Indian Bank has approached the enforcement directorate (ED) to register a money laundering case against one of the country’s top wilful defaulters: Varun Industries, a maker of stainless steel products, and its two promoters owe Rs 2,555 crore to a consortium of 10 banks, official sources told The Indian Express.
Indian Bank, the lead bank of the consortium had earlier approached the Central Bureau of Investigation which in April registered a case against the two directors of the firm — Kiran Mehta and Kailash Aggarwal —for defaulting on a loan of Rs 330.28 crore. The CBI has booked the company officials for cheating, criminal conspiracy and forgery. It has conducted raids across the country and collected incriminating documents from the offices of the firm, officials said.
“The bank recently approached us on the basis of it’s complaint filed with the CBI. We are examining the facts and are yet to take a decision on registering a case under the Prevention of Money Laundering Act (PMLA),” said an ED official, who did not want to be named.
Emails sent to the company did not elicit any response.
The Enforcement Directorate is already investigating several wilful defaulters such as Kingfisher Airlines, Zoom Developers and Winsome Diamond and Jewellery under the PMLA.
On March 4, Indian Bank in a public notice said the two directors furnished their personal guarantees, in order to avail the credit facilities.
But none of them is “available at the addresses given to us, and are not traceable/responding.” The notice also said the company has failed to peacefully handover possession of some of their properties mortgaged to the bank in Mumbai, Nashik and Rajasthan among others.
“The company has not furnished several details despite the commitments made by the company in the various consortium meetings and even after repeated follow-up with the company, in this regard,” said the Indian Bank public notice.
In December, The Indian Express had reported that Varun Industries in a court submission said that it had not recovered over Rs 1,800 crore from two Dubai-based firms — White Impex General Trading LLC and Al Rad International Est. for the last three years. Mehta and Agarwal, had admitted in the court that while the company’s bank liabilities are “more than Rs 1,500 crore, the assets of the company are only worth Rs 300 crore”.
Now the CBI has alleged that the domestic trade transactions of the firm were fake transactions as the actual movement of goods between Varun Industries and local traders never happened. The agency has also alleged that certain transactions relating to the payments for goods were fake and most of the company’s export dealings were with two related firms based in the UAE.
In July, the e-auction of the properties of Varun Industries including the flats owned by its promoters conducted by Indian Bank proved to be a damp squib as it remained unsold. The bank is once again planning to put the properties on the block said sources. Apart from Indian Bank, Varun Industries owes money to Central Bank of India, Syndicate Bank, State Bank of India, United Bank of India, Bank of India, Bank of Baroda, JMFL (UCO Bank) ARCIL (IDBI Bank) and Allahabad Bank.
Interestingly, the ED has once before investigated Varun Industries for alleged transactions with a firm that has been chargesheeted in the coal block allocation scam, according to a top ED official. The ED found that Varun Industries and its subsidiary Varun Jewellery routed at least Rs 3.80 crore to Vini Iron and Steel Udyog Ltd, a Kolkata based company which acquired Rajhara North coal block in Jharkhand