ED arrests Gurgaon's Richa Industries promoter for cheating banks, laundering assets during firm’s insolvency

NEW DELHI: ED on Thursday arrested Sandeep Gupta, promoter of Richa Industries Ltd, from Gurgaon after it was found that he had not only cheated banks of hundreds of crores of rupees but had also allegedly laundered the company's valuable assets, when it went to insolvency, by diverting them to shell entities floated by him and his associates. Gupta was remanded to eight days of ED custody by a special court in Gurgaon.

The probe is one of the many the agency has launched into fraud cases related to corporate insolvency where assets were allegedly siphoned off before the companies were sold, with lender banks forced to take haircuts of up to 90-95% of their outstandings.


In a similar case, ED recently shared information with the Delhi Police for registering an FIR against Suraksha, which had acquired Jaypee Infratech Ltd (JIL) through insolvency, but has now been accused of siphoning off prime commercial properties and hospitals of JIL, laundering proceeds through shell entities beneficially owned by the promoters and their family members.

In the Richa Industries Ltd (RIL) case, the corporate insolvency resolution process initiated in 2018 reached a dead end in absence of an approved resolution plan, leading the National Company Law Tribunal (NCLT) to order liquidation on June 11 last year. A liquidator was appointed and the sale of RIL yielded Rs 40 crore to public sector Indian Overseas Bank (IOB) and Union Bank against admitted claims of Rs 696 crore, an approximate 94% haircut, ED said.

The agency has accused Gupta of a "concerted conspiracy" to siphon off the company's assests and subvert the corporate insolvency resolution process (CIRP).

"Investigation found that in Oct 2018, just before initiation of CIRP, RIL issued corporate guarantees of over 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. The timing and concentration of guarantees indicate deliberate structuring to influence CoC control during insolvency proceedings," ED has said.

To subvert the insolvency process, it said, Gupta had incorporated a shell company, Saariga Constructions Pvt Ltd (SCPL), using former RIL employee Neha Singh as a ‘benamidar'. "Through coordinated efforts, SCPL is said to have fraudulently secured voting rights in the CoC, enabling the Gupta family to obstruct and influence CIRP in their favour," ED said.

The agency noted that significant diversion of funds through related party transactions. Between 2015-16 and 2017-18, about Rs 16.4 crore were siphoned off to group entities under the guise of loan repayments. During 2018-19, RIL funds were used to acquire controlling interest in Richa Krishna Constructions Pvt Ltd, diverting a valuable Rohtak project during CIRP. In the same period, shares of RIL were transferred at a gross undervaluation, causing financial loss to RIL, ED claimed.