Hyderabad: The Central Bureau of Investigation (CBI) has booked a case against eight persons including Madhucon Project Limited, Madhucon Infra Limited and Madhucon Toll Highway Limited for allegedly indulging in diversion of funds. Former MP and TDP leader Nama Nageswara Rao is the founder of Madhucon Project Limited, which is located on Road No.36 in Jubilee Hills.
Following orders from High Court of Jharkhand, the case was booked against Ranchi Expressway Limited, its CMD K Srinivasa Rao and Directors N Seethaiah and N Prithvi Teja, Madhucon Project Limited, Madhucon Infra Limited and Madhucon Toll Highway Limited, Kota and Company and others.
According to First Information Report (FIR), the National Highways Authority of India (NHAI) had invited bids for a project related to laying four-lanes on NH-33 at Ranchi-Rargaon-Jamshedpur section on the basis of design, built, finance, operate and transfer in March 2010.
Being the lowest bidder, a letter of award was given to Madhucon Project Limited in 2011. As per requirement, a special purpose vehicle – Ranchi Express Limited (Concessionaire) was incorporated by Madhucon Group to execute the project.
Srinivas Rao, Seethaiah and Teja were the founding directors of the company. Ranchi Expressway Limited entered into a concessional agreement with NHAI in April 2011 where upon the project was entrusted to the concessionaire for execution.
The estimated cost of the project was Rs 1,655 crore as per common loan agreement (CLA) dated October 31, 2011 between Ranchi Expressway Limited and Consortium of Banks. However, Rao, Seethaiah and Teja in connivance with another person fraudulently round tripped Rs 50 crore given to Madhucon Projects Limited as an advance in 2012.
The amount was diverted by Madhucon Projects Limited to Madhucon Infra Limited which in turn routed the amount to the account of Madhucon Toll Highways Limited and further to Ranchi Expressway Limited as a subordinate debt.
In furtherance of conspiracy, Kota and Company based in Hyderabad fraudulently issued a false audit certificate based on round tripping of Rs 50 crore showing total contribution by the promoters to the extent of Rs 124.82 crore.
Ranchi Expressway Limited fraudulently obtained initial drawdown of Rs 110 crore, knowingly submitted false certificate given by Kota and Company with Canara Bank and thereby obtained initial drawdown from lender banks to the extent of Rs 110 crore.
The fraud committed by Madhucon Group of Companies was explained in detail in the FIR. As a result of fraudulent acts of Directors of Ranchi Expressway Limited, an amount of Rs 1029.39 crore was released by Consortium of Banks.
As there was no commensurate progress in the project, the loan account of Ranchi Expressway Limited was declared NPA in 2018 by Consortium of Banks. As a result, the NHAI has terminated its contract with concessionaire in January 2019.
Owing to conspiracy, funds to the tune of Rs 264 crore were diverted on account of round tripping in equity/subordinate debt infusion, diversion of mobilization and material advances and not utilising for the purpose of project as mandated by the concessionaire agreement and the CLA.