ED attaches properties worth Rs.109.8 crores in bank fraud case of Simbhaoli Sugars mill

New Delhi, July.02(HS): Enforcement Directorate (ED) has attached assets of Simbhaoli Sugars Ltd, Simbhaoli, Hapur worth Rs. 109.80 crores under the provisions of Prevention of Money Laundering Act, 2002 (PMLA) in a bank fraud case.

The attached assets include land, buildings and plant & machinery of distillery unit of the company situated at Simbhaoli. ED initiated investigation under PMLA on the basis of FIR registered by CBI, BS&FC, New Delhi against Simbhaoli Sugars Ltd and others for cheating and defrauding Oriental Bank of Commerce on the pretext of financing the sugarcane farmers.

CBI had also made the chairman of Simbhaoli Sugars Limited, Gurmit Singh Mann as an accused in this case and Mann happens to be the son-in-law of Punjab CM, Capt. Amrinder Singh.

According to the FIR, the company was given loan of 148.59 crores by the bank for providing assistance to 5762 farmers but the funds were diverted by the company for other purposes. ED conducted searches at the offices of the company situated at Noida and Simbhaoli resulting into recovery and seizure of incriminating documents. Investigation revealed that the company was facing a liquidity crunch and approached the bank for sanction of loan under interest subvention scheme of RBI under a tie-up arrangement with 5762 farmers for financing them for pre and post-harvest assistance.

An MoU was executed between the Bank and the Company on 18.01.2012. The funds paid by the company to the farmers were not remitted to the accounts of the farmers. Therefore as per the terms and conditions of the loan, the liability was shifted upon the company which failed to repay.

There were serious irregularities in KYC documents. The loan then turned NPA with Rs. 98.7 crores (principal) outstanding and the Bank filed a recovery suit before the Debt Recovery Tribunal (DRT). Investigation also revealed that the loan funds were diverted by the company by routing into various other accounts and finally using it towards repayment of outstanding loans including External Commercial Borrowings, operational expenses of the company and payment of cane arrears which should have been paid from sales/ revenue of the company.

The company thus laundered the funds intended for assistance to the needy farmers, in utter violation of the terms & conditions and the intent of the loan. Instead of settling the entire loan liability, the company again induced the Oriental Bank of Commerce to withdraw the application before the Debts Recovery Tribunal and grant a fresh Corporate Loan of Rs. 110 crores on 28 Jan 2015 to clear the previous loan dues, with subservient first pari-passu charge on all the movable and immovable fixed assets and Personal Guarantee of Directors/Promoters of the company.