Kolkata: ED raids in Insolvency and Bankruptcy Code 'misuse' case
Kolkata, Sep 30 (PTI) The Enforcement Directorate on Wednesday conducted searches at a dozen locations here in a money laundering investigation against a Kolkata-based group accused of a bank loan fraud exceeding Rs 820 crore and the subsequent "misuse" of the Insolvency and Bankruptcy Code (IBC), officials said.
Agency officials alleged that the Tayal Group induced banks through "false" declarations regarding production capacity and machinery, falsified stock statements, and the unauthorised sale of hypothecated machinery.
Twelve premises located in Kolkata were covered as part of the searches conducted under the anti-money laundering law, the officials said.
The company or its representatives could not be contacted for a comment.
The action comes days after ED Director Rahul Navin asked his investigators to step up action under the anti-money laundering law in cases related to misuse and fraud under the IBC, including instances where "large haircuts" were undertaken so that promoters could re-acquire assets.
They reportedly layered the loan amount through promoter-controlled shell entities and siphoned the funds into real estate assets, including the Empress Mall in Nagpur. The agency provisionally attached the mall in May 2019 under the Prevention of Money Laundering Act (PMLA), the officials said.
Following this attachment, proceedings under the Corporate Insolvency and Resolution Process (CIRP) were initiated against corporate guarantor KSL & Industries Ltd. under Section 7 of the IBC by purported financial creditors which were closely controlled entities of the Tayal Group, the officials claimed.
They alleged the debt was a "sham" paper transaction engineered for a collateral purpose.
The resolution professionals (RPs) misused the IBC by admitting unverified, interest-inflated claims from promoter-linked shell entities without proper verification.
According to the officials, the RPs acted as an instrument of the promoters by filing applications to set aside PMLA attachments, suppressing various adverse orders and concealing the ED's physical possession of Empress Mall from the courts.
Their (RPs') conduct also drew severe adverse remarks and their dismissal by the National Company Law Tribunal (NCLT), they said.
