Rs.975 Crore Loss to Bank of Baroda and Other Banks, ED files chargesheet against Mandhana Industries
Purushottam Mandhana, promoter of Mandhana Industries, has been accused of misusing business loans for personal benefits, leading to a ₹975 crore loss for a group of banks led by Bank of Baroda, according to a charge sheet filed by the Enforcement Directorate (ED). The investigation revealed that Mandhana and others diverted funds meant for business purposes and used them for personal gains, including repaying personal loans and purchasing properties.
Allegations and Court Proceedings
A special court for Prevention of Money Laundering Act (PMLA) cases reviewed the ED’s charge sheet, which lists 18 people as accused, including Purushottam Mandhana, his wife Prema, and son Priyavrat. The court found sufficient grounds to proceed with the case, stating there was a clear prima facie case of money laundering. The court has summoned the accused to appear in court on November 21, 2024.
Fraudulent Practices at Mandhana Industries
Mandhana Industries, a textile company based in Palghar, has been operating since the 1990s. According to the ED, the company secured 21 loans from various banks, including Bank of Baroda, under the guise of business expansion. However, it is alleged that the company inflated its turnover without engaging in real business activities. The charge sheet also claims that Mandhana Industries set up two fake entities in the names of loyal employees, but these entities did not conduct any genuine business.
Misuse of Bank Loans
Instead of using the loans for business, the Mandhana family is accused of diverting the funds for personal purposes, such as repaying personal loans, buying properties, and trading in stocks. The charge sheet further alleges that the family purchased shares of Mandhana Industries to artificially boost the company’s stock price. This misuse of funds caused a significant financial loss to the consortium of banks.
Current Status
Both Purushottam and Priyavrat Mandhana were arrested during the investigation. While Purushottam has since been released on bail, Priyavrat remains in judicial custody. The ED continues to investigate the full extent of the fraud, and more details may emerge as the case progresses. This case underscores the importance of ensuring proper use of business loans and the severe consequences of fraudulent practices on both financial institutions and the broader economy.
