A special court has remanded Ravi Ramaswami Parthasarathy to a three-day police custody in the Rs 1-lakh crore Infrastructure Leasing and Finance Limited (IL&FS) scam, which triggered a liquidity crisis in the financial services market in 2018.
In the court of the special judge under Tamil Nadu Protection of Interest of Depositors (in Financial Establishment) Act, 1997, the EOW-Chennai said the custodial interrogation may reveal various crucial facts which are in his exclusive domain, being the key managerial personnel directly involved and in-charge of the affairs of IL&FS scam and active conspirator in this entire case.
"This is a mammoth scam involving huge sums of monies which have been siphoned off/diverted by the accused in connivance with other persons."
"His personal remand is the need of the hour and in the interest of investigation under the offence of Tamil Nadu Protection of Interest of Depositors, 1997 and other IPC offences, to secure the ends of justice," said the EOW-Chennai remand note.
Seeking the remand of Ravi Parthasarathy from the Court of the Special Judge under Sections 420, 409, 120B r/w 109 IPC, the EOW termed the case as "Â.one of the biggest economic frauds in the history of our country".
"The IL&FS group has defaulted in payments to various creditors through a calculated fraud and the total default caused to the entire creditors is approximately a mind-boggling figure of 1 lakh crore," the remand note added.
"Considering the nature, gravity, seriousness and magnitude of the case, this court is of view that police custody has to be ordered in the interest of justice in order to facilitate the Investigating Agency to effectively investigate the case further," the special judge said while granting a three-day police remand of the accused from June 16.
The Economic Offences Wing of Chennai police (EOW-Chennai) had arrested the kingpin and the mastermind of the scam from Mumbai on June 9 on the basis of a complaint filed by 63 moons technologies limited. On June 14, Ravi Parthasarthy was sent to judicial custody for 15 days.
Parthasarathy, who is said to be a close confidant of former Finance Minister P. Chidambaram, is accused of using IL&FS, which consists of more than 350 group companies, as a vehicle to perpetrate a huge fraud, floating non-convertible debentures (NCD) to collect deposits from investors offering the lure of high returns and siphoning of illegally several hundred crores of rupees.
After avoiding several summons by the EOW-Chennai, Parthasarathy had moved the Madras High seeking an anticipatory bail and quashing of FIR filed against him under various sections. The Madras High Court quashed his half-baked defence of ill-health and ceasing to be the chairman of IL&FS with effect from 2017, paving the way for EOW-Chennai to take him into custody.
Making a very hard-hitting statement, the remand note pointed out that the Union of India had to intervene since the activities of the IL&FS group affected the interests of the economy of India. The companies were set up as a vehicle of fraud and innocent depositors were cheated and their livelihood taken away by virtue of the fraud committed by Parthasarathy, who it termed "Kingpin and Mastermind".
Ravi Parthasarathy became the chairman of the board of directors of IL&FS group in 2004. He served as the president and CEO of IL&FS group since 1989, thus clearly establishing that he was at the helm of affairs of the IL&FS group for over 30 years since its inception. Since then, Parthasarathy had been controlling the arm and mind of the IL&FS group and he was responsible for managing its day to day affairs and played a major role in the scam.
The First Investigation Report (FIR) was filed by 63 moons to recover its Rs 200 crore investment in NCDs states that in or around 2018 IL&FS group defaulted in their financial debt/obligations and has been defaulting since then, which busted the whole scandalous activities of IL&FS Group and its key managerial persons, including Ravi Parthasarathy. The company itself had admitted the massive liability of Rs 91,000 crore towards various investors and creditors.
The Serious Fraud Investigating Officer (SFIO) has named Ravi Parthasarathy as the prime accused and mentioned him as the key decision-maker in the IL&FS group, who used the group as his fiefdom. Being chairman of IL&FS group and director of its various subsidiaries, it noted, the coterie led by Parthasarathy abused its position and diverted funds of its group companies.
In one of the most damaging findings, the Government of India petition mentioned, "IL&FS had created a trust known as the Employee Welfare Trust which was used as an instrument to enrich its directors at the cost of the company. The trust was used to perpetrate fraud on IL&FS ad its group companies. The trust owned 12% of IL&FS Limited. Ravi Parthasarathy and certain other senior IL&FS personnel were major beneficiaries of the Trust."
The RBI report underlined that the major role in perpetrating the fraud and financial irregularity was played by Parthasarathy during his tenure as Group Chairman. The report noted indiscriminate sanctioning of loans, diverting of funds, flouting of RBI norms, fraudulent transactions to certain accounts, showing inflated numbers of subsidiaries, conflict of interest and concentration of power in the hands of few, which included Ravi Parthasarathy and his coterie.
In 2019, the NCLT-Mumbai had taken note of key findings of the SFIO interim report about the manner in which the IL&FS Group conducted its affairs contrary to public interest. It observed that the Committee of Directors (COD) from among the now suspended Board of Directors of IL&FS Group abused their powers. Through various acts, including circuitous transactions increased the debt burden across the IL&FS Group.
The Union of India had filed Company Petition No. 3638 of 2018 under Sections 241 and 242 of the Companies Act seeking suspension of the Board of Directors of IL&FS under section 242(2)(k) of the Companies Act. In the Petition, the Union of India inter alia stated as, Ravi Parthasarthy and his team were responsible for the negligence, incompetency and misleading the public by presenting rosy financial statements. "IL&FS was camouflaging its financial statements by hiding severe mismatch between its cash flows and payment obligations. It was also hiding total lack of liquidity and glaring adverse financial ratios," the petition added.