CBI files Rs 5,000 cr loan fraud case against IVRCL undergoing liquidation

Another company, undergoing insolvency proceeding, finds itself on the wrong side of the law.  This time the Hyderabad-based infrastructure company IVRCL Ltd has been hauled up the enforcement agencies for causing Rs 5,000 crore loss to a consortium of public sector banks.

The Central Bureau of Investigation (CBI) has registered a case of fraud against Hyderabad-based IVRCL Limited, its former managing director E Sudhir Reddy, former joint Managing Director R Balarami Reddy and unknown public servants/others on a complaint from State Bank of India, Hyderabad.

It has been alleged that the accused in connivance with unknown public servants and others defrauded the consortium of public sector banks consisting of State Bank of India, IDBI Bank, Canara Bank, Andhra Bank, Corporation Bank, EXIM Bank, Punjab & Sind Bank, Union Bank of India and caused a loss of Rs 4,837 crore to the banks.

The company allegedly availed various credit limits from a consortium of banks, led by State Bank of India and cheated the banks, without repaying the loan amount. A forensic audit done on the books of the company revealed that the company made payments to related parties through letter of credits, without recording any purchase transactions in the books and routed the funds to the account of the company and thereby misappropriated the bank funds.

Searches were conducted today at the residential and official premises of the accused at Hyderabad which led to recovery of several incriminating documents.

IVRCL Ltd is undergoing liquidation after it failed to find a buyer under the insolvency process that was initiated in February 2018. The company owed Rs 14,000 crore to different creditors. According to information available with the Insolvency and Bankruptcy Board of India (IBBI) only one resolution applicant has submitted its plan and offered Rs 2,377 crore for resolution.

The liquidator — Sutanu Sinha — has been trying to sell the company as going concern under liquidation. However, after the CBI case, it seems that possibility now looks difficult.