ED finds resolution professional colluding with BPSL promoters
The Enforcement Directorate (ED), the agency that investigates money laundering cases in India, has found resolution professional MK Khandelwal involved in unlawful activities in collusion with promoters of Bhushan Power & Steel Ltd (BPSL), which was under the insolvency proceeding from July 2017 to September 2019.
According to ED, BPSL was engaged in clandestine clearances of finished goods from its Odisha Plant to its plants at Kolkata and Chandigarh. Goods valued around Rs 700 crore had been cleared without payment of applicable taxes and duties and without issuance of any statutory invoice.
The ED found that this practice, which was resorted to by the former management of the company, continued even after the initiation of the insolvency proceeding and that Resolution professional M K Khandelwal was also involved in these irregularities.
The ED raided the residential premises of the resolution professional in Gurgaon and Delhi, and at his office in Delhi. It also raided the residence of one of the former Directors of BPSL in Delhi were conducted.
During these searches various incriminating documents, laptops, mobile phones, extracts and other valuables such as jewellery worth Rs.86 lakh were seized. Incriminating documents indicating receipt of cash by M K Khandelwal while discharging duties of resolution professional/interim resolution professional have also been seized. Huge cash payments to various individuals outside the books of accounts indicate siphoning and generation of cash from various concerns undergoing process of CIRP under NCLT.
Investigation under Prevention of Money Laundering Act (PMLA) found that promoters of Bhushan Power & Steel Limited (BPSL) Sanjay Singal and others illegally diverted huge amount of funds out of loans taken by BPSL from various banks. These funds were used for creation of assets (including equity investment in BPSL and movable/immovable properties in Delhi & London) in the name of companies controlled by Sanjay Singal. So far, assets worth around Rs 4230 crore have been identified and provisionally attached under PMLA. Prosecution complaint has also been filed against 25 accused under PMLA.
It is to be mentioned here that BPSL was acquired by JSW Steel under the IBC by paying Rs 19,700 crore against total financial creditors’ claim of Rs 47,158 crore. The BPSL insolvency case took almost two years to resolve.
Even though the resolution plan by JSW Steel was admitted September last year, JSW is yet to make the full payment to the creditors after the ED filed an appeal in Supreme Court against lifting of attachment of properties of BPSL.
