Seven locations under scanner; company and its directors accused of cheating banks after taking loans; look-out circulars issued against accused

The Enforcement Directorate on Monday searched the premises of Diamond Power Infrastructure Ltd. (DPIL) in Vadodara and its directors, who allegedly cheated 11 banks by not repaying loans of Rs. 2,654 crore. The loans were declared non-performing assets in 2016-17.

“Searches are being carried out in seven locations in Vadodara, Gujarat, under the Prevention of Money Laundering Act,” an official said.

Two residences of the accused were found locked. “The owners are not available since the CBI search on April 5. The team will break in and search the premises after informing the police. Their employees have been involved as witnesses,” the official said.

Bail petition

The CBI, which has issued look-out circulars against the accused, said they were in India and filed an anticipatory bail petition in a special court in Ahmedabad, which reserved its order for Tuesday.

The Enforcement Directorate searched the official premises of the DPIL, Diamond Power Transformers Ltd. and Northway Spaces Ltd. The directorate’s investigation is based on an FIR filed by the CBI against the company and its promoter, S.N. Bhatnagar, and his sons Amit and Sumit, who are the managing director and the joint managing director, respectively. The company makes cables and other electrical equipment.

The CBI has alleged that the DPIL had fraudulently availed itself of credit from a consortium of 11 public and private banks since 2008, though the company and its directors were on the RBI’s defaulters list and the ECGC Caution List at the time of initial sanction of credit. Axis Bank was the lead bank for the term loan when the consortium was formed in 2008. The Bank of India was the lead bank for cash credit limits.

In its report to the banks, the DPIL allegedly projected inflated turnovers. But Bank of India officials did not decrease the cash credit limits, the agency alleged.

The CBI said the company had been submitting false stock records to the lead bank so as to draw more into the cash credit accounts.