The ED on Tuesday said it has attached assets worth about Rs 110 crore of Simbhaoli Sugars Limited, one of India's largest sugar mills, in connection with a money laundering probe against the firm related to an alleged bank loan fraud.
The agency said a provisional order was issued under the Prevention of Money Laundering Act (PMLA), for attachment of properties like land, buildings, plant and machinery of the distillery unit of the company located in Simbhaoli, Hapur in Uttar Pradesh.
The Enforcement Directorate, in a statement, said the total value of assets under the latest attachment order is Rs 109.8 crore.
A PMLA case was filed against the firm by the agency last year in March after taking cognisance of a CBI FIR against Simbhaoli Sugars Ltd and others for "cheating and defrauding the Oriental Bank of Commerce on the pretext of financing sugarcane farmers."
Last year too, the ED had conducted raids after the criminal case was registered.
"According to the CBI FIR, the company was given a loan of Rs 148.59 crore by the bank for providing assistance to 5,762 farmers but the funds were diverted by the company for other purposes," it said.
The company's Chairman Gurmit Singh Mann, Deputy Managing Director Gurpal Singh, Chief Executive Officer G S C Rao, CFO Sanjay Tapriya, Executive Director Gursimran Kaur Mann and five non-executive directors were booked by the CBI.
Gurpal Singh is the son-in-law of Punjab Chief Minister Amarinder Singh. The chief minister had denied any wrongdoing on the part of his son-in-law.
The ED said investigation has that the company had routed the loan funds into various other accounts and finally used it towards repayment of outstanding loans including external commercial borrowings, operational expenses of the firm and payment of cane arrears which should have been paid from the sales and revenue of the company.
The funds paid by the company to the farmers were not remitted to the accounts of the farmers and therefore, as per the terms and conditions of the loan, the liability was shifted upon the company which failed to repay, it added.
"There were serious irregularities in KYC (know your customer) documents. The loan then turned NPA (non performing asset) with Rs 98.7 crore (principal) outstanding and the bank filed a recovery suit before the Debt Recovery Tribunal (DRT)," the ED said.
Describing the modus operandi of the alleged fraud, the ED said instead of settling the entire loan liability, the company again "induced" the Oriental Bank of Commerce to withdraw its application before the DRT and grant a fresh corporate loan to it of Rs 110 crore in January, 2015 in order to clear the previous loan dues.
The company, it said, again "deliberately" failed to repay the corporate loan and at the time of filing the CBI FIR, an amount of Rs 109.8 crore were outstanding (principal amount).
The company had offered one-time settlement of Rs 14.69 crore against the entire outstanding and this highlights an "ingenious modus operandi of money laundering by taking huge loans from banks and later settling them at heavily discounted sums thereby causing huge wrongful losses to such lender banks."
The agency claimed bank loans were illegally diverted towards payment of cane dues, loan repayments and other operational expenses.
"The company, thus, laundered the funds intended for assistance to the needy farmers in utter violation of the terms and conditions and the intent of the loan," it said.