ABG yard scam: Delhi HC maintains banks’ decision to declare Rishi Agarwal’s account as a scam Ship’s crew

As a relief to ailing businessman Rishi Agarwal, promoter of ABG Group, the Delhi High Court (HC), which is hearing various petitions, has granted a temporary stay of decisions by various banks classifying his accounts as fraudulent. The provisional legal protection was granted due to the lack of “opportunities for a hearing”.

Agarwal and his companies are under investigation by the Central Bureau of Investigation, the Enforcement Directorate and the Serious Fraud Investigation Office (SFIO) for causing a fraud of over Rs 24,000 crore.

Attorney Vijay Aggarwal filed four separate petitions on behalf of his client Rishi Agarwal, challenging the manner in which the banking consortium had acted against his client in various banking arrangements, resulting in his client’s accounts being declared fraudulent, without that he had been granted an opportunity to present his case.

Attorney Aggarwal argued that his client had suffered serious business losses, which was not grounds for invoking the RBI Fraud Classification and Reporting Circular, which also required criminal proceedings to be instituted before the CBI or the EOW.

Attorney Aggarwal further argued that his client’s companies had been declared an NPA without giving him an opportunity to be heard and that he had done so in addition, even as the banks engaged forensic examiners to investigate the cause and nature of his losses did not want to be given an opportunity to make his contributions, submissions and comments on the findings/results of the forensic examination.

“…the banks’ action, which was administrative in nature, was perverse and could be overturned as it violated the rights of natural justice, which every individual is entitled to as a fundamental human right, while relying on a series of bank decisions in Delhi High Court itself,” argued Aggarwal.

The HC ruled: “Counsel on behalf of the plaintiff (Agarwal) submits that the entire matter was conducted by the defendants (banks) and in so far as is de hors within the meaning of the principles of natural justice, the plaintiff before declaring the accounts when there was no hearing.” a ‘fraud’,” the court ruled. “…pending the hearing of the defendants, the decision to declare the applicant’s account a fraud is suspended,” it said.

As a result of the complaint filed by SBI, the CBI charged Agarwal, ABG Shipyard Limited and others in an alleged fraud case of Rs. 22,000 crore based on the completion of an audit by Ernest and Young. The audit report raised questions as to the veracity of transactions entered into by the company with its own group companies in which large sums of money were transferred from India to shell companies based in foreign jurisdictions. The company went into liquidation in 2020 and its assets in Surat were bought by Welspun Group for 750 crore last year.

Vadraj Cement, another project by Agarwal, is said to divert funds and incur a loss of Rs. 1700 crores to a consortium led by the Punjab National Bank. A complaint was registered with the CBI earlier this year following the completion of Pipara and Co LLP’s forensic review.

Vadraj Energy, a wholly owned subsidiary of Vadraj Cement, which drew a separate loan from a separate consortium led by the Punjab National Bank, has not yet been reported to the CBI as a bank fraud. The alleged amount diverted is Rs 400 crore but the company also received a stay of bank fraud charges.

Another company, PFS Shipping India Limited, was reported to the CBI for a Rs.1000 bank fraud. 200 crores after the account self-declared as an NPA in early 2017. Forensic examiner MK Agarwal and Associates allegedly discovered incriminating material on certain financial transactions, prompting the lead bank, the Bank of India, to report the company to the CBI for further criminal investigation into Rishi Agarwal’s alleged crimes in March this year. Source: Economic Times

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