Earlier, the Enforcement Directorate (ED) had stated on June 28 that it has attached assets worth Rs 517.81 crore belonging to SKS Ispat & Power Ltd in connection with a bank fraud case of Rs 895.45 crore involving Cethar Ltd. The ED initiated proceedings under the Prevention of Money Laundering Act (PMLA) based on an FIR registered by the CBI against Cethar Ltd, a boiler manufacturing company based out of Trichy, Tamil Nadu.
According to the ED, Cethar Ltd availed credit facilities amounting to Rs 895.45 crore from a consortium of lenders led by Indian Bank, Madurai. The company’s accounts became non-performing assets (NPAs) on December 31, 2012, and proceedings under the Insolvency and Bankruptcy Code (IBC) were subsequently initiated before the National Company Law Tribunal (NCLT) in Chennai in 2017.
In the Juhu guest house matter, Agritrade India transferred the agreed amount to Gupta Steel, a Mumbai-based company in which Gupta is a beneficiary, based on a mutual understanding in good faith, without a written contract. However, Gupta later denied owning the property altogether. Interestingly, Gupta’s firm did sell another property in Mumbai to Ashok Kumar Sahoo, a former tainted SKS director, for $5.1 million.
There are several reasons why this transaction raises suspicions. First, there are no board minutes or documentary evidence within SKS supporting the purchase of the guest house for SKS, whether in Juhu or anywhere in Mumbai, from Gupta Steel. Second, the purchase was made orally based on good faith without any written documentation.
An ED official said that in the bank fraud case of Rs 895.45 crore, it was revealed that Rs 565 crore had been kept off the books, in addition to Rs 228 crore being written off as a loss on the sale of investments.
The official said, “In order to be awarded the Engineering, Procurement, and Construction (EPC) contract of SKS Power Generation (Chhattisgarh) Limited (SKSPGCL) worth about Rs 3,500 crore, Cethar Ltd siphoned off Rs 228 crore to SKS Ispat & Power Ltd under the guise of investment in shares of then parent company SKS Ispat & Power Ltd.
“However, the interest accruing at a rate of 12 per cent per annum compounded was kept off the books. This money was accounted for as trade receivables until 2016-17 when it was written off as a loss on the sale of investments through the creation of backdated/forged agreements.
The investigation revolves around a money laundering case based on a CBI FIR against Cethar Limited. The company “availed” credit facilities of Rs 895.45 crore from a consortium of lenders, led by Indian Bank’s Madurai branch. Cethar Limited’s Director K. Subburaj colluded with Gupta to siphon off assets worth Rs 793 crore from Cethar’s books, which resulted in its insolvency and subsequent liquidation under the IBC.
Gupta’s questionable actions do not end there. The new management of SKS Power, in May 2021, accused Gupta’s previous management of embezzling funds. They filed an affidavit in the Delhi High Court alleging fraudulent activities and requested a CBI inquiry.
In recent developments, Sarda Energy and Minerals have emerged as the top bidder for insolvent SKS Power. Their offer of Rs 1,800 crore includes full payment to all SKS creditors.
–Ajit Weekly News
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