New Delhi: In a significant development in corporate fraud investigations, the Enforcement Directorate (ED) on Thursday arrested Sandeep Gupta, the promoter of Richa Industries Ltd, from Gurgaon. The arrest follows revelations that Gupta allegedly orchestrated a complex scheme to cheat banks of hundreds of crores of rupees while simultaneously laundering the company's valuable assets during its insolvency proceedings.
Details of the Arrest and Custody
The ED's action came after it was discovered that Gupta had not only defrauded multiple banks but had also diverted Richa Industries' assets to shell entities controlled by him and his associates. Following his arrest, a special court in Gurgaon remanded Gupta to eight days of ED custody, allowing investigators to delve deeper into the intricate web of financial misconduct.
Pattern of Insolvency-Related Fraud
This investigation represents one of several probes the agency has launched into fraud cases linked to corporate insolvency. In these scenarios, valuable assets are allegedly siphoned off before companies are sold, forcing lender banks to accept massive haircuts—sometimes as high as 90-95% of their outstanding dues.
A parallel case recently saw the ED sharing critical information with Delhi Police, leading to the registration of an FIR against Suraksha. This entity had acquired Jaypee Infratech Ltd through insolvency but now faces accusations of siphoning off prime commercial properties and hospitals. The proceeds were allegedly laundered through shell entities beneficially owned by the promoters and their family members.
The Richa Industries Insolvency Saga
In the specific case of Richa Industries Ltd (RIL), the corporate insolvency resolution process initiated in 2018 reached a dead end due to the absence of an approved resolution plan. Consequently, the National Company Law Tribunal (NCLT) ordered liquidation on June 11 last year.
A liquidator was appointed, and the sale of RIL's assets yielded a mere Rs 40 crore to public sector banks Indian Overseas Bank (IOB) and Union Bank. This amount stands in stark contrast to their admitted claims of Rs 696 crore, representing an approximate 94% haircut—a devastating financial blow to the lending institutions.
Allegations of Concerted Conspiracy
The ED has accused Gupta of engaging in a concerted conspiracy to siphon off the company's assets and subvert the corporate insolvency resolution process (CIRP). Investigators uncovered that in October 2018, just before the initiation of CIRP, RIL issued corporate guarantees exceeding Rs 232 crore to six entities, all signed by Gupta.
These beneficiary entities collectively held 48.25% voting rights in the Committee of Creditors (CoC), effectively blocking IOB and Union Bank from independently steering or approving any resolution plan. The timing and concentration of these guarantees strongly indicate deliberate structuring to influence CoC control during the insolvency proceedings.
Subversion Through Shell Companies
To further undermine the insolvency process, Gupta allegedly incorporated a shell company named Saariga Constructions Pvt Ltd (SCPL), using former RIL employee Neha Singh as a benamidar (nominee). Through coordinated efforts, SCPL fraudulently secured voting rights in the CoC, enabling the Gupta family to obstruct and influence the CIRP in their favor.
Diversion of Funds and Assets
The agency also noted significant diversion of funds through related party transactions. Between 2015-16 and 2017-18, approximately Rs 16.4 crore were siphoned off to group entities under the guise of loan repayments. During 2018-19, RIL funds were utilized to acquire controlling interest in Richa Krishna Constructions Pvt Ltd, diverting a valuable Rohtak project during the CIRP.
In the same period, shares of RIL were transferred at gross undervaluation, causing substantial financial loss to the company. These actions, according to the ED, demonstrate a systematic approach to asset stripping and financial manipulation that has become alarmingly common in corporate insolvency cases.
