Supreme Court directs ED to conduct exhaustive investigation in money laundering case against Amtek Auto’s former promoters

Supreme Court: In a writ petition seeking an investigation against the promoters, directors, beneficiaries and key-managerial personnel and shell entities of auto parts maker Amtek Auto Limited Group (‘Amtek Auto’) , the division bench of BR Gavai and Sandeep Mehta*, JJ. has directed Directorate of Enforcement(‘ED’) to investigate against former promoters of Amtek Auto for allegedly siphoning over Rs. 20,000 crores obtained from public banks, after observing that there appeared to be prima facie material to indicate collusion in the scam by bank officials. The Court has asked ED to file a status report before the next date of the hearing, that is after six months.

In this case, the petitioner has raised an important issue regarding the failure of the agencies concerned to address the humongous fraud allegedly committed by Amtek Auto and its associate companies in its banking related transactions, debt obligations, etc.

The Court said that during the hearing it was informed that one of the journalists who was investigating the matter and was trying to reach at the bottom of the matter, was being followed by certain unknown elements/persons. Thus, it directed the office of the Attorney General to take measures for ensuring the personal safety of the said person and his family.

In this case, it was alleged that Amtek Auto Limited Group has siphon off more than Rs 20,000 crores of funds, taken from 27 public and private Banks in India. Amtek became insolvent in 2017. In 2018, the National Company Law Tribunal approved the resolution plan submitted for Amtek Auto by Liberty House, which was settled with 80% haircut for Deccan Value Investors in November 2021. A Forensic Audit Report by Ernst and Young indicated siphoning off over Rs 12,000 crores by Amtek. Hence, a PIL was filed in the Supreme Court based on this Report.

In 2022, the Supreme Court had issued notice and directed Central Bureau of Investigation(‘CBI’) and Serious Fraud Investigation Office (‘SFIO’) to file their Status Reports, and the SFIO in their Affidavit before the Court, confirmed the aspersion raised in the Report and went on to reveal that the amount of siphoning is greater than Rs 20,000 crores.

The Court noted that large number of banks/Public sector undertakings have closed the loan accounts by accepting mere 20 percent repayment. Doubts have also been cast on the role of the accounting firm owing to Resolution Professional being its erstwhile employee.

After perusing the SFIO report, the Court noted that Amtek group has created a web of more than 500 companies. Dummy directors have been appointed in the related entities. Misrepresentation has been made in books. There has been diversion and siphoning of loans through related and controlled entities by various modes.

The Court noted that prima-facie the evidence collected thus far has indicated that the funds of Companies Under Investigation were diverted in land deals and real estate projects, etc. Undue benefits have been given to the family members and close relatives of the directors.

The Bench said that the possibility of large-scale money laundering having taken place in relation to public monies procured from the Public Sector Banks cannot be ruled out and is rather imminent.

The Court directed an exhaustive investigation of the issues pertaining to huge banking fraud which may run into Rs. 27,000 crores of public money to be conducted by the ED. Further, it requested the ASG to issue necessary directions to the ED for compliance of this order.

Further, it directed that the investigation/enquiry being carried out by the SFIO and the CBI to continue and will not be prejudiced by this order. Both agencies were directed to fully cooperate with and complement the ED in collecting evidence. The SFIO and CBI have also been directed to provide copies of the Enquiry Reports submitted to the Amicus Curiae and the Petitioner’s Counsel.

The matter will be renotified after 6 months for receiving status report from the ED. Further, it will next be taken up on 02-09-2024