A senior CBI official said that they received a complaint in this connection from the Central Bank of India in 2021 against Varun Industries Ltd (VIL) and its directors Kiran Mehta, Kailash Agarwal and others for defrauding the bank to the tune of Rs 269.29 crore.
The firm approached the bank with a loan request in 2006 and it was declared an non-performing asset in 2012.
According to official information, the company executed loan and security documents for securing the credit facilities availed by it from a consortium of banks through its directors, including creation of charge on its current assets through hypothecation agreement of stock and its book debts and also created registered mortgage over the collateral securities offered by the company against the bank facilities.
“The company had availed various credit facilities from the Central Bank of India in a consortium led by the Indian Bank for a Wind Mill Power project at Jaisalmer. The company did not remit export payment received from sale of goods received under LC to meet the import leg of merchant transaction. The Merchant Trade LC was issued by the bank on the request of the company. The transactions under this head was dishonestly intended to siphon out the funds from the banking channel,” said the FIR.
The bank has alleged in the FIR that during this it learned that the accused company borrowed an amount of nearly Rs 30 crore from SE Investment Ltd against pledge of shares and Rs 15 crore from IFCI Venture Capital Fund without taking NOC from a consortium of banks.
Forensic audit was conducted by the bank in 2012 and it was revealed that most of the sales turnover of the company was with Al Rad International Trading and White Impex General Trading LLC. AI Rad International Trading and White Impex General Trading LLC were having a distributor agreement with Varun Industries.
“Outstanding amount from AI Rad International Trading and White Impex General Trading LLC significantly increased year-on-year between 2009 and 2012 from Rs 165.69 crore (33.17crore +132.52 crore) to Rs 2233.37 crore and payments received from these buyers were Rs 78.61 crore (32.41crore + 46.20 crore) only during the same period i.e. during 2009-2012. These facts clearly show that these entities have been used as a conduit to siphon the funds out of banking channel with dishonest intention of not repaying the funds,” said the forensic audit report.
The report also added that though Varun Industries Ltd raised bills for supplies made to UAE-based companies mentioned above but actually the consignment were sent to Hong Kong and 17 UAE-based companies.
The CBI said that as per the bank’s complaint the accused company had discounted export bills, (obtained advance) against export bills sent for collection to its associate companies, namely Al Rad International Trading Est, UAE, and White Impex General Trading LLC, UAE, and did not honour the bills and later on wrote-off the same in its books.
It was also revealed that Varun Industries Ltd and its group companies were only supplying to these two UAE-based companies. The outstanding amount from these two companies significantly increased between 2009 and 2012.
“It is suspected that these entities have been used as a conduit to siphon the funds out of banking channel with dishonest intention of not repaying the funds. In domestic trade transactions, there were accommodative transactions and actual movements of goods had not happened between VIL and its local traders, as proof of supply of goods by way of lorry receipts were not submitted. That the inland LC opened by VIL were discounted at SICOM through a financial intermediary and credited to various small companies whose capability of meeting such large transaction is doubtful,” the FIR said.