ED attaches Rs 486 crore property in Bhushan Power and Steel bank fraud case

The Directorate of Enforcement (ED), Delhi Zonal Office, has provisionally attached an immovable property valued at approximately ₹486 crore in connection with the bank fraud case involving the erstwhile Bhushan Power and Steel Ltd (BPSL). The attached asset is a residential property located on Amrita Shergill Marg, New Delhi, spanning 1 acre (approximately 4,840 square yards). This property was owned by Mrs. Aarti Singal, a former director of BPSL and wife of Sanjay Singal, the then main promoter and director of the company.

The ED initiated its investigation based on a First Information Report (FIR) registered by the Central Bureau of Investigation (CBI). The FIR alleged that BPSL’s directors defrauded banks of ₹47,204 crore. Investigations revealed that Bhushan Power and Steel Ltd and its promoters diverted bank funds into private investments, including shares and properties. The company’s books were manipulated to reflect fake expenses, purchases, and capital assets, facilitating the withdrawal of bank funds as cash. This cash was then used to acquire assets in the names of family members and funneled through various benami companies for investments in shares and immovable properties. The objective was to prevent banks from recovering the loan amounts.

Previously, the ED had attached properties—including land, buildings, machinery, and an aircraft—worth ₹4,452 crore through multiple provisional attachment orders since October 10, 2019. Sanjay Singal was arrested by the ED on November 22, 2019, and a Prosecution Complaint was filed against him and other key employees on January 17, 2020. The court took cognizance of the complaint on the same date, and the trial is ongoing.

Creditor banks had initiated the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016, to recover the outstanding loan amount of ₹47,204 crore. JSW Steel emerged as the Successful Resolution Applicant with a bid of approximately ₹19,350 crore. The ED filed an affidavit before the Supreme Court seeking the restitution of attached properties valued at ₹4,025 crore to JSW Steel under the provisions of the Prevention of Money Laundering Act (PMLA). The Supreme Court accepted the affidavit and ordered the restitution of assets to JSW Steel on December 11, 2024.

Despite recovering ₹19,350 crore, banks incurred a loss of about ₹28,000 crore. Consequently, the ED continued its investigations to recover assets dissipated by BPSL’s promoters. With the current provisional attachment of the property on Amrita Shergill Marg, the total value of attachments in this case amounts to ₹4,938 crore, of which ₹4,025 crore has been restituted under PMLA provisions. The ED intends to return the remaining assets to the victim banks.

Background on Bhushan Power and Steel Ltd (BPSL) Fraud Case

In July 2019, Allahabad Bank reported a fraud of over ₹1,774 crore by BPSL to the Reserve Bank of India (RBI). The bank stated that BPSL had misappropriated bank funds and manipulated its books to raise funds from consortium lender banks. Prior to this, Punjab National Bank (PNB) had reported a fraud of ₹3,805.15 crore by BPSL, citing similar allegations of fund misappropriation and book manipulation.

The CBI’s investigation revealed that BPSL had diverted approximately ₹2,348 crore through its directors and staff from loan accounts of multiple banks into over 200 shell companies without any clear purpose. The agency noted that BPSL had availed various loan facilities from 33 banks and financial institutions between 2007 and 2014, amounting to ₹47,204 crore, and subsequently defaulted on repayments. The lead bank, PNB, declared the account as a Non-Performing Asset (NPA), followed by other banks and financial institutions.

In October 2023, the ED conducted search and survey operations at 30 locations across Delhi NCR, Haryana, Kolkata, Mumbai, and Bhubaneswar as part of its investigation under the PMLA against the erstwhile promoters of Bhushan Steel Limited (BSL) in connection with a bank fraud of ₹56,000 crore. During these operations, various incriminating documents and digital records were recovered and seized. The ED’s investigation revealed that the erstwhile Managing Director, Neeraj Singal, and his associates had formed several shell companies and rotated funds through a chain of multiple entities for personal purposes not intended by the banks.

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