HC directs ED not to take any 'coercive steps' against Bhushan Steel ex-promoter in money laundering case

The Delhi High Court on Wednesday directed the Enforcement Directorate (ED) not to take any coercive steps against Bhushan Steel ex-promoter Neeraj Singal in a matter relating to money laundering case against him.

The court directed him to co-operate in the investigation.

A bench of Chief Justice DN Patel and Justice Rekha Palli asked the Centre and ED to file a response on Singal's plea challenging a money laundering case against him and seeking quashing of Enforcement Case Information Report (ECIR) lodged by the directorate.

The court has listed the matter for further hearing on February 25.

ED has lodged a complaint of the scheduled offence under the provision of the Prevention of Money Laundering Act.

Singal has challenged the ED's complaint saying that the Serious Fraud Investigation Office (SFIO) was already probing the allegations of fraud against him in connection with the alleged siphoning of funds worth over Rs 2,000 crore.

Earlier SFIO has filed a complaint in the matter of Bhushan Steel Limited (BSL) alleging BSL had defaulted on loans following which the banks had to take a haircut of more than Rs 20,000 crore as a part of the resolution process.

The investigation of SFIO had among other things unearthed fraudulent misuse of Letter of Credits (LoCs) to the tune of around Rs 45,000 crore by the two along with BB Singal, former chairman of BSL in collusion with others.

According to the complaint, the gross misuse of the first time adoption of Indian Accounting Standards (IndAS) in misstating the financial statements of the company by fraudulently overvaluing their assets by around Rs 15,000 crore to inter alia write off inventory of around Rs 6000 crore, trade receivables to the extent of Rs 1,250 crore.

The fraudulently inflated inventory was used to raise credit from banks.

The promoters used more than 150 companies to build a complex web of transactions to carry out the siphoning off funds to hoodwink the lenders and other investors in the company.

The SFIO investigation revealed the promoters ran the listed company more like a proprietorship concern and reduced corporate governance requirements to paper formalities.