ED attaches properties of Sena leader in money laundering case

The issue pertains to illegal sale of cooperative sugar mills in Maharashtra

The Enforcement Directorate (ED) on Friday attached properties worth ₹78 crore of Shiv Sena leader Arjun Khotkar in an alleged case of money laundering.

The issue pertains to illegal sale of cooperative sugar mills ( Sahakari Sakhar Karkhana) {SSK} in Maharashtra State Co-operative Bank (MSCB) case. The central agency has provisionally attached residual plant and machinery at the site of more than 200 acres of land of the Jalna Sahakari Sakhar Karkhana Limited in the name Arjun Sugar Industries Pvt. Ltd.

After directions from the Bombay High Court, a First Information Report (FIR) was registered by the Economic Offence Wing on August 26, 2019. It has been alleged in the said FIR that the cooperative SSKs were fraudulently sold by the then officials and directors of the MSCB at throw-away prices to their relatives/private persons without following the due procedure prescribed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.

As per the press release by the ED, investigations revealed that the Jalna SSK Limited was established in the year 1984-85 on around 235 acres of land, including 100 acres received without any monetary consideration from the Government of Maharashtra. The Jalna SSK failed to repay the loan availed from the MSCB and was declared as non performing asset on March 31, 2002. There was a loan outstanding of ₹33.49 crore of the MSCB on the Jalna SSK as on September 30, 2008. To recover its dues, the MSCB took possession of the said SSK in February 2009 under the SARFAESI Act. Thereafter, the MSCB conducted an auction of the Jalna SSK in February 2012 with a reserve price of ₹42.18 crore. And only two parties — Tapadia Constructions Private Limited., Aurangabad and Ajeet Seeds Private Limited, Aurangabad — participated in the said auction. Tapadia Constructions was the highest bidder at ₹42.31 crore whereas other bidder Ajeet Seeds bid below the reserve price.

Investigation revealed that Tapadia Constructions and Ajeet Seeds are operating from the same building in Jalna. After receipt of the final installment of the sale amount by the MSCB, a sale certificate was also issued to Tapadia Construction on the same day. Tapadia Constructions Pvt. Ltd did not operate the SSK and after the lapse of 15 months, the SSK along with 235 acres of land located in Jalna was said to be sold to Arjun Sugar Industries Private Limited which is incorporated by Arjunrao Panditrao Khotkar and others only with a view to purchase the Jalna SSK Limited.

Mr. Khotkar was on the Board of Directors of the MSCB during the period from 1998-2004. He was director in the Jalna SSK during the period from 1997 to 2003. As per the ED, around ₹10.56 Crore was paid by Tapadia Construction to the MSCB as initial deposit in lieu of the Jalna SSK was an adjustment entity introduced by conversion of cash through shell companies. Further, ₹31.73 crore was sourced from Arjun Sugar in December 2012. Thus Tapadia Constructions was only a proxy entity which had purchased the Jalna SSK Ltd from the MSCB as a proxy for others.

Investigation also revealed that the valuable and crucial equipment of the SSK such as boilers were sold as scrap by Arjun Sugar Industries Pvt. Ltd.