ORDER

14.12.2023

FPA-PMLA-6807-6808/DLI/2023

This Appeal has been filed under Section 26 of the Prevention of Money Laundering Act, 2002 (in short “the Act of 2002”) to challenge the order dated 03rd November, 2023 passed by the Adjudicating Authority.

It is stated that an ECIR was recorded on 29th August, 2019 pursuant to a complaint dated 01^st July, 2019 filed by Serious Fraud Investigation Officer (SFIO) against M/s. Bhushan Steel Limited & Ors. It was for offence under I.P.C. and Companies Act of 2013. It was alleged that Brij Bhushan Singal and Neeraj Singal, ex-promoters of M/s. Bhusan Steel Ltd. had obtained huge loans from financial institutions with outstanding liabilities of Rs. 56,000 Crores.

Mr. Brij Bhushan Singal and Neeraj Singal, the ex-promoters of the Company had formed 157 companies in which either they were the directors or shown to be employee. In order to infuse funds in M/s. Bhusan Steel Ltd., they availed credit facility from lender banks. By using a complex web of companies and financial transaction, siphoned of the funds. It was alleged that an amount of Rs. 1,770 Crores was siphoned from M/s. Bhushan Steel Ltd and M/s. Bhushan Energy Ltd. by Brij Bhushan Singal and Neeraj Singal.

It is also alleged that Brij Bhushan Singal and Neeraj Singal transferred funds from BSL and BEL to its associated companies by showing it to be “Capital Advances”. The recipient companies transferred these funds through one or more layers of associated companies of Brij Bhusan Singal and Neeraj Singal and ultimately invested in BSL as promoters‟ equity.

The siphoning commenced with the diversion of funds as „capital advances‟ with the transfer in the head of „CWIP‟ in BSL or BEL. In this manner, an amount of around Rs. 1770 Crore was siphoned which was then used by Brij Bhushan and Neeraj Singal as their own equity under controlled companies for purchase of movable or immovable properties in personal names or in the names of the companies they controlled. Brij Bhushan Singal and Neeraj Singal made systematic investments in BSL through several promoters‟ Company after obtaining loans, the interest payments of which were made only after diversion of funds from Company BSL itself. All the loans raised for investment in BSL were repaid after redemption of preference shares amounting to Rs. 632 Crore in the F.Y. 2015-16 and 2016-17. The promoters of the company deftly devised the entire web of transactions duly and implemented it to divert monies to integrate the same into system as share capital and projecting a false financial position to the lenders by creating a fa(cid:231)ade of enhancing net worth.

That, after a complex web of interwined transactions among the group companies of Neeraj Singal with that of erstwhile Bhushan Steel Limited (BSL) and with the help of bank accounts of Brij Bhushan Singal, Ritu Singal, Uma Singal and himself, funds were remitted to M/s. BSL to the tune of Rs. 1375 Crore from FY: 2009-10 to 2014-15 wherein funds were utilized for round tripping transactions and were sourced from the Cash Credit Loan accounts of M/s. BSL and after layering through multiple other related companies/directors, invested in M/s. BSL as their own equity.

It is also alleged that the directors and staff of M/s. Bhushan Steel Limited had dishonestly and fraudulently by using false and fabricated documents diverted huge public funds to the tune of Rs. 45,818 crores during the period 2013-14 to 2016-17 into its accounts (out of which, Letters of Credit [LCs] to the tune of Rs. 24,594 crores were verified) from the banks through the instrument of LC, where Jindal Steel Works or Hindustan Zinc Ltd. were stated to be beneficiaries of LCs to the tune of Rs. 3204.09 crore, thereby causing wrongful loss to the State Bank of India and Punjab National Bank. It is also alleged that Sh. B.B. Singal and Sh. Neeraj Singal Ex promoters of BSL, in order to avail credit facilities from lender banks for its steel plant had infused huge funds as equi