya Steel Pvt Ltd, Vedik Ispat Pvt Ltd,Bhavani Steel Corporation and Speigel Enterprises Pvt.Ltd and the funds were initially credited to the bank account of Aradhya Wire Ropes Pvt.Ltd and then routed through other companies bank accounts and finally returned back to Bharath Infra Exports and Imports Ltd. Further investigation is under progress.

In another case,The Directorate of Enforcement (ED) has seized nine immovable properties located in the state of Maharashtra and Karnataka worth Rs.65.53 Crore belonging to Venkateshwara Hatcheries Pvt Ltd (M/s VHPL) under the provisions of Foreign Exchange Management Act (FEMA),1999.

ED had initiated investigation in connection with the illegal remittances made by the company since 2011 till date to its wholly owned Subsidiary named Venky’s Overseas Limited (M/s VOL),UK.

Investigation revealed VHPL declared the business of VOL to RBI as Agriculture and Mining (Rearing of ducks, hens ).

After the incorporation of VOL,VHPL remitted huge funds in the guise of equity infusion.However, no such business activity was ever initiated by VOL even after lapse of more than 11 years from its incorporation.

ED investigation further revealed that VHPL had made remittances to the tune of GBP (pounds) 73,96,069 equivalent to INR 65.53 Crore to VOL since its incorporation till date.

The VOL immediately after its incorporation, had purchased an immovaable property named “Alexander House”having total area of 90 acres in United Kingdom through the funds remitted by VHPL with a view to provide convenience to the Directors and employees of VHPL. Further all the funds remitted by VHPL to VOL subsequently were utilized for repayment of loan obtained by VOL from Barclays Bank,UK which was taken for acquisition of said immovable property.

Investigation established that VHPL had no intention to conduct bonafide business through its subsidiary VOL and it was created as a front to purchase an immovable property in the UK for the ultimate enjoyment by the directors, employees and family member of VHPL.

Therefore, the equivalent value of properties held in India have been seized under the provisions of Section 37A of FEMA,the official release,said.Further investigation is under progress.