Mumbai News: PMLA Court Takes Note Of 2 Big Ticket Bank Frauds

The special court for Prevention of Money Laundering Act (PMLA), last week, took cognisance of two money laundering cases filed by the Enforcement Directorate (E) over alleged bank frauds by Ess Dee Aluminium Ltd (EDAL) and M/s Jagat Agro Commodities Pvt Ltd (JACPL).

The ED had last month filed a prosecution complaint against EDAL and 15 others for alleged money laundering to the tune of Rs336.38 crore. The predicate offence was registered in 2020 with the CBI. While the ED began its probe in the case in January 2021, the CBI filed a charge sheet in May 2023. 

It was alleged that a consortium of banks led by State Bank of India, including Axis Bank, IDBI Bank, SBBJ, SBP, Corporation Bank, Bank of Baroda, Bank of Maharashtra and Shamrao Vithal Co-op Bank, provided working capital, term loans and corporate loans to EDAL from 2005.

The probe revealed that loan funds were cycled through shell companies, which neither supplied nor purchased any material. Funds were used to offset cash credit limits and repay the earlier loans.

Meanwhile in the case of JACPL, on October 11, 2003, SBI sanctioned cash credit limit of Rs5 crore to JACPL, which enhanced it to Rs283 crore till 2015. The company was not only unable to pay interest on the sanctioned credit, it also needed more funds, so the bank sanctioned a term loan of Rs38.65 crore. The bank also sanctioned Rs6.52 crore to the company on June 29, 2015 at the time of restructuring the account. However, the firm could not repay and was ultimately turned into a non-performing asset on July 28, 2016. 

The bank sanctioned the term loans based on turnover of the company as reflected in the balance sheet, but the probe revealed that the firm’s directors fraudulently got their company’s stock statement inflated. Based on this, the firm received fund-based and non-fund based credit limits amounting to Rs328.92 crore from SBI and Rs68.75 crore from PNB from 2003 to 2015.

The probe revealed that JACPL diverted money against fake bills to many shell firms, which had no business activities and were only involved in fake sale/purchase transactions on paper.