The ‘Lala pad’ and Rs 10 notes: The fake transport challan system ED found while probing Bengal coal smuggling scam

The ED added that during its investigation, it allegedly found that Majee introduced an illegal transport challan or pad—commonly known as the ‘Lala pad’—and this illegal transport challan functioned as a tax invoice issued in the name of non-existent firms.

Majee introduced an illegal transport challan or pad, which functioned as a tax invoice issued in the name of non-existent firms. (Express Photo)

“Along with the fake transport challan, a currency note of Rs 10 or Rs 20 was provided to the transporter. The transporter would take a photograph of the said currency note while holding it beside the number plate of the truck, dumper, or tipper carrying the illegal coal and send the image to the operator of the coal syndicate,” the ED said.

The agency claimed that the operator would then circulate the photograph through WhatsApp to concerned police officials and other government authorities along the route of the vehicle, ensuring that the truck was not intercepted or, if intercepted, was immediately released.

Records seized during the investigation allegedly indicate the generation of proceeds of crime amounting to approximately Rs 2,742 crore. Evidence analysed during the PMLA investigation, including seized registers, digital records, Tally data, and WhatsApp communications, revealed systematic cash transactions and the use of hawala channels for transfer and layering the proceeds of crime, the ED said.

How ED says proceeds of crime were transferred

“Investigation has further revealed that the syndicate operated an underground hawala network to transfer proceeds of crime in cash, bypassing formal banking channels and regulatory oversight. In a typical transaction, the recipient would share a unique code with the sender, usually the serial number of a Rs 10 or other denomination currency note. This serial number functioned as the transaction’s authentication key,” the ED claimed.

According to the agency, the sender would relay this code to a hawala operator, who would communicate it to an associate at the recipient’s location. Upon delivery of the agreed cash amount, the recipient would present the specific currency note bearing the pre-shared serial number as proof of identity. Once verified, the cash was handed over, completing the transaction without any formal documentation or banking record, the ED said.

“This system enabled the movement of large sums of money across locations through a network of intermediaries operating outside the regulated financial system,” the agency added.

The ED said its investigation has further established that certain beneficiary companies in the steel and iron sector purchased illegally excavated coal in cash, thereby knowingly assisting, using, and projecting the proceeds of crime as untainted.

The attached assets include immovable property, fixed deposits, and mutual fund investments in the names of beneficiary companies, namely Shakambhari Ispat and Power Limited and Gagan Ferrotech Limited. With this latest attachment, the total value of assets attached in the case so far stands at Rs 322.71 crore.

In January, the ED had conducted searches at 10 premises in Kolkata and Delhi in connection with the case. The evidence collected during these searches has been instrumental in linking the proceeds of crime to the properties now being attached, the ED said.