ED attaches Nathella Sampath Jewellery's properties worth Rs 3.28 bn

NSJPL, its promoters and directors, and others have been accused in a case related to bank loan fraud

The Directorate of Enforcement, Chennai, has attached 37 immovable properties worth about Rs 3.28 billion of city-based Nathella Sampath Jewellery Private Limited (NSJPL), its promoters cum directors and others under the Prevention of Money Laundering Act (PMLA), 2002, in a case related to bank loan fraud. 

The directorate has initiated investigations based on an FIR registered by the Central Bureau of Investigation (CBI), Bank Fraud & Security Cell, Bengaluru, in April 2018 against the company, its promoters, directors and others under the provisions of PMLA. NSJPL has been engaged in the sale of gold jewellery, silver articles and jewellery, and jewellery made of precious and semi-precious stones. Their showrooms are spread across Chennai, Hosur and Vellore. 

The FIR was registered based on a complaint by the State Bank of India (SBI), which is the lead bank of the consortium of banks that provided various loans to NSJPL, alleging that the promoters had unduly enjoyed bank borrowings in the form of cash credit facilities from a consortium of banks for their company from the year 2009. It was also alleged that the promoters had been misrepresenting and falsifying the books of accounts and financial statements of the company for the purpose of availing credit facilities from the lenders with a clear criminal and malafide intent to cheat and defraud the lenders, causing them a wrongful loss of about Rs 3.80 billion as on February 1, 2018. 

The directorate searched various premises of NSJPL, its promoters, and its statutory auditors. Various documents and electronic devices were seized, while no stocks of goods were found at any of the showrooms in a survey conducted. During investigations, the directorate noticed that the stocks reported to the banks were at about Rs 4.95 billion as on March 31, 2017. However, according to the forensic audit conducted, the actual stocks during the period could only be about Rs 310 million. Similarly, the sales reported for 2016-17 were Rs 15.17 billion, whereas actual sales, according to the forensic audit, were about Rs 1.57 billion. The case with purchases, which were reported at Rs 15.91 billion as against the actual figure of Rs 610 million, was similar, it alleged. The loans were obtained fraudulently, with the help of falsified statements, alleged the directorate. It has further alleged that the promoters and firms and trusts related to their family indulged in money laundering.

The investigation has led to the identification of 12 immovable properties of Rs 1.13 billion that the promoters derived from the crime's proceeds and another 25 immovable properties, including showrooms, the residence of the promoters and the registered office of the company, of a value of about Rs 2.15 billion, involved in money laundering. These properties were mostly mortgaged with financial institutions outside the consortium of banks and the investigation revealed that the crime's proceeds were used for payment of the monthly instalments towards the loans, it alleged.