ED Attaches Assets of Rs442.85 Crore of Kwality Ltd's Erstwhile Promoter and Director
Moneylife Digital Team 17 January 2025
The Delhi zonal office of the directorate of enforcement (ED) has attached immovable properties worth Rs442.85 crore belonging to Kwality Ltd's erstwhile promoter, chairman and managing director (CMD) Sanjay Dhingra and non-executive director Siddhant Gupta in the company's Rs1,400.62 crore bank fraud case.
 
In a release, ED says, "The provisionally attached properties comprises of a farmhouse at DLF Chhatarpur (12,000 sq yards), residential properties at Vasant Vihar and Punjabi Bagh and several residential plots at Karnal and Mohali. These properties were owned by the then erstwhile promoters Mr Gupta and Mr Dhingra of Kwality Ltd through dummy companies. The driver and security guard of these two promoters were the directors in such companies."
 
ED initiated an investigation on the basis of a first information reports (FIRs) registered by central bureau of investigation (CBI) against Mr Gupta and Mr Dhingra of Kwality Ltd for cheating banks. Kwality Ltd was engaged in processing and trading milk, ice creams, and various dairy products. 
 
The FIR alleged that Kwality Ltd, through the erstwhile directors, indulged in falsification and fabrication of books of accounts by misrepresenting sales, purchases, debtors, and creditors, thereby cheating the consortium of banks. As per FIR, bank fraud is to the tune of Rs1,400.62 crore.
 
ED investigation revealed that the then promoters and directors of Kwality Ltd fudged the books of accounts to show higher sales and debtors. Huge amounts of trading, including sales and purchase, were made without actual physical deliveries or receipt of the goods at factory premises. 
 
The agency also noticed that sham companies and firms operated through implanted and dummy owners were used to divert the bank funds. The funds diverted through the stated modus were circulated and layered to conceal their origin and routed to different accounts as per the instructions of the promoters for purposes not intended by the banks, it added.
 
In November 2024, ED conducted search operations at 15 locations connected with the erstwhile promoters of Kwality Ltd. During the search operations, cash amounting to Rs1.3 crore and various evidence related to assets and bank accounts held through several shell companies by the promoters were recovered and seized. 
 
"High-end luxury cars like Porsche, Mercedes and BMW having purchase value of about Rs4 crore purchased in the name of the benami and dummy companies were also found during the search and were seized. Further demat accounts having investment value of about Rs2.5 crore were also frozen," ED says.
 
In July 2024, market regulator, Securities and Exchange Board of India (SEBI) barred Mr Dhingra and Mr Gupta from markets while imposing a penalty of Rs1.5 crore each. SEBI also fined Satish Kumar Gupta, former chief financial officer (CFO), Rs75 lakh. The penalty was levied for the involvement of these three in misstating financial figures between FY16-17 and FY18-19.
 
The investigation was referred to SEBI by the income-tax (I-T) department, after the department did search and seizure operations on 23 March 2018. The national company law tribunal (NCLT) ordered the liquidation process of Kwality in January 2021. (Read: SEBI Slaps Rs3.75 Crore Penalty on Former CMD, Director, CFO of Kwality for Misrepresenting Company's Financials)
 
Earlier in September 2020, CBI carried out searches at eight locations in Delhi, Uttar Pradesh, Rajasthan, and Haryana for alleged bank fraud of over Rs1,400 crore by Kwality Ltd and its erstwhile promoters and directors. (Read: CBI raids in Delhi, UP, Rajasthan and Haryana in Kwality's Rs1,400 crore bank fraud case)
 
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