Delhi Court sends five people to custodial remand in Bhushan Steel fraud case

Earlier, ED had provisionally attached assets worth Rs 61.38 crore on 08-11-2021. The provisional attachment order was subsequently confirmed by the adjudicating authority on July 24, 2022.

New Delhi: The Rouse Avenue Court has sent five persons arrested by the Enforcement Directorate in connection with an alleged Rs 56,000 crore bank loan fraud under a money laundering case against Bhushan Steel Ltd (BSL) to custodial remand. Special Judge Rajesh Kumar Goel sent the accused, namely Ajay S Mittal and Archana Ajay Mittal, to ED custody until January 14, 2024 and accused, namely Nitin Johri, Pankaj Kumar and Pankaj Kumar Tiwari, to ED remand until January 15, 2024.

The ED claims that the promoters, directors, and officials of Bhushan Steel prepared forged documents and made fraudulent representations to banks to discount Letters of Credit and diverted funds back into their own companies. Funds were misappropriated against the fabricated LCs created in favour of JSW Steel limited and Hindustan Zinc Limited.

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The judge said, “Keeping in view the totality of the circumstances, particularly the seriousness of the allegations made against the accused persons, I am of the considered opinion that custodial interrogation of the accused persons is required to ascertain the further complicity of the accused persons in laundering the proceeds of crime and modus operandi adopted by them.”

According to the Directorate of Enforcement (ED), five persons were arrested on January 11, 2024, under PMLA 2002 in connection with the money laundering investigations against Bhushan Steel Limited related to bank fraud of Rs 56,000 crore.

The arrested persons are Ajay Mittal [brother-in-law of promoter Neeraj Singal], Archana Mittal [wife of Ajay Mittal and sister of Neeraj Singal], Nittin Johri [the then CFO of Bhushan Steel] and two others. ED initiated an investigation on the basis of the prosecution complaint filed by the Serious Fraud Investigation Office [SFIO] against Bhushan Steel Limited. The said complaint had invoked scheduled offences under the PMLA Act.

ED investigation revealed that erstwhile Bhushan Steel Limited [BSL] and its Managing Director, namely Neeraj Singal and his associates, formed several shell companies. They rotated funds from one company to another through a chain of multiple entities. The funds were circulated to infuse capital, buy property and for other personal purposes not intended by the banks. “The misappropriated funds were diverted to other group/associated companies, causing wrongful loss to the State Bank of India and Punjab National Bank,” stated ED.

Earlier, ED had provisionally attached assets worth Rs 61.38 crore on 08-11-2021. The provisional attachment order was subsequently confirmed by the adjudicating authority on July 24, 2022.

A search operation was conducted on Neeraj Singal on June 9, 2023 and he was arrested by the ED on the same day. Neeraj Singal is in judicial custody to date. A prosecution complaint has been filed against him and other accused on 08-08-2023 and cognizance has been taken by the Hon’ble PMLA Court on November 11, 2023.

Another search operation was conducted on October 13, 2023, with respect to certain persons of BSL who had a key role in the alleged bank fraud. Important digital evidence and valuables were seized during the said search. Ajay Mittal and Archana Mittal knowingly received proceeds of crime to the extent of Rs 70 crore.

They also mortgaged the property of BSL and routed the funds to the family of Neeraj Singal. Nittin Johri and two others are ex-employees of BSL who were the main persons in charge of accounts and banking transactions.

“The said 3 persons are directors in various paper companies managed by Neeraj Singal for the rotation of funds. They manipulated the accounts of BSL and were also involved in providing fake documents/details to the bank so as to raise loan funds. Thereafter, they were actively involved in the diversion of Bank funds,” stated ED.