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CBI Files FIR Against PAL Trading for Alleged Rs 24 Crore Loan Fraud via Shell Companies

Fraud, Bribery & CorruptionCBI Files FIR Against PAL Trading for Alleged Rs 24 Crore Loan Fraud via Shell Companies

The Central Bureau of Investigation (CBI) has registered a First Information Report (FIR) against a Mumbai-based company, PAL Trading, for allegedly siphoning off money that was loaned from the State Bank of India (SBI) through 17 shell companies. This alleged fraudulent activity has caused a loss of Rs 24 crore to the bank.

Here are the key details of the case:

  1. PAL Trading, based in Mumbai, had received credit facilities totaling Rs 22 crore from the State Bank of India in 2007.
  2. As of December 27, 2012, the outstanding loan amount had risen to Rs 24.20 crore, leading to it being classified as a non-performing asset.
  3. During a forensic audit of PAL Trading, it was revealed that the company had misappropriated and diverted the loan funds to real estate companies owned by relatives of the company’s directors, Rinku Patodia and Anita Patodia, through 17 shell companies.
  4. The term “shell company” refers to a company that lacks active business operations or significant assets and can sometimes be used for illegal purposes such as tax evasion, money laundering, or obscuring ownership.
  5. The company allegedly opened 28 letters of credit, each valued at Rs 25 lakh, from the bank between December 2011 and February 2012. These letters of credit were later devolved by the shell companies.
  6. The FIR alleges that this misappropriation of funds was carried out systematically and in a planned manner.
  7. The company is also accused of misrepresenting its financial situation to SBI, claiming that it was facing a cash crunch and needed overdrafts to continue its operations. However, it was allegedly routing its sale proceeds through accounts with other banks, including ICICI Bank, rather than using the cash credit account maintained with SBI.
  8. The CBI has alleged that the company’s actions, including the diversion of funds and false representations to the bank, demonstrate dishonest intentions on the part of the company and its management.

The FIR marks the initiation of a formal investigation into the case, and further legal action may follow as the investigation progresses.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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