Home Scam Defaulters make merry

Defaulters make merry

Despite the arrest of IIFL Commodities director Chintan Modi, Anand Rathi Commodities director Amit Rathi, Geofin Comtrade director CP Krishnan, there are still many defaulters like Jagmohan who are roaming scot free. Jagmohan used the money to build an empire and is still enjoying the luxuries of life

Jab ishwar hai saath to dar kahe ka (When God is with us, why be afraid). This is the ringtone of the mobile phone of Mohan India promoter Jagmohan, who is embroiled in the Rs. 6,000-crore National Spot Exchange Limited (NSEL) scam. It is now almost 21 months since the NSEL scam was exposed. Unfortunately, there has been no action by the government against defaulting borrowers, who had taken money from the Exchange and are not returning it. NSEL is unable to recover money from 24 borrowers. It had filed a complaint with the Economic Offences Wing (EOW), Mumbai Police. Any further delay in acting against these borrowers will only result in the money getting siphoned off. It’s a sordid saga where the script is written well in advance-court cases and investigation take years to complete and, meanwhile, scamsters go scot-free.

Mohan India Limited is one of the biggest defaulters of the scam-ridden NSEL. It owes around Rs. 950 crore to the investors. Mohan India is owned by Mera Baba Group of Delhi, which has major investments in property and also runs educational institutions. Two brothers, Jagmohan Garg and Manmohan Garg, are the promoters of Mera Baba Group.

EOW investigation revealed that NSEL officials paid up to Rs. 11 crore as bribes to income tax and other government officials to evade taxes and that the money allegedly came from Mohan India.

EOW investigation revealed that NSEL officials paid up to Rs. 11 crore as bribes to income tax and other government officials to evade taxes and that the money allegedly came from Mohan India

The disclosures came to light in an affidavit once filed by NSEL’s former vice-president (business development), Amit Mukherjee, and discovered by tax officials during a search of his house. EOW officials of the Mumbai Income Tax Department said they had submitted details of this affidavit to the Central Bureau of Investigation (CBI).

“We found the document during a search of Mukherjee’s personal belongings. We have forwarded it to the CBI for further action,” the then Additional Police Commissioner (EOW), Rajvardhan Sinha, said.

Sinha said that Mukherjee, in the affidavit, had claimed that top NSEL officials were paid these bribes and that the money was arranged from Mohan India.

Jagmohan, Mera Baba Group promoter, informed gfiles that he had handed over the property papers to the Enforcement Directorate for attachment. The matter is in court now. He said it was surprising that NSEL promoter Jignesh Shah appears to be reluctant to pay the investors out of the sale of properties. Mohan India has signed a settlement agreement to cough up around Rs. 770 crore.

Jagmohan had accepted in his letter dated August 1, 2013, that the total amount payable by him to the NSEL against the settlement was Rs. 625 crore (subject to the final amount). He had agreed to pay a minimum of 5 per cent of dues every week and settle the outstanding dues within the next 20 weeks. The payment is backed by collateral of land parcels and properties worth Rs. 1,000 crore.

Delhi-based Mohan India and its group company Tavishi Enterprises owe Rs. 952 crore to NSEL against trade in sugar contracts.

Mohan India has so far paid a single instalment of Rs. 25 crore against its dues of Rs. 605 crore, whereas Tavishi has not paid anything and has instead moved court, challenging the dues of Rs. 347 crore.

According to former NSEL MD and CEO Anjani Sinha’s first affidavit, Mohan India is the same company that allegedly gave Rs. 18 lakh to Mukherjee and Bonhi Mukherjee on February 11 and March 22, 2013.

Sinha claimed Mohan India director Jai Shrivastava, in a meeting in New Delhi on September 7, 2013, also gave Mukherjee Rs. 35 crore in cash and cheque.

The bank statements and transaction details of Mohan India and Brinda Commodity (that took money from NSEL without delivering sugar) indicate that the money was invested in various activities and handed over to related as well as unrelated entities. Rs. 172 crore was given to Genius Promoters (Rs. 124 crore), and to Shrivastava (Rs. 48 crore).

Rs. 613 crore was transferred to unrelated entries. Investigators say that pay orders of Rs. 161.68 crore were made and that it might have been used for buying land in Najafgarh
in Delhi.

Also, Rs. 373 crore was paid to six companies-Anuj Traders, Neki Ram Vijay Kumar, Sandeep Kumar Anuj Kumar, Shree Raghav Trading, Vijay Shree Enterprises and Vishnu Traders. It is reported that these companies seem to be entry operators, facilitating cash in lieu of cheques. What action has been taken against them is not known.

An alarming fact is that most of the money came back from related entities, where it was parked and then routed to unrelated entities to evade seizure of assets.

“Of the above, Rs. 307 crore was routed to these firms between August 1 and August 21, when the exchange finally defaulted in payments,” a source informed.

The break-up of how the money was used is as follows:

1. Rs. 13.75 crore from Mohan India and Rs. 31.75 crore from Brinda Commodity paid to SR Bhalotia, another defaulter. According to a source, of this amount, Rs. 35 crore was a loan on behalf of NSEL and the balance may have been paid for the purchase of sugar.
2. Rs. 6.74 crore was used for buying vehicles.
3. Rs. 6.15 crore for buying gold.
4. Rs. 8.39 crore was used for buying sugar from Nizam Deccan Sugar to show sample stock in the warehouse.
5. Rs. 128 crore was received from Brinda Commodity.
6. Rs. 110 crore was received from Wizkid Promoters, which too received payments money from Brinda Commodity.
7. Brinda Commodity paid Rs. 79 crore to Ram Awadh Sharma (the driver-cum-director) who then paid Rs. 4 crore to Mohan India.
8. Brinda Commodity also paid Rs. 136 crore to Tavishi Enterprises. The money was then paid back to NSEL against their buy trade.
9. Brinda paid Rs. 14.65 crore to Timber Trail Travel Today, a popular hill resort in Parwanoo in Himachal Pradesh.
10. Rs. 96 crore was received from entities such as Saral Diagnostics (a leading diagnostic centre in north Delhi) and from fixed deposits of Rs. 5 crore.

Of the Rs. 852 crore that the Mohan India group received from NSEL, Rs. 550-600 crore was paid to unrelated entities and Rs. 150-200 crore to related entities

In a nutshell, out of the Rs. 852 crore that the Mohan India group received from NSEL (around Rs. 70 crore are carry forward and transaction costs), Rs. 550-600 crore was paid to unrelated entities and Rs. 150-200 crore to related entities.

ONE official disclosed: “We have also come to know that one M/s Singh & Associates is very much involved with the Mohan India group. It gave Rs. 6.5 crore to park with GD Goenka School. Apart from this, money has been received from other accounts to his account. Therefore, the involvement of M/s Singh & Associates with Mohan India is also under investigation.” The Income Tax Department has sent notices and is investigating all entities that received money from the group and had other transactions with it.

Interestingly, little is known about Mohan India, which bought 216,324 tonnes of sugar for Rs. 605.2 crore. In 2011-12, the last year for which its financial records are available, it earned a net profit of Rs. 2,044 on revenue of Rs. 72,400. Tavishi, on the other hand, was born a couple of months before the exchange collapsed under its own weight.

Mohan India director Jagmohan is the man behind Mera Baba Realty projects. Garg’s six brothers-Madanmohan, Manmohan, Harimohan, Adarshmohan, Radhey-mohan and Shreemohan-have board positions in the group.

– gfiles Investigation Team

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