Sanjay Dalmia Group: Did He Commit a INR 540 Billion Fraud?
Businessman Sanjay Dalmia Group was born in India in 1944. He claims that he continues to lead the philanthropic trusts run by the Sanjay Dalmia Group of Companies, a large international corporate group with its headquarters in Delhi. The PHD Chamber of Commerce and FICCI (Federation of Indian Chambers of Commerce and Industry) are two trade associations with which Sanjay Dalmia Group is affiliated. He has also served on the board of directors of the Union Bank of India and as a member of IDBI’s (Industrial Development Bank of India) Northern Committee.
Sanjay Dalmia Group is also a founding director of the “Europe-India Chamber of Commerce” (EICC), established to boost trade, commerce, and investments between India and Europe. It has its headquarters in Brussels.
Sanjay Dalmia Group ACCUSED IN THE Rs 38-CR JSCB SCAM HELD GUILTY
Sanjay Dalmia Group, the primary suspect in the 338 billion Jharkhand State Cooperative Bank (JSCB) scam, was imprisoned after being detained by police near the Balaji Dham under the Hirapur police station in Asansol, West Bengal, which is part of the Burdwan district.
Sanjay Dalmia Group was detained on Monday in Asansol close to Balaji Dham. We had been following leads and monitoring his movements. He was residing in Mukesh Agrawal, a well-known local businessman’s home.
We detained him as soon as he left the residence concerning the fraud and loan default totaling Rs 33.50 crore at the JSCB branch in Seraikela, according to Kolhan CID deputy superintendent of police (DSP) Animesh Gupta.
Gupta claimed that on Tuesday, Sanjay Dalmia Group was brought back and appeared in court.
Gupta stated, “The court sent him to judicial custody while we have filed an application for taking him on remand for three days.” He was sought after in relation to a separate 34.14 crore scam, Gupta added.
JSCB has struggled with scandals totaling 1400 crore over the past ten years, and as a result, its capital reserve has decreased to 1,200 crore from 12,400 crore.
According to police sources, the inquiry into the alleged 125 crore bank loan default at an Allahabad Bank branch in Jamshedpur has been expanded.
Promoter for Golden Tobacco and GHCL Sanjay Dalmia was arrested in a case involving real estate fraud.
A top executive of the Mumbai-based Golden Tobacco Company (GTC) was apprehended after being stopped at the Kolkata airport as he attempted to leave the country, according to police. The executive was the subject of a Look Out Circular (LOC) in an alleged Rs 540 crore cheating case against whom the LOC was issued.
As the LOC had been issued against him by the Mumbai police’s Economic Offence Wing (EOW), GTC Chairman Sanjay Dalmia Group was stopped by immigration officials at the Kolkata airport on Sunday, according to Deputy Commissioner of Police KMM Prasanna.
Both property developers and sellers are subject to fake property registrations. In this kind of real estate fraud, the con artist will fabricate property title documents and claim ownership of the property. There have been multiple instances where con artists copied title deeds for abandoned or contested properties and sold them to purchasers.
Sanjay Dalmia Group was given to the EOW, who yesterday transported him to Mumbai and arrested him. He was subsequently brought before a judge, who ordered him to remain in police detention until July 14, according to Prasanna.
According to authorities, Sanjay Dalmia Group and others were arrested in 2012 by the EOW under IPC sections 34 (common intention), 120B (criminal conspiracy), 420 (cheating), and 406 (criminal breach of trust).
Sanjay Dalmia Group was ordered to appear in person before a Mumbai local court on April 11 in connection with the case after the Supreme Court rejected his application for anticipatory relief in March.
He did not, however, show up for the EOW, according to the police.
The FIR against him claims that the GTC agreed to a Memorandum of Understanding (MoU) to construct a land in 2009 with Sheth Developers and Suraksha Realty. For Rs. 540 crores, a 14-acre parcel of land next to Mithibai College was to be purchased.
Sheth Developers discovered the land had significant liabilities in the form of Income Tax and Central Excise dues after making a partial payment of Rs 132 crore. The Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) discovered that it was involved in several lawsuits regarding the land.
Sheth Developers complained to GTC after it attempted to sell the land to a third party, according to the police, who said that Sheth Developers subsequently went to the EOW, which led to the filing of an FIR against Sanjay Dalmia Group and others.
GTC Chairman Dalmia is being investigated for fraud
A top executive of the Mumbai-based Golden Tobacco Company (GTC) was apprehended after being stopped at the Kolkata airport as he attempted to leave the country, according to police. The executive was the subject of a Look Out Circular (LOC) in an alleged Rs 540 crore cheating case against whom the LOC was issued.
As the LOC had been issued against him by the Mumbai police’s Economic Offence Wing (EOW), GTC Chairman Sanjay Dalmia Group was stopped by immigration officials at the Kolkata airport on Sunday, according to Deputy Commissioner of Police KMM Prasanna.
Sanjay Dalmia Group was given to the EOW, who transported him to Mumbai and arrested him. He was subsequently brought before a court, which ordered him to remain in police detention until July 14, according to Prasanna.
According to IPC sections 406 (criminal breach of trust) and 420 (cheating), the EOW charged Sanjay Dalmia Group and others in 2012. Police said that 34 (common intention) and 120B (criminal conspiracy) both apply.
Sanjay Dalmia Group was ordered to appear in person before a Mumbai local court on April 11 in connection with the case after the Supreme Court rejected his application for anticipatory relief in March.
He did not, however, show up for the EOW, according to the police.
The FIR against him states that in 2009, the GTC agreed to a Memorandum of Understanding (MOU) for the development of a plot with Sheth Developers and Suraksha Realty.
For Rs. 540 crores, a 14-acre parcel of land next to Mithibai College was to be purchased.
Sheth Developers discovered the land had significant liabilities in the form of Income Tax and Central Excise dues after making a partial payment of Rs 132 crore. The Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) discovered that it was involved in several lawsuits regarding the land.
Sheth Developers complained to GTC after it attempted to sell the land to a third party, according to the police, who said that Sheth Developers subsequently went to the EOW, which led to the filing of an FIR against Sanjay Dalmia Group and others.
SEBI has prohibited GHCL brass because of stake gaps
For allegedly breaking several securities market laws, including insider trading regulations, the Securities and Exchange Board of India (Sebi) has barred GHCL Ltd, its promoter Sanjay Sanjay Dalmia Group, two top officials, and 43 promoter group firms from the securities market until further orders.
The company was found guilty by the regulator of regularly disclosing misleading promoter shareholding information over the four quarters of 2008. The overstatement was more than 100% in the latter three quarters of the year.
Even though Link Intime, the company’s registrar, reported that the promoters held 19.4%, 18.02%, and 18.74% of the company’s shares at the end of June, September, and December 2008, respectively, the company had informed the exchanges that the promoters held 40.4%, 40.3%, and 38.32% during these times.
The overstatement was less in the first quarter of 2008 than it is now.
According to registrar statistics, as of March 31, 2008, the firm reported that the promoters owned 47.6% of the company, whereas they only owned 32.4%.
The promoter holding had decreased by up to 20% as of March 31 due to an anomaly in the company’s submission of shareholding information, as reported by DNA Money on April 15.
“This is a listed companies and its management’s extremely serious offense… The corporation’s deliberate dissemination of incorrect information is completely unacceptable for a publicly traded company. According to an order issued on Monday by KM Abraham, a full-time member of Sebi, “filing incorrect and blatantly wrong information concerning the promoters’ holding presents a misleading picture about the promoters’ involvement in managing the operations of the company.
The aggrieved parties have been granted 15 days by Sebi to file a lawsuit against the ex-parte, ad interim order.
We are researching the order, Sanjay Dalmia Group stated. To Sebi, we shall reply. Since the situation is still pending, I am unable to comment.
According to a senior member of the GHCL staff, “The promoters had pledged over 20% shares with financial institutions and these shares have been invoked in the fourth quarter of FY09.”
The official affirmed that the promoters had used the money for personal expenses rather than bringing any money into the company from the pledged shares. He insisted that “the margin call was triggered, which resulted in the shares being invoked.”
However, according to experts, the Satyam scam and the new pledge disclosure rules that followed have doomed the corporation.
The new regulations require corporations to disclose any pledging of shares by their promoters on an ongoing basis whenever such pledges are made, as well as at the end of each quarter.
The company management appears to have cheerfully falsified the exchange filing for the previous four quarters, according to a corporate law specialist. The information from the registrar appears to have been ignored by the company secretary or made to be ignored by management.
The two individuals blacklisted by Sebi are managing director Ravi Shanker Jalan and company secretary Bhubaneswar Misra.
According to the expert, unless the lender uses the pledging method, the promoter’s account will reflect the shares in the depository data that the registrar receives.
“It is obvious that the lender has already used the promise because the registrar’s data indicates that shares did not lay in the promoter’s account. The promoter must have had some sort of informal agreement with the lender, though, wherein he would pay back the loan and acquire the shares at a later time, as he was not required to reveal pledges, the analyst added.
However, due to the share-pledging regulations put in place by Sebi for the March 2009 quarter, this arrangement was unable to continue. The corporation therefore made an effort to reconcile the holding with the exchange filing.
“As of March 31, 2009, the promoter holding as reported to BSE is 18.16%. The promoter holding as of the quarter ended December 31, 2008, was 18.74%. The promoters’ attempt to balance their incorrect ownership reported by them in the previous four quarters by providing the ostensibly accurate holding for the March 2009 quarter is demonstrated by this, according to the Sebi ruling.
The head of a significant institutional lender noted that since GHCL was named in a Sebi order in 2007, it has been impossible for it to obtain funding from any structured financing entity. Since no market institutions would touch their shares following the Sebi proceedings in 2007, they were compelled to take out loans from private lenders.
The regulator issued an order barring six GHCL promoter organizations on April 25, 2007, for creating a false and deceptive impression of trading in GHCL.
According to reports, GHCL has obtained a Rs 53 crore loan against its land and property in Connaught Place, New Delhi, as well as a Rs 75 crore loan from its principal bankers.
One of the company’s banks, IDBI, stated as a top executive, “I cannot share precise facts about any client. However, we are not at odds with Gujarat Heavy (GHCL).
On Monday, GHCL shares on the BSE decreased by about 1% to Rs 32.05.
Golden Tobacco Company is accused of committing excise fraud by the government.
The government accuses Sanjay Dalmia’s GTC of using close-knit wholesalers to steal money from the business and then reincorporate it through fake book entries in order to avoid paying Rs 50 crore in excise duties.
50 crore rupees are at stake. During investigations carried out between 1980 and 1982, the Government’s investigators discovered what they perceived to be a tax trick to stash away this large amount into covert pockets two years prior.
However, the Government has been puzzlingly slow in trying to recover the money from Golden Tobacco Company (now renamed GTC Industries), in a cautionary tale that contains textbook bureaucratic dithering, deliberate delays, and legal quibbles. The daily cost of the delay is Rs. 10 lakhs.
The officials in charge of the case were at one point routinely relocated to remote locations. In Parliament, inquiries have been made on alleged efforts to conceal the case. Additionally, the Public Accounts Committee has consistently prodded the Finance Ministry to implement corrective action. But the money hasn’t been found yet.
The raids on GTC’s offices, wholesalers, and semi-wholesalers in numerous towns and cities across the nation started the action following a protracted inquiry. The cigarette manufacturing corporation is said to have engaged in a nationwide excise evasion scheme in cooperation with its dealers, according to “truckloads of documents” that were found as proof.
Finally, the excise authorities served GTC with two show-cause letters in 1983 following a legislative uproar in which the Government was openly accused of seeking to cover up the incident.
However, the show cause notices regarding under-recovery of excise could only cover a period beginning six months prior to the notice’s issuance, which is why the company’s attorneys were able to get a stay order from the courts on the grounds that the notifications dealt with time-barred issues. In addition, the 1983 notice’s coverage span included the years 1978–1979 and 1979–1980, according to GTC’s attorney Umesh Khaitan.
The government finally started paying attention again two whole years later, thanks to the Parliamentary Public Accounts Committee. This time, they sent a notification to the business that was allegedly engaging in fraud. However, GTC went back to court and was granted a stay on the same grounds that the case had expired.
A notice that makes claims of fraudulent manipulation is valid for five years. However, the company’s attorneys argued that, as before, more than five years had passed before the notice was published, and that this was in fact the case as the 1985 notification related to a time frame earlier than 1980.
The company’s attorneys would not have been able to obtain a stay order on the technical basis that the issue was time-barred if the claim of fraud had been stated in either of the 1983 show cause notifications. However, nothing was done. And now the court has ruled that no orders can be made, even if administrative actions against the corporation may still be taken.
Even today, despite excise authorities’ acknowledgment that the daily loss is a staggering Rs 10 lakh, the issue has not yet been brought up for departmental adjudication. The Central Board of Excise and Customs (CBEC) was only recently prompted to establish a special cell with the task of building a prosecution case against GTC by the Revenue Department of the Finance Ministry.
Jyotirmoy Dutta, Chairman of the CBEC, declared: “We will not permit anyone to profit from any delays on our behalf. We will argue our case in court because we have a strong case against them. But that simply raised the question: Why, if the government had a strong case, had the matter gone on for four years?
The information already available to the officials, however, reveals a cunning strategy through which GTC and its dealers allegedly used a system of fictitious accounts, phony agencies, financial cunning, and strict control over the distribution machinery to avoid paying their fair share of taxes, according to Government documents. Khaitan, who stated last week that “There is nothing to the case,” disagrees with this scenario.
The show cause notice is not supported by any facts. The relevant officials conducted a thorough investigation after the raids and came up with no evidence of wrongdoing.
However, the reality remains that the investigation was obstructed by the Government being subjected to significant pressure, and senior members of the Directorate of Revenue Intelligence substantially reduced the number of investigators on the job and hampered the probe’s progress.
Furthermore, according to the Government’s records, it has possessed information amassed by the investigators since 1980 that paints a vivid picture of what GTC and its dealers were up to.
The case diary notes that all of the company’s existing wholesalers were replaced with 13 Marwari families in 1979 when Sanjay Dalmia Group purchased GTC from the Narsis, a Gujarati family.
By 1983, about 40 of these families were in charge of 330 wholesalers, who were in charge of the company’s sales across India.
In 1982, only the Sardas and the Thard families, each of which had a number of subsidiary partnerships with clearly defined market regions, controlled the selling of cigarettes in Bombay.
According to the Government’s documents, the wholesalers and other dealers further down the chain were selected less for their expertise in the cigarette business and more for the purpose of forming a close-knit organization that would be an extension of the mother company in the ensuing financial wheeling and dealing.
The investigators claimed that the economic relationship between GTC and its dealers “was in the nature of transactions between commercially related persons who have both a direct and indirect interest in promoting the business of each other”
According to the records, the overall scheme to avoid paying excise taxes started in 1979. GTC started gradually lowering its wholesale costs, frequently by making little adjustments to the cigarette brands. Both the excise tax and the profit tax were reduced by the price decreases.
On paper, this exercise was not against the law. The cigarette industry has the flexibility to set its prices, according to attorney Khaitan. In actuality, the Government agreed to our price lists following discussions. The Government was made aware of the entire plan.
But there was a problem. Retail pricing ought to have decreased if wholesale prices were cut. This didn’t happen; they stayed the same instead. Following their examinations, government inspectors claimed that wholesale prices had also altered solely on paper and had not actually decreased.
Kutcha or dummy vouchers represented the “lowered” prices. According to the Government, the corporation then reinvests the difference between the old and new prices. The corporation is accused of using this accounting ploy to artificially lower the selling price of cigarettes on the books, significantly lower the excise tax on cigarettes, and then reinvest the money in a way that would not be subject to taxes.
After receiving their smokes at an abnormally cheap price, GTC’s wholesale customers sold them to their dealers or semi-wholesalers downstream for a bigger margin. For instance, GTC charged Rs 69.18 per thousand cigarette sticks to its wholesale customers for the Panama Virginia Special. To semi-wholesale dealers, the wholesaler offered them for sale for Rs 94.20.
However, because the wholesalers provided the dealers with kutcha certificates indicating that they had sold the cigarettes for Rs 74.20, this final price—the real earnings—was not recorded in the accounting records.
The actual profit to the wholesaler was calculated to be roughly 25 rupees per thousand cigarettes (the difference between Rs 69.18 and Rs 94.20).
For the record, however, the wholesalers only displayed a profit of Rs. 5, which represented the difference between Rs. 74.20 (the fictitious voucher) and Rs. 69.18 (the falsely lowered ex-factory price). According to government inspectors, several tax avoidance strategies were used to reinvest the hidden profit of Rs 20 into the business.
The price GTC charged its dealers for a thousand sticks of Panama Filter King was Rs 90.91. Although invoices revealed that the dealers had only paid Rs 104.25, the wholesaler nevertheless received Rs 154.25 in actual payment from his dealers, resulting in an unreported profit margin of Rs 50 per thousand cigarettes.
A report from the Finance Ministry states that one way to reinvest the hidden earnings was through a complicated system of commercial credit and deposits, with interest rates set up to encourage wholesalers to reinvest their funds in the company. To put it another way, the debits and credits were modified to generate a legitimate cash flow between the wholesaler and the business to pay for the flow-back of the “extra” funds.
According to federal inspectors, another way that the unexplained money reached the parent business was through wholesalers’ payment of advertising and sales promotion costs. Raids on various advertising agencies and records taken from them indicated that although the wholesaler was responsible for these costs, the firm had control over them.
Additionally, it was believed that some bills maintained by GTC as expenses for advertising and sales promotion were either inflated or made up. Additionally, it was discovered that several advertising businesses that were sending GTC bills were simply operating on paper, issuing bills solely to allow the flow-back of money from wholesalers to GTC.
The Sanjay Dalmia Group family-owned Govan Advertising, Everest Advertising, and Blitz Advertising were at least three of the companies that filed lawsuits against wholesale dealers as well as customers.
Investigators advised that to prevent record destruction or alteration, it would be necessary to obtain the statements of all directors and senior officers as well as to keep a constant eye on the entire GTC network due to several “suspicious transactions” in which the company’s officers may have personally taken part.
This was not done, once more. Instead, the case’s revenue officers were reassigned to different regions of the nation, and the high court’s authorized adjudication process has advanced slowly.
The department finally took action after Finance Minister V.P. Singh ordered that his officers go after the “big fish” I don’t believe in concepts like time-barred, said V.P. Singh. Even after a century, if the money is owed to us, we will get it back. If Singh is willing to back up his words with actions, only time will tell.
Sanjay Dalmia Group requested a hearing with EOW
In connection with a case of cheating, the Bombay High Court has ordered Delhi-based businessman Sanjay Dalmia Group to appear before the Economic Offences Wing (EOW).
On November 13, the court declined to toss Dalmia’s FIR against the head promoter of the cigarette company Golden Tobacco Company and instead ordered him to appear before EOW.
Indiabulls Financial Services filed a complaint against Sanjay Dalmia Group and others, alleging fraud, after lending Rs 225 crore to Sanjay Dalmia Group entities.
Sanjay Dalmia Group’s bail denied in Rs. 540 billion fraud case
Sanjay Dalmia Group, chairman of the struggling Golden Tobacco Company (GTC), was denied bail by a magistrate’s court in a Rs 540 crore fraud case, claiming that he had previously sought to avoid arrest and even attempted to exit the country.
The judge stated that there was no assurance Sanjay Dalmia Group, 78, would be present for the case’s trial even if bail was granted.
Sheth Developers and Suraksha Realty, two real estate companies, claim that Sanjay Dalmia Group and his company defrauded them in a 2009 agreement to develop a 31,128 square-meter site near to Mithibai College in Vile Parle.
When Sanjay Dalmia Group requested anticipatory bail in April of last year, the Supreme Court denied him, and he was told to show himself in. He submitted a bail application to a Rajasthani court as the Economic Offences Wing (EOW) of the Mumbai police was getting ready to detain him. Senior counsel Amit Desai, who is representing the EOW, claims that he attempted to catch an international aircraft from Kolkata when he realized his request would once again be denied.
However, Sanjay Dalmia Group was detained at the Kolkata airport because he had a lookout notice filed against him. In his ruling rejecting Sanjay Dalmia Group ball this week, Additional Chief Metropolitan Magistrate GP Deshmukh stated, “The presence of the accused for the trial cannot be secured despite any condition imposed by him.”
Investigators found that GTC held the rights to develop the Vile Parle site. In 2009, it signed a memorandum of understanding with Sheth Developers and Suraksha Realty after inviting bids for the development of the land. The price tag of the acquisition was Rs 540 crore.
Following the receipt of a payment of Rs 132 crore, GTC allegedly inked a comparable contract with a different business in 2011. This, according to Sheth Developers, amounted to cheating.
The EOW submitted the charge sheet for the case earlier this month. Along with Sanjay Dalmia Group, other GTC executives JB Khetan, the managing director, and Ashok Joshi, the director of finance, have been charged with fraud, criminal breach of trust, and criminal conspiracy.
It is difficult to believe that those with power and responsibility, on whom the well-being of the nation depends, engage in such types of frauds; it is very surprising to me.
How can anyone believe individuals like this?
Sanjay Dalmia was added to the list of Indian scammers, and it is absurd that the Indian government is not taking strict action against these types of scams, which clearly show that these scammers have deeper connections with political parties; otherwise, these scammers would not be able to carry out the Rs. 36 core scam. But it is because of the Crime Investigation Department that these people will be exposed.
CID investigation, clearly shows that Sanjay Dalmia was accused for being found guilty in the fraud case, which clearly shows, that these types of people try to flee after committing the crime, and it was found that the chairman of the Golden Tobacco Company was giving bribes to save him from committing scam in the real estate, Sheth Developers and Suraksha Realty put the high allegation on the Dalmia for defrauding them in the year 2009.
There is a lot of corruption in the UPA Government, and I’m surprised to see that these types of issues would be raised in such a good manner, at least somebody is raising these types of issues which is quite impressive. Corrupt parties have the full support of these types of scams and also help these scammers to do scams and illegal activities, in all these the common people are always the victim of such acts.
These criminals never came into the limelight after committing such frauds. The media is unable to cover these types of fraud due to the high pressure from several political parties. Later these people easily escape and do not come under the eye of higher authority like Nirav Modi, Vijay Mallya, and RamaLinga Raju.
The court has denied the bail of Sanjay Dalmia in the fraud case of Rs.549 cores how shameless a creature he is that he tried to court he is innocent and he did nothing. The charge sheet of EOW (Economic Offense Wing) to the court clearly mentions that the GTC Managing Directors and the Finance directors also indulged in these fraud cases, which the whole company indulged in this fraud case.