The Enforcement Directorate (ED) on Friday announced the seizure of Rs 1.3 crore in cash and “evidence” related to shell companies after it searched the former promoters of dairy major Kwality Ltd. as part of a Rs 1,400 crore alleged bank fraud-linked money laundering case.
Luxury cars and demat accounts valued at approximately Rs 6.5 crore have also been frozen under the provisions of the Prevention of Money Laundering Act (PMLA), the agency said in a statement.
The federal agency raided 15 locations in Delhi-NCR on November 27, targeting the premises of promoters and directors of the erstwhile company, such as Sanjay Dhingra and Siddhant Gupta, along with some “shell” (paper) companies connected to them. Kwality Ltd. has since been liquidated and is now under new ownership.
The ED case stems from a September 2020 CBI FIR filed against the promoters and Kwality Limited, which was involved in the processing and trading of milk, ice creams, and other dairy products. The CBI FIR alleged that the company, through its directors, engaged in “falsification and fabrication” of books of accounts by “misrepresenting” sales, purchases, debtors, and creditors, ultimately “cheating” a consortium of banks to the tune of Rs 1,400.62 crore.
The ED’s investigation found that the accused had “manipulated” the books of accounts to show inflated sales and debtors. “Huge amounts of trading (sales and purchases) were made without actual physical deliveries or receipt of the goods at factory premises,” the agency said.
The ED also noticed that “sham” companies operated through “dummy” owners and sought loans, but these funds were used under the directions of the erstwhile Kwality Ltd. promoters. “The funds diverted through the stated modus operandi were circulated and layered to conceal their origin and routed to different accounts as per the promoters’ instructions,” the agency alleged.
During the raids, the ED seized Rs 1.3 crore in cash and evidence related to assets and bank accounts held through various shell companies. The agency also froze luxury cars, including a Porsche, Mercedes, and BMW (valued at about Rs 4 crore), as well as demat accounts worth Rs 2.5 crore.
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