CBI files Rs 970-mn loan default case against Simbhaoli Sugars, officials

The Central Bureau of Investigation (CBI) on Sunday registered a case on a complaint from Oriental Bank of Commerce (OBC) against a private sugar company based at Simbhaoli in Hapur district of Uttar Pradesh for defaulting loan.

The case is registered against the chief managing director (CMD) of the company and others including directors, chief executive Officer (CEO), chief financial Officer (CFO) and unknown bank officials and other private persons, u/s 120-B r/w sec. 420 & 409 of the Indian Penal Code (IPC) and Sec. 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 for causing a loss of Rs.109.08 crore (approximately) to the bank.

It was alleged that the Oriental Bank of Commerce had sanctioned a loan amounting to Rs.1.48 billion in 2011 to the said private company.

The loan was sanctioned for financing individual / joint liability groups (JLG) / self help groups (SLG) / sugarcane farmers in a tie-up arrangement under the Reserve Bank of India (RBI) scheme to 5,762 sugarcane farmers supplying sugar produce to the said private company, from January 25, 2012 to March 13 2012, which was dishonestly and fraudulently diverted by the company for its own needs.

The account turned a non-performing asset (NPA) on March 31, 2015, and was later declared as an alleged fraud of Rs. 978.5 million. The bank intimated the Reserve Bank of India (RBI) on May 13, 2015, about the fraud.

It is further alleged that in addition to the existing NPA, the bank, under multiple banking arrangements sanctioned another corporate loan of Rs.110 crore to the said private sugar company on January 28, 2015, to pay its outstanding loan of Rs. 978.5 million

The OBC adjusted the total liability of Rs. 112,94,99,471 of the said private company on June 30, 2016, by way of deposit of this new corporate loan.

The corporate loan, too, turned NPA on November 29, 2016.

Search was being conducted on Sunday at eight premises including the residence of directors, factory, corporate office and the registered offices of the company in Delhi, Hapur, and Noida.

The investigation is underway. Further details are awaited.