Supreme Court Issues Notice On Plea Seeking Probe Into Amtek Bank Fraud Allegations

A Bench of Chief Justice of India UU Lalit and Justice Ravindra Bhat has posted the matter for next hearing on October 11.

During the hearing, the counsel appearing for the petitioner submitted that three separate complaints were made to the Central Bureau of Investigation, Enforcement Directorate and Serious Fraud Investigation Office [CBI, ED and SFIO] regarding the matter.

The petition filed through Advocate on Record Sameer Shrivastava states that Amtek, which is into manufacturing of automotive systems, entered into a global acquisition mode, purchasing several entities, and thereby obtaining loans to the tune of Rs. 12,800 crores from several public, government and listed banks on this pretext.

The petitioner alleged that Amtek also created hundreds of shell entities and related parties, and was in fact siphoning off the loans that had been extended to it into the accounts of these related parties through bogus sale-purchase transactions, or in the garb of extending loans to related parties; writing off loans receivable from related parties, manipulative and false book-making and accounting practices, etc.

"Notably, the hundreds of these related parties were indirectly owned and exclusively controlled % by the promotors of AAL through their web of benaamidars. And, as a result of these criminal activities, the promotors, directors, beneficiaries and key- managerial personnel and benaamidars of AAL successfully managed to defalcate thousands of crores of public funds for their own profit and gain."

Resultantly, Amtek failed to meet its debt obligations towards these public, government and listed banks, and therefore the Reserve Bank of India in 2017, directed the banks to initiate insolvency proceedings against the Company.

An employee from Ernst and Young was appointed as the RP during the insolvency proceedings and had commenced a Forensic Audit of the Company through Ernst and Young to determine if any transactions between 2015 to 2017 qualified as Preferential Transactions, Undervalued Transactions, Transactions Potentially Defrauding Creditors, And Extortionate Credit Transactions.

The Forensic Audit, though limited in nature, showed in no uncertain terms, several fraudulent transactions Amtek had carried out during the 2-year review period alone. This alone should've made the RP move the National Company Law Tribunal, the petition stated.

"That, not only should have this resulted in filing of criminal complaints with the investigating agencies to commence a thorough Forensic Audit of all such persons and entities involved, but the then-Resolution Professional ought to have moved the jurisdiction of the National Company Law Tribunal for recovery of these monies. Shockingly, neither happened in all these years, and AAL was subsequently liquidated at a haircut of 80 % causing enormous losses to the State Exchequer."Further, the plea said,

"What is utterly shocking in the backdrop of present circumstances is that the instances of these criminal, fraudulent and laundering activities had already been documented in a Forensic Audit Report ("FAR" for short) dated 13.03.2018 carried out by Ernst & Young for the then-Resolution Professional appointed for AAL, however, despite it being in existence for nearly 4 years, neither the Forensic Auditors nor the then-Resolution Professional reported the theft of these thousands of crores from the State Exchequer to any of the investigating agencies".

The Petitioner, who had been provided a copy of the Forensic Audit Report through a whistle-blower, also submitted complaints before the CBI, ED and SFIO. Despite repeated follow ups, the authorities never took any action, the petition pointed out.

Owing to this, the petition seeks a direction to appoint a retired Justice of the Supreme Court under whose stewardship the Respondent Agencies can conduct the investigation against Amtek, its officers and promoters.