ED attaches Rs 367 crore worth properties of Bhushan Steel

The Enforcement Directorate on Friday attached movable and immovable properties worth Rs 367 crore of Bhushan Steel under the provisions of Prevention of Money laundering Act (PMLA), 2002. The immovable properties were situated in Delhi, Mumbai, Kolkata and Odisha. The attached properties were held in the name of proxies or shell companies.

ED initiated investigations on the basis of prosecution complaint filed by Serious Fraud Investigation Office (SFIO) against Bhushan Steel Limited.

As per ED investigations, former managing director of Bhushan Steel Limited (BSL) Neeraj Singal and associates formed several shell companies to circulate funds from one company to another through a network of multiple entities. The funds taken from banks as loans were circulated to infuse capital, buy property and for other personal purposes not intended by the Banks.

Investigations also revealed that promoters, directors and the officials of BSL prepared forged documents and made fraudulent representations before the banks to discount Letter of Credits (LCs) and diverted the funds back into their own companies with malafide intentions.

Funds were misappropriated against the fabricated LCs created in favour of JSW Steel limited and Hindustan Zinc Limited. The misappropriated funds were diverted to other group/associated companies, causing wrongful loss to the State Bank of India and Punjab National Bank.

Earlier, ED had provisionally attached assets worth Rs 61.38 crore In November 2021 and a search operation was also conducted on Neeraj Singal on 9th June 2023 and he was arrested by ED on the same day. Neeraj Singal is currently in Judicial Custody.

Prosecution complaint was filed against him and other accused persons on 08 August 2023 and cognizance was taken by the PMLA court on 07 November 2023. Another search operation was conducted on 13 October 2023 with respect to certain persons of BSL who had a key role in bank fraud. Important Digital evidence and valuables were seized during the search proceedings.

Thereafter, ED had arrested Ajay Mittal (brother-in-law of Neeraj Singal), Archana Mittal (sister of Neeraj Singal), Nittin Johri (the then CFO of Bhushan Steel), Prem Tewari (the then Vice President, Banking) and Prem Agarwal (the then Vice President, Accounts). Ajay Mittal and Archana Mittal received proceeds of crime to the extent of Rs 80 crore. They also mortgaged property of BSL and routed the funds to the family of Neeraj Singal.

Currently, Archana Mittal is out on bail while all other accused persons are in judicial custody.

Bhushan Steel was one of the first few large NPA cases which were referred to by Reserve Bank of India (RBI) for initiation of corporate insolvency resolution process (CIRP). Tata Steel emerged as the successful resolution applicant after it promised to pay Rs 36,000 crore to creditors of the Bhushan Steel against their claims of Rs 43,832 crore.

Also See: NCLT can under Section 32A order release of corporate debtor’s properties attached by ED