Court denies bail to Usher Agro CMD in ₹915.65 crore loan fraud case

Bombay HC rejects bail plea of Usher Agro Ltd promoter accused of defrauding banks of ₹915.65 crore, citing incriminating evidence of money laundering.

MUMBAI: The Bombay high court (HC) has rejected the bail plea of Vinod Chaturvedi, promoter and managing director of M/s Usher Agro Ltd (UAL), arrested by the Enforcement Directorate (ED) for allegedly defrauding a consortium of banks to the tune of ₹915.65 crore.

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A single judge bench of justice Manish Pitale rejected Chaturvedi’s bail plea observing that the material on record prima facie indicated that he and his co-accused applied for huge amounts of loan and then undertook indirect transactions and simultaneously kept on siphoning off and diverting the amounts.

ED registered an Enforcement Case Information Report (ECIR) against UAL, Chaturvedi and other directors of the firm on August 29, 2019, around eight months after the Banks and Securities Fraud Cell of the Central Bureau of Investigation (CBI) registered an FIR against the firm, Chaturvedi, his brother Manoj Pathak and other persons for defrauding the consortium of banks to the tune of ₹915.65 crore.

The ED arrested Chaturvedi on September 17, 2021, in the money laundering case, while Pathak is still at large. Chaturvedi approached high court in 2022 for bail, primarily contending that a simple loan default owing to genuine reasons had been given a colour of criminality by the law enforcement agencies. He claimed that forensic audit did not reveal any criminality in UAL and the firm had repaid a substantial part of the loan – an amount of ₹497 crore, but its financial condition started deteriorating in the fourth quarter of the financial year 2015-16.

Advocate Shreeram Shirsat, who represented ED, on the other hand pointed out that the agency’s investigation had brought out sufficient incriminating material against the accused persons, especially Chaturvedi. He said Chaturvedi was instrumental in creating shell companies and amounts obtained as loans were diverted into the shell companies, making out a case of money laundering.

Shirsat added that the shell companies consisted of common directors, most of whom were persons of few means and obviously only for namesake. He said the shell companies did not have any offices, their addresses were fictitious, and the directors were all people having no experience and they were inactive throughout.

The special prosecutor added that the probe revealed huge cash withdrawals to the tune of more than ₹ 154 crore from the firm’s bank accounts, ostensibly for purchasing paddy, but no paddy was purchased and those were all fictitious transactions only to siphon off loan amounts.

Justice Pitale accepted arguments advanced by Shirsat on behalf of ED, observing that “the material on record shows that the loan amount was indeed circulated in the accounts of UAL and then found their way to 15 companies.”

The court added that “while amounts were reaching these companies actual transactions of UAL with these companies were not discernible and there was material to indicate that only accommodation entries were being made to inflate the balance sheet.”

Justice Pitale rejected Chaturvedi’s bail plea also after noting that UAL’s Chartered Accountant himself had revealed that the 15 “shell companies” were formed on his specific instructions and that “the entire modus operandi was the brainchild of the applicant (Chaturvedi).”