Oriental Bank of Commerce’s (OBC) loans to Delhi jeweller Dwarka Das Seth International and its owner Sabhya Seth turned non-performing asset (NPA) in 2014 but the bank approached the CBI only on August 16, 2017 — after the company had folded up and Seth fled the country, according to the bank’s complaint to the agency.
The bank has accused the the company and its owner of defaulting on loans amounting to Rs 389.85 crore. The CBI registered an FIR on Thursday, six months after the complaint. The OBC alleges that Dwarka Das Seth International took loans by way of letters of credit and other such credit facilities for gold and diamond jewellery export/import between 2007 and 2012 but failed to repay.
A probe by the bank found that it had indulged in round-tripping of funds through fictitious companies abroad and had utilised funds through discounting of bills issued under letters of credit of foreign banks, which were either non-existent or had negative ratings.
“We feel Shri Sabhya Seth of Dwarka Das Seth International Pvt Ltd had orchestrated an elaborate plan to dupe the bank,” OBC said in its complaint. The FIR has named Dwarka Das Seth International, its associate concern Dwarka Das Seth SEZ India Incorporation, proprietor Sabhya Seth and directors Reeta Seth, Krishna Kumar Singh, Ravi Kumar Singh and unknown bank officials as accused.
The FIR alleged that the company was availing credit facility through discounting of bills against LCs established by overseas banks such as Dubai Bank Kenya, Soleil Chartered Bank, Trade Chartered Bank, TF Bank Kontrakt and Century Bank Corp.
The FIR said that on investigations later, OBC found that these banks had “poor ratings” and it had exposed too much loan against their LCs. Following this, the bank stopped honouring their LCs and called Seth for discussion. Seth reportedly said he would arrange for LCs from better-rated banks.
He also sought more time, saying his debtors were facing financial difficulties, the FIR said. The complaint stated that despite several extensions, Seth was unable to pay back the loan. “Now for the last 10 months the customer is not responding and he and his family is not available at the address as per bank records,” the bank complained.
The bank then tried to get in touch with Seth’s buyers, but no one responded. Further probe revealed that Seth had set up many companies, such Freya Trading, in Dubai for round-tripping of loan money and his own companies were his customers.