Rs 975-cr bank loan ‘fraud’: ED arrests former vice-president of Mandhana Industries

The ED had earlier arrested Priyavrat’s father, Purushottam Mandhana, a director in the company. On July 25, the court had ordered his release, rendering his arrest “illegal” as the provisions of PMLA were not followed.

On Tuesday, the ED sought the custody of Priyavrat for two weeks and submitted that he was given a copy of the grounds for his arrest and the reason to believe that he had committed the offence, as mandated under PMLA.

The ED claimed that a consortium of banks led by Bank of Baroda was defrauded, where the company through its promoters and directors, diverted funds given as loans to the tune of Rs 975 crore.

The ED claimed that Priyavrat was involved in the laundering of money to the tune of Rs 73.79 crore. It also claimed that he was involved in tampering of evidence, by asking a person to change passwords of some of the bank accounts on July 2.

The ED’s special public prosecutor Sunil Gonsalves while seeking Priyavrat’s custody said that proceeds of crime were transferred to an account belonging to him.

The ED claimed that funds were transferred to Priyavrat’s account from a textile company, Balaji Corporation, which the agency claims was formed only to layer the proceeds of crime.

The ED claimed that three other textile companies were formed and multiple transactions worth over Rs 300 crore were done to launder money.

The agency claimed that this was done by Purushottam. No business activity was seen to be done in these dummy companies, the ED claimed.

Priyavrat, through his lawyer, Karan Kadam, claimed that he was detained from 7am on Monday, and sought for the arrest to be declared illegal.

The ED denied that he was detained and submitted that he was arrested and informed with a copy served to him about the grounds of arrest and the reason to believe that he is guilty of the offence, as per PMLA.

Special Judge A C Daga allowed the ED’s plea and sent Priyavrat to the agency’s custody till August 2.

Meanwhile, the Bombay High Court has issued notices to Purushottam, on a plea filed by the ED against the special court’s order, directing his release on July 25.

The matter will be heard after two weeks.