Money laundering: Promoter of Topworth Steels remanded in ED custody

Abhay Lodha, the promoter of Topworth Steels and Power Pvt Ltd, has been remanded in Enforcement Directorate custody till September 8 in a money laundering probe connected to the company. The probe is based on an FIR registered by the Central Bureau of Investigation for allegedly defrauding IDBI Bank of ₹60.28 crore. Lodha is accused of fraudulent LC transactions and using mobile phones and cars registered in others' names. The court deemed custodial interrogation necessary for a thorough investigation.

Mumbai: The special PMLA (Prevention of Money Laundering Act) court on Wednesday remanded Abhay Lodha, 52, promoter of Topworth Steels and Power Pvt Ltd (TSPPL), in Enforcement Directorate (ED) custody till September 8, in a probe connected to money laundering.

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In February 2022, ED launched a money laundering probe against TSPPL – a sponge iron manufacturing company – based on an FIR registered by the Central Bureau of Investigation (CBI) on January 4, 2019, for allegedly defrauding IDBI Bank of ₹60.28 crore.

According to ED’s application, seeking Lodha’s custody remand for 14 days, on May 25, 2014, IDBI Bank sanctioned a letter of credit (LC)/trade credit bank guarantee (TCBG) limit of ₹50 crore to the company. Around a year later, in March 2015, the LC/TCBG limit was enhanced to ₹60.28 crore.

The agency claimed that the company entered into fraudulent LC transactions with M/s Harsh Steel Pvt Ltd and M/s Maheep Marketing Pvt Ltd and FIRs and enforcement case information reports were registered against both the firms as well for the alleged LC fraud.

The remand application also revealed that Lodha used two mobile phones – both registered in the names of people completely unrelated to him, and high-end cars registered in the name of his friends.

Lawyers for Lodha opposed ED’s plea for his custodial remand, contending that the transactions dated back to 2014 and Lodha was arrested in the predicate offence and since proceedings are pending before the National Company Law Tribunal, there was nothing in the matter for the ED to deal with. In any case, the lawyers said custodial interrogation of the accused was not necessary, as the probe was all about banking transactions.

Special judge MG Deshpande, however, was unimpressed by the defence arguments. “Statement of the accused coupled with the modus operandi described in the remand application clearly indicates how the generated POC (proceeds of crime) had been placed, layered and siphoned off,” the special court said.

“Public money entrusted with banks is nothing but the wealth of the nation and thus, ultimately the nation is the victim of this fraud,” the court added. “Therefore, thorough investigation is necessary and that is not possible unless the accused undergoes custodial interrogation, because he is the only person who has knowledge of this fraud,” the court said while remanding Lodha to ED custody up to September 8.