Srei Equipment Finance reports Rs 3,000 crore fraud transactions
The Administrator of Srei Equipment Finance Limited has reported fraud transactions worth Rs 3,025.73 Crore by the promoters of the company during 2019-2020 and 2020-2021, the company informed the exchanges recently.
Transactions reported by the Administrator of Srei Equipment Finance include disbursements made to certain entities — Power Trust, M/s Kanoria Foundation and its trustees, India Power Corporation Limited, India Power Corporation (Bodhgaya) Limited, Tuticorin Electricity Supply Private Limited, Bhaskar Silicon Private Limited, Green Utility Private Limited, Environ Energy Corp India Private Limited, Meenakshi Energy Limited, Devi Trading and Holding Private Limited, and others.
As per the transaction auditor report shared with the Administrator, the monetary impact of the above transactions covered under the Application amount to Rs 2,512.06 crore, being the amount outstanding in the books of the Company as on October 08, 2021, and Rs 513.67 crore being amount considered as due and outstanding towards notional loss to the Company on account of fraudulently charging lower rate of interest to certain entities referred to as the Power Trust group of entities.
The Application has been filed before the NCLT under Section 60(5) and Section 66 of the Code on June 10, 2022.
The Administrator obtained assistance from a reputed professional agency, BDO India LLP to conduct investigation of the affairs of the Company in respect of transactions qualified under sections 43 to 51, and sections 65 and 66 of the Code. Accordingly, the Administrator of the Company received an initial report from the professional agency appointed as the transaction auditor, indicating that there are certain transactions which are fraudulent in nature, as per Section 66 of the Code.
Insolvency law requires the administrator/resolution professional to identify if an insolvent company has undertaken any avoidance transactions such as preferential, fraudulent transactions, undervalued or extortionate transactions in the past, and if it finds the company involved in such transactions, the formers are required report to the Adjudicating Authority for appropriate directions. The law even mandates the resolution professional or the liquidator to facilitate the claw-back or disgorgement of value lost through such avoidance transactions.
The central bank initiated the insolvency proceedings against the two NBFCs – Srei Infrastructure Finance and Srei Equipment Finance — after a consortium of lenders led by UCO Bank sought RBI’s directions on pursuing recovery of dues from the Srei Group after loans worth about Rs 30,000 crore was identified as non-performing assets (NPA) this quarter.
As many as 14 entities/persons have expressed their interest in acquiring the two Srei Group companies.
Also Read: Vedanta, Jindal Power among 14 entities bidding for SREI Infra Fin, SREI Equipment Finance
