Construction firm booked by CBI for cheating bank of ₹91.92 crore

The Central Bureau of Investigation (CBI) has booked a construction company and its directors for allegedly duping Union Bank of India (UBI) to the tune of ₹91.92 crore.

In a complaint to the agency, the public sector bank claimed that the firm allegedly diverted the loan money from the bank to its associate/related firms for purposes that were not sanctioned by the credit agreement. The company is engaged in activities related to land development, earthwork, irrigation, and construction among others.

In 2009, the company had obtained various credit facilities from the bank which were renewed and enhanced from time to time and the last credit facility was sanctioned/enhanced to ₹95 crore in 2013, the complaint said. The credit facilities were secured by way of mortgage of immovable properties as well as personal guarantees.

The company allegedly failed to adhere to the financial discipline as imposed upon it by the bank in accordance with the terms and conditions of the arrangement and due to persistent irregularities shown in the repayment of the loan, the account was classified as a non-performing asset in April 2018, the bank claimed. Subsequently, the bank appointed a forensic auditor to audit the account of the borrower firm, based on which it was declared as a fraud in August 2020, a source said.

As per the forensic audit’s report, it was alleged that the company and its promoters had availed the credit facility from the bank on the basis of manipulated stock and book debt statements and financial statements with inflated figures to draw higher volume of amounts from the bank, CBI sources said. The borrower firm thereafter diverted the credit amount to its related and associated companies without its sanctioned end - utilisation, and thereby caused a loss to the bank and corresponding gain to itself, the sources said.

The CBI recently registered a case against the firm and its directors under section 120-B (criminal conspiracy) read with 420 (cheating), 465 (forgery), 467 (forgery of valuable security, will, etc), 468 (forgery for purpose of cheating), and 471 (using as genuine a forged document) of the Indian Penal Code and section 13 (2) read with 13 (1) (d) (criminal misconduct by public servants) of the Prevention of Corruption Act.