Bank loan fraud: ED attaches ₹375-cr assets of Surat firm

The central probe agency said it has attached the plant and machinery of the firm -- Ms Nakoda Limited -- in Surat district of Gujarat under the Prevention of Money Laundering Act (PMLA

The ED has attached assets worth over ₹375 crore of a Gujarat-based firm in connection with its money laundering probe in an alleged bank loan fraud, perpetrated using fraudulent Letters of Credit of more than ₹2,100 crore.

Canara Bank Connaught Circus Branch in New Delhi.(Pradeep Gaur/ Mint File Photo)

The central probe agency said it has attached the plant and machinery of the firm -- Ms Nakoda Limited -- in Surat district of Gujarat under the Prevention of Money Laundering Act (PMLA).

It said a money laundering case was registered against the firm, its CMD Babulal Gumanmal Jain and his son, and joint MD Devender Babulal Jain based on a CBI FIR.

The assets attached are valued at ₹375.71 crore.

“Ms Nakoda Ltd had availed fund-based and non-fund based financial assistance from the consortium of 13 banks led by Canara Bank and had defaulted on repayment of these loans to the tune of ₹2,107 crore. 

“Investigation revealed that Jain and his son entered a criminal conspiracy with others to carry out fake sale and purchases of fancy fabrics with the companies floated by Puneet Rungta and Jagdish Somani,” the agency said in a statement.

On the strength of fake purchase invoices, it said, the firm opened 816 of Letters of credit (LCs) with banks. 

“Out of the total LCs fraudulently opened by the company with banks against fake purchases, 202 LCs to the tune of ₹827.98 crore devolved due to non-payment by Ms Nakoda Limited. 

“These fraudulently obtained LC-based funds were laundered by the company through circular transactions,” it said.

The Enforcement Directorate said the same funds were utilised for repayment of various loans including term loans, interest, banking charges and as working capital for meeting day-to-day expenses towards running its plant and factory -- purposes other than for which the loans were sanctioned.

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