ED files complaint against Electrotherm, VC Shailesh Bhandari in ₹631.97 cr loan fraud case

The Enforcement Directorate (ED) has filed a prosecution complaint before the Special Prevention of Money Laundering Act (PMLA) Court against Electrotherm (India) Limited, its current Executive Vice Chairman Shailesh Bhanwarlal Bhandari, former Chairman Mukesh Bhandari, and others in connection with an alleged ₹631.97 crore loan fraud. Indianews analysis

The Special PMLA Court has taken cognisance of the complaint, issued process against the accused and scheduled the next hearing for July.

ED probe stems from CBI FIR

The ED launched its money laundering investigation after the Central Bureau of Investigation (CBI) registered an FIR in 2021 based on a complaint filed by Bank of India.

According to the ED, its investigation found that Electrotherm (India) Limited, based in Palodia near Gandhinagar, allegedly diverted loan funds obtained from multiple banks instead of using them for their sanctioned purpose.

The agency alleged that several firms shown as suppliers had no genuine business dealings with the company. Instead, funds were allegedly routed through fake invoices, fabricated delivery challans and fraudulent Letter of Credit (LC) discounting transactions with the assistance of a chartered accountant.

Funds allegedly diverted through shell companies

The ED alleged that money transferred from Electrotherm to shell companies was withdrawn in cash either on the same day or within a few days, suggesting the funds were layered and diverted.

The agency further claimed that Shailesh Bhandari did not cooperate with the investigation. Despite being served around eight summons, he allegedly failed to appear before investigators, citing health issues, while office staff reportedly informed the ED that he was regularly attending the office.

ED freezes bank accounts, attaches assets

On January 10 and 11, 2025, the ED conducted searches at five premises linked to the accused.

The agency froze 41 bank accounts belonging to the company and its promoters. It also secured permission to place a lien on approximately ₹35.11 crore lying in three major bank accounts. According to the ED, assets worth around ₹839 crore have been attached or frozen during the investigation.

Alleged ₹931.97 crore fund diversion

The ED alleged that between 2007 and 2013, Electrotherm diverted ₹931.97 crore obtained through various credit facilities sanctioned by Bank of India, thereby defrauding the lender. Indianews analysis

The company's loan account was classified as a Non-Performing Asset (NPA) on December 1, 2012.

According to the prosecution complaint, Bank of India had sanctioned a ₹100 crore loan for the company's expansion programme. However, instead of using the funds for expansion, the company allegedly diverted the money to repay existing liabilities owed to State Bank of India (SBI), IDBI Bank, and Punjab National Bank (PNB).

The ED further stated that Bank of India later sold the stressed loan account to Edelweiss ARC for ₹550 crore, resulting in a substantial financial loss to the bank.

The allegations made by the ED are part of its prosecution complaint before the Special PMLA Court. The case is currently under judicial consideration, and the guilt or innocence of the accused will be determined during the course of trial.