ED Attaches Land in Shri Lakshmi Cotsyn Bank Fraud Case
The Directorate of Enforcement (ED) in Lucknow has attached 86 land parcels worth Rs 31.94 crore in connection with the Shri Lakshmi Cotsyn Limited bank fraud case. These lands, located in Chhattisgarh, are linked to the Prevention of Money Laundering Act, 2002. The properties are registered under the company, its employees, and other individuals.
The investigation began after a complaint from the Central Bank of India, accusing the company of financial misconduct from 2010 to 2018. The company allegedly misused funds from a consortium of 23 banks, led by the Central Bank of India, for manufacturing textiles. The accounts were declared Non-Performing Assets due to financial mismanagement.
A forensic audit revealed the company inflated inventory records, improperly managed auctions, and gave large discounts to related and non-existent parties. Funds were also diverted to Shri Lakshmi Power Ltd and used to buy land in Chhattisgarh.
The case involves a loan fraud of Rs 7377 crore, declared fraudulent by the RBI. The company’s assets have been liquidated by the National Company Law Tribunal.
Doubts Revealed
ED -: ED stands for the Directorate of Enforcement. It is a government agency in India that investigates financial crimes like money laundering and fraud.
Attaches Land -: When the ED ‘attaches’ land, it means they take control of the property because it is linked to illegal activities. This is done to prevent the owners from selling or using it.
Shri Lakshmi Cotsyn -: Shri Lakshmi Cotsyn Limited is a company that was involved in a bank fraud case. They were accused of taking loans and not using the money properly.
Bank Fraud -: Bank fraud is when someone tricks a bank to get money illegally. In this case, it involved taking loans and not paying them back properly.
Chhattisgarh -: Chhattisgarh is a state in central India. It is where the attached land parcels are located.
Money Laundering -: Money laundering is hiding where money really comes from, especially if it was earned illegally. It makes ‘dirty’ money look ‘clean’.
Central Bank of India -: The Central Bank of India is one of the oldest and largest commercial banks in India. They reported the fraud in this case.
Fund Diversion -: Fund diversion means using money for a different purpose than it was intended for, often illegally.
National Company Law Tribunal -: The National Company Law Tribunal (NCLT) is a special court in India that deals with company-related issues, like bankruptcy and liquidation.
Liquidated -: Liquidated means selling off assets to pay back debts. In this case, it refers to selling the company’s assets to recover the money lost in the fraud.
