Vadodara: CBI today conducted raids at at-least 4 places here in connection with Rs 2654 crore bank defraud case of Vadodara based power equipment manufacturer M/s Diamond Power Infrastructure Ltd (DPIL).

As per primary reports the raids were conducted at the company’s corporate office premises at Gorwa, factory in Samlya and residence of top management in Sevasi.

CBI has registered a case against DPIL. Its director SN Bhatnagar and his two sons have allegedly defrauded a consortium of 11 banks (in whichSBI, BoB, Bank of India, Axix bank, ICICI were also included) to the tune of Rs 2654 crore. Loans were allegedly given to the company despite this entity being blacklisted by the Reserve Bank of India.

DPIL management, had allegedly fraudulently availed credit facilities from the consortium (of 11 banks and 8 other financial companies) since 2008. The company and its Directors managed to get the term loans and Credit facilities, in spite of the fact that they were already appearing in the RBI’s defaulters list and ECGC Caution List at the time of initial sanction of credit limits by the consortium.

Axis Bank was the lead bank for the Term Loan and Bank of India was the Lead bank for CC Limits. The company, allegedly with support of officials from various banks, managed to obtain enhancement in credit facilities.

It had exaggerated its turnover projection and sales figures for the same.

The company has recently filed insolvency petition in the National Company Law Tribunal which had ordered it to not to sale its properties and had appointed an administrator.

CBI FIR:

Complaint was filed against Diamond Power & Infrastructure Ltd on March 26. The case was handed over to Gandhinagar CBI DySP PK Ghodeshwar. Complaint was filed against Diamond Power & Infrastructure Ltd, Vadodara, Suresh Narayan Bhatnagar(founder of DPIL), Amit Suresh Bhatnagar(MD), Sumit Suresh Bhatnagar(Joint MD), unidentified public servants of banks, other unidentified persons.

1. A Reliable Source Information has been received wherein it is alleged that MIs. Diamond Power Infrastructure Limited (DPIL), promoted by Shri S N Bhatnagar and his two sons, S/Shri Amit Bhatnagar and Sumit Bhatnagar who are also the Managing Director and Joint Managing Director respectively of DPIL, was engaged in the manufacture of cables and other electrical equipment. It is alleged that MIs DPIL, through its management, has fraudulently availed Credit Facilities from a Consortium of 11 Banks (Public Sector and Private Sector) since 2008, leaving behind an outstanding debit of Rs.2654.40 Crores as on 29.06.2016. The company and its Directors managed to get the term loans and Credit facilities, in spite of the fact that they were already appearing in the RBI’s Defaulters List and ECGC Caution List at the time of initial sanction of Credit Limits by the Consortium.

2. At the time of formation of Consortium in 2008, Axis Bank was the Lead bank for the Term Loan and Bank of India was the Lead bank for CC Limits. The present exposure of credit Facilities from various Member Banks availed by the company, is as under:

Bank of India – Rs 670.51 crore

Bank of Baroda – Rs 348.99 crore

ICICI – Rs 279.46 crore

Alahabad Bank – Rs 227.96 crore

Axis Bank – Rs 255.32 crore

Dena Bank – Rs 177.19 crore

SBI – Rs 266.37 crore

IOB – Rs 71.59 crore

IFCI – Rs 58.53 crore

Exim Bank – Rs 81.92 crore

Corporation Bank – Rs 81.92 crore

Corporation Bank NCD – Rs 8.22 crore

Dena Bank Pension Fund – NCD – Rs 9.24 crore

Dena Bank Gratuity Fund – NCD – Rs 4.11 crore

Tata Capital – Rs 35.24 crore

Bank of Maharashtra – Rs 11.87 crore

Syndicate bank – Rs 11. 26 crore

CSEB Gratuity and Pension Fund – Rs 7.60 crore

3. It is alleged that the company, with the active connivance of officials from various Banks has managed to obtain enhancement in Credit facilities. During the year 2011 when M/s. DPIL had projected turnover of Rs. 2197.60 Crores for the year 2012 whereas the actual turnover was Rs. 1267.60 Crores only for the year 2011 and thereof MIs. DPIL got the Credit facilities enhanced from Rs. 285 Crores to Rs. 480 Crores. In the next year, against the estimates of Rs.2197.60 crores, M/s. DPIL actually achieved a turnover of Rs. 1740.38 Crores as on 31.03.2012, which was less by Rs. 457.22 Crores from the projected turnover figure, in spite of fact that the CC limit was fully availed by the company. In spite of consistent failure to achieve the inflated figures of estimates, the Bank of India officials while conducting the credit review, did not decrease the cash credit limit, but, kept it unchanged at Rs.480 crores even though such figures were based on grossly exaggerated sales figures.

4. It is further alleged that MIs. DP I (-was submitting false stock statements to the lead Bank by treating the receivables more than 180 days (Non-Current Asset) to less than 180 days (Current Asset) to get more drawing power in their Cash Credit Accounts. The receivables were also dated from the date of payment instead of the date of invoice, as are required by the banking guidelines. In this manner, MIs. DPIL had fraudulently shown higher net working capital indicating their cushion to take up higher working capital exposure.

5. It is also alleged that MIs DPIL had extensively utilized the Cash Credit limits for obtaining large number of Letter of Credits and many of which could not be honoured by the company and were thus forced charged on the Credit limit. It is learnt that since 2008, about 1000 such LCs issued by Bank of India alone devolved, hich included at least 16 LCs amounting to Rs. 110.79 Crores issued in he name of MIs. Ruby Cables (Sister Concern of M/s.DPIL). These LCS in favour of sister concerns were issued by bank officials in gross violation of bank’s guidelines in order to give undue pecuniary favour to the borrowers.

6. It is also alleged that MIs. DPr Lhad invested an amount of Rs. 6.70 Crores in Group Companies out of the CC Limit, which was not as per the terms of sanction. Similarly, interest free loans amounting to Rs. 32.96 Crores were given to group related parties without any supporting documents and against the terms of the sanction of CC Limits. Thereby MIs. 0 PI Lwas able to fraudulently divert the bank funds.

7. It is alleged that the account of company started becoming overdue in 2014 and this was first reported under SMA2 by lOB, Exim Bank and State Bank of Hyderabad on 01.12.2014. Thereafter, Joint Lending Forum (JLF) of the consortium banks was created on 2.1.2015. For restructuring the account, JLF decided for restructuring under Corrective Action Plan (CAP) by way of restructuring under Corporate Debit Restructuring (CDR). At this stage Bank of India was made Lead bank for all types of loans. Accordingly accounts were restructured on 31.03.2015.

8. In the meantime, the accounts of M/s.DPIL in Bank of India and Bank of Baroda were declared NPA on 16.02.2016 (w.e.f. 9.1.2015) by RBI based on Asset Quality Report conducted by RBI. The accounts of the company with other banks were declared NPA from December, 2017.

9. However, as the CDR could not succeed, JLF decided for strategic Debit Restructuring (SDR) Scheme, with reference date as 9.6.2016. Under this outstanding loan of Rs. 828.42 crores was converted into equity at the rate of Rs. 41.28 per share and were distributed between the consortium members. At this stage, JLF directed the borrower to deposit all receivables in Trust and Retention Account (TRA) with Bank of India, of which 2% was to be deducted towards the outstanding. However, with the intention to cheat the banks, M/s. DPIL opened accounts with banks outside consortium like Kotak Mahindra bank, HDFC Bank and Karur Vysya Bank, where it received the realization of the receivables which should have been repaid to the banks to clear their outstanding dues. It is alleged that M/s.DPIL has diverted funds through these accounts with other Banks, which are not part of consortium, to the tune of about Rs. 70 Crores.

10. It is also alleged that DGGSTI, Vadodara has issued a Show Cause Notices to M/s. DPIL and its group companies, who had fraudulently availed CENVAT Credit, out of which such claims of MIs DPIL itself are to the tune of Rs. 100.80 Crores till 2013 by submitting bogus purchase invoices against which no material was received. This shows fictitious purchase figures of about Rs. 500 Crores were used to avail these CENVET credits as well as huge working capital facilities from Banks. In this manner, M/s. DPIL has also cheated Govt. of India to the tune of Rs. 100.80 Crores by fraudulently claiming CENVAT Credit. This also showed the fraudulent manner in which MIs. DPIL used to falsify their books of accounts.

11. It is alleged that due to the diversion of the CC limits by the Borrower Company, by using different manipulative methods, few of which are mentioned above, out of the total securities with present worth of Rs.1418.83 crores, the present value of the Stock is only RS.338.44 crores.Thus, the underlying securities are grossly inadequate to cover the outstanding dues of the consortium of banks amounting to RS.2654.40 crores.

12. The aforesaid facts reveal that MIs DPIL through its founder Shri Suresh N. Bhatnagar, Shri Amit Bhatnagar, Managing Director, DPIL and Shri Sumit Bhatnagar, Joint Managing Director, DPIL along with other unknown persons associated with them in criminal conspiracy with the unknown bank officers of various banks (who abused their official positions), cheated the banks by way of misappropriating public funds to the tune of Rs. 2654.40 Crores by way of falsification of accounts, creation of false documents, forgery of records, knowingly using such records as genuine. These acts constitute offences punishable under section 120-B r/w 420, 467,468,471 IPC and sections 13(2) r/w 13(1)(d) of PC Act,1988.

DeshGujarat