ED Opens Money Laundering Probe
The Enforcement Directorate (ED) has launched a money laundering investigation against Essel Group chairperson and Zee founder Subhash Chandra in connection with LIC Housing Finance Limited (LICHFL) loans to two companies of the group, which allegedly caused the public sector company a loss of ₹1,322 crore, people familiar with the matter said. Chandra provided personal guarantees for the borrowings.
Officials, speaking on condition of anonymity, said the ED’s probe under the Prevention of Money Laundering Act (PMLA) stems from the Central Bureau of Investigation (CBI) First Information Report (FIR) in the matter on August 31.
“We have registered an ECIR [Enforcement Case Information Report] in the matter,” said an officer, without providing specifics, referring to the ED’s equivalent of an FIR.
There was no response to HT’s text message to Chandra seeking comments.
A spokesperson for Zee Entertainment Enterprises Limited said that it has been brought to the company’s notice that an ECIR “addressed to” Chandra, in his personal capacity, has been registered on the back of the ongoing CBI investigation related to the previous FIR.
The spokesperson added that the matters pertain to Chandra and the promoter entities and have no bearing on the company or its operations.
In its FIR, the CBI named Chandra as accused number one under sections pertaining to criminal conspiracy, cheating and criminal breach of trust. It also refers to three companies, two individuals and other “unknown” people. Immigration authorities issued a look-out circular against Chandra at all airports, ports and land entry/exit points to ensure he does not leave the country, on CBI’s request
Loans to Group Companies
{{/usCountry}}In its FIR, the CBI named Chandra as accused number one under sections pertaining to criminal conspiracy, cheating and criminal breach of trust. It also refers to three companies, two individuals and other “unknown” people. Immigration authorities issued a look-out circular against Chandra at all airports, ports and land entry/exit points to ensure he does not leave the country, on CBI’s request
Loans to Group Companies
{{/usCountry}}Vasant Sagar, one of the two companies, was given a loan of ₹500 crore. Pan India Infraprojects Private Limited was the co-borrower for the home entity loan for takeover and top-up of business expansion.
A ₹480 crore loan was given to Digital Subscriber Management and Consultancy Services Pvt Limited. Sprit Infrapower and Multiventures Pvt Ltd was the co-borrower under a rental discounting facility.
A rental discounting facility, also known as lease rental discounting, is a loan against future rental income.
Net Worth Certificates and Alleged Loss
The lending decisions were based on net worth certificates Chandra submitted in 2018 as his personal guarantee. For the ₹500 crore loan, Chandra submitted certification stating his net worth, as on March 31, 2017, was ₹59,113 crore. For the ₹480 crore loan, Chandra provided a net worth certificate on July 6, 2018, stating that his net worth was ₹40,562 crore.
The FIR said both loan accounts defaulted and the current loss to LICHFL was ₹1,322 crore.
According to the CBI, Chandra “categorically denied having the net worth as stated in the certificates”, which he submitted to LICHFL for approval and disbursal of the loans, during subsequent personal insolvency proceedings.
It added that during the insolvency process, Chandra said his net worth in 2024 was ₹31.79 crore and that “even in 2017-18, he did not have the net worth of more than ₹40,000 crore”.
LICHFL accused Chandra of creating “false documents to denote inflated and false net worth to cheat LICHFL into deploying funds to the Principal Borrowers”.
Insolvency Proceedings and ED Directive
LICHFL is a party in the National Company Law Tribunal (NCLT) personal insolvency proceedings, in which the tribunal last month approved Chandra’s repayment plan of ₹6.25 crore out of admitted claims of ₹22,006 crore. A five-member bench of NCLT later stayed this order.
ED director Rahul Navin last month asked all his teams to focus on unearthing frauds in insolvency cases involving disproportionately large haircuts through which promoters re-acquire assets, the agency said in a statement.
The directive came days after the controversy over the NCLT order approving Chandra’s repayment plan.