The Directorate of Enforcement (ED) has temporarily attached assets worth Rs 517.81 crore of ‘M/s SKS Ispat & Power Ltd’ in the shape of land, building, equipment and machinery in connection with an Rs. 895.45 crore bank fraud case involving M/s Cethar Ltd.
The inquiry was launched by the ED in response to an FIR filed by the CBI’s BSF Cell in Bangalore against Cethar Ltd., a boiler manufacturing business situated in Trichy, Tamil Nadu. Cethar Ltd. received the loan in the amount of Rs. 895.45 crores from a syndicate of lenders led by Indian Bank, SAM Branch, Madurai. The company’s accounts became NPA on December 31, 2012, and proceedings under the IBC were commenced before the NCLT in Chennai in 2017. In 2019, an investigation under the PMLA was launched. Searches were undertaken at the Director of the company’s properties in 2022, and immovable property and valuables worth Rs. 9.08 Crore were attached, which were later validated by the Adjudicating Authority, PMLA.
Further examination found a massive Rs. 565 crore that was kept off the books, in addition to Rs. 228 crores written off as a loss on investment sale.
Cethar Ltd syphoned off Rs. 228 Crore to SKS Ispat & Power Ltd. under the guise of investment in shares of the then parent company SKS Ispat & Power Ltd. in order to be awarded the EPC contract of SKS Power Generation (Chhattisgarh) Limited (SKSPGCL) for approximately Rs. 3500 Crore. This money was recorded as Trade Receivables until 2016-17 when it was written off as a loss on the sale of investments due to the creation of backdated/forged agreements. This was done just two days before the NCLT proceeding began, suggesting a high level of criminal conspiracy.
Thus, K Subburaj, Director of Cethar Ltd, conspired with Anil Gupta, CMD of SKS Ispat & Power Ltd. with the criminal purpose of syphoning off assets worth Rs.793 crore from Cethar’s accounts, resulting in liquidation under the IBC, 2016. To conceal the profits of the crime of Rs.793 crores, which were safely parked in M/s SKS Ispat & Power Ltd, a sophisticated structure of agreements and transactions was devised. SKS Ispat & Power Ltd. utilised the Rs.793 crore proceeds of crime for its usual business purposes.
Thus, M/s SKS Ispat & Power Ltd.’s fixed business assets, which include land, buildings, plant and machinery, roads, and railway siding, are provisionally attached under the provisions of the PMLA, 2002.
