The Enforcement Directorate (ED) arrested Abhay Narendra Lodha, the Promoter and Managing Director of M/s Topworth Steels and Power Pvt. Ltd. (TSPPL) and Topworth Group, on Wednesday.
The PMLA Court in Mumbai granted ED custody of Abhay Narendra Lodha up to September 8, 2023. ED launched an investigation under the Prevention of Money Laundering Act, 2002, based on an FIR registered by the Banking Securities and Fraud Branch, CBI against M/s Topworth Steels and Power Pvt. Ltd., Abhay Narendra Lodha & Others.
Extensive search operation
Enforcement Directorate searches were conducted at 12 premises across various locations in Mumbai, Pune, New Delhi, Nagpur, and Durg in a Bank Fraud Case. During the searches, details regarding ownership of various immovable properties and companies both overseas and within India (previously undisclosed) were discovered. Additionally, foreign currencies from different countries valued at over ₹7 Lakhs, along with various other incriminating documents and media, were recovered by ED. Details of shell entities controlled by Abhay Lodha were also recovered.
Unveiling financial wrongdoings and illicit gains
ED's investigation revealed that besides causing a wrongful loss of ₹63.10 crore to IDBI bank through fraud in credit facilities such as the Letter of Credit / Trade Credit Bank Guarantee (LC/TCBG) from 2014-15 to 2016-17, the Topworth group of companies, controlled by Abhay Narendra Lodha, also generated proceeds of crime amounting to ₹3000 crore. This was accomplished through the Topworth group and its connected entities. CBI had previously registered cases against the Mumbai-based company and its directors for defrauding IDBI Bank of ₹63 crore between 2014 and 2016. In addition to the company, directors Abhay Narendra Lodha, Surendra Champalal Lodha, Ashwin Narendra Lodha, and Niting Golecha were also booked by CBI in the bank fraud case. Nine companies within the group faced lawsuits from their creditors, leading to insolvency resolution proceedings in seven group companies. ED's searches were conducted based on the CBI FIR, resulting in the discovery of incriminating documents.
The flagship firm of the Topworth group, Topworth Steels and Power Ltd., is indebted to banks with an amount of ₹4,392 crore and has been undergoing insolvency proceedings since 2019. The group's activities include manufacturing and trading steel and aluminium products, including mining machinery, pipes, tubes, and aluminium foil. The Central Bureau of Investigation (CBI) filed six FIRs against Topworth group companies, and their promoters, and several court cases are pending. The Topworth group comprises 14 companies registered in Mumbai, Nagpur, Maharashtra, as well as Chhattisgarh and Gujarat, with corporate headquarters in Mumbai. Abhay Lodha resides in Mumbai, and Surendra Lodha is based in Nagpur. In 2018, CBI registered six FIRs against multiple companies and officials in the Topworth group, based on complaints from branches of Bank of Baroda, PNB, SBI, and UCO Bank.
Bankruptcy proceedings & allegations against Topworth promoters
Indian Bank, a public sector bank, has already declared an NPA account of Abhay Narendra Lodha and Ashwin Narendra Lodha, promoters of Topworth Steel and Power Ltd., as a Defaulter. The bank accused the Lodhas of diverting ₹44.55 crore. The promoters of the company were also implicated in the coal allocation case. Topworth Steel and Power is currently undergoing a corporate insolvency resolution process (CIRP) initiated by the State Bank of India (SBI) due to defaulting on a payment of ₹835 crore. The company owes approximately ₹2,930 crore to financial creditors, including ₹930 crore to SBI, ₹524 crore to PNB, ₹348 crore to Union Bank of India, and ₹308 crore to Indian Bank.
Several other companies within the Topworth group are also undergoing corporate insolvency resolution process (CIRP), including Topworth Urja and Metals Limited. Topworth Urja and Metals Ltd. were subjected to CIRP by the Bank of Baroda in August 2022 due to defaulting on a payment of ₹218 crore. Other entities like Topworth Pipes and Tubes are being sold under the liquidation process. Topworth Tollway and Topworth Infra are also undergoing the Corporate Insolvency Resolution Process.
Several Topworth group companies face lawsuits from creditors, with cases admitted by the NCLT and insolvency resolution proceedings ongoing in seven group companies. Ten cases of bounced cheques have been filed by SBI against Topworth group companies under the Negotiable Instruments Act. Abhay Lodha was arrested in Mumbai in December 2018 after a non-bailable warrant was issued against him based on a complaint that a ₹10 crore cheque for loan repayment had bounced. On May 31, 2019, the Bank of Baroda issued public notices declaring the directors of two Topworth group companies, including Abhay Lodha and Surendra Lodha, as willful defaulters.
