ED files prosecution complaint against REL, Madhucon Group in PMLA case
Hyderabad: Hyderabad zonal unit of Directorate of Enforcement (ED) has filed Prosecution Complaint (PC) before the Special Court (PMLA) here against Ranchi Expressway Limited (REL), Madhucon Projects Limited, Madhucon Toll Highway Limited, Madhucon Infra Limited and others under the provisions of Prevention of Money Laundering Act (PMLA)- 2002.
The court has taken cognizance of the PC. The ED initiated investigation on the basis of an FIR registered by CBI ACB Ranchi, against REL and its directors. Subsequently, the CBI filed a charge-sheet before the Special Judge for CBI cases, Ranchi against Ranchi Expressways Limited and others.
As per the FIR and chargesheet, the NHAI had awarded a project of 4-laning of NH-33 on Ranchi-Rargaon-Jameshdpursection to Madhucon Project Limited. A Special Purpose Vehicle (SPV) Ranchi Expressway Limited was incorporated by Madhucon Group, to execute this project. Madhucon Project Limited was the Engineering Procurement Construction (EPC) contractor of the project.
Madhucon Group could not complete the project despite availing the full loan amount, and subsequently, their contract was terminated and an FIR was registered based on the directions of the Jharkhand High Court. The ED investigation revealed that REL obtained loans of Rs.1030 cCrore from a consortium of banks led by Canara Bank.
However, Madhucon Group did not utilize the entire loan amount for the stated purpose and diverted it to its associated entities for utilization in other works and also siphoned off the loan by giving bogus works to its related shell entities. The work on the ground suffered and they could not complete the work despite drawing the entire loan amount.
They also managed the maintenance reports and work progress reports to falsely claim higher expenses. The financials of the group were not doing well for many years and after winning the tender for Ranchi-Jamshedpur Project, Madhucon Group created an SPV namely REL and did round tripping of loan funds to show bogus investment by promoters.
Eventually, Madhucon Group could not repay the loans and the loan account turned into NPA. The ED investigation also revealed that Madhucon Group’s promoters siphoned off the loan funds by taking the entire EPC contract from its SPV and then diverting huge mobilisation and material advances for their other projects.
Loan funds were also diverted to sub-contractors and shell entities controlled by them and cash amounting to Rs.75.50 crore was received back from them. These sub-contractors did not work, had no sufficient expertise and were based in Andhra Pradesh and Telangana, whereas the project was in Jharkhand.
They took large advances from Madhucon Project Ltd. out of the loan funds and then re-routed the funds to Madhucon Group on the pretext of using their equipment and labour. Diversion of loan funds of Rs.365.78 crore has been identified during PMLA investigation till date. The ED had earlier conducted searches in the case and seized incriminating evidence and unaccounted cash of Rs.34 Lakh.
It had also attached 105 immovable properties and other assets worth Rs.96.21 crore belonging to Madhucon Group of companies and their directors. Further investigation is under progress.