ED Conducts Searches in Ruchi Group Bank Fraud Case; Assets Frozen and Cash Seized.

Headnote:

The Directorate of Enforcement conducted search operations at multiple locations in Indore and Mumbai in connection with bank fraud cases involving the Ruchi Group. The investigation revealed large-scale diversion and siphoning of bank funds through shell entities, round-tripping transactions, and bogus accounting practices. During the searches, cash exceeding ₹23 lakh was seized, and bank balances of over ₹20 lakh were frozen. Further investigation is ongoing.

Background:

• The ED initiated investigation based on multiple FIRs registered by the Central Bureau of Investigation (CBI), Bhopal.

• The FIRs pertain to bank frauds allegedly committed by Ruchi Group companies, namely:

– M/s Ruchi Global Ltd. (now M/s Agrotrade Enterprises Ltd.)

– M/s Ruchi Acroni Industries Ltd. (now M/s Steeltech Resources Ltd.)

– M/s RSAL Steel Pvt. Ltd. (now M/s LGB Steel Pvt. Ltd.)

• The companies were promoted by Late Shri Kailash Chandra Shahra and Shri Umesh Shahra.

• It was alleged that the companies caused wrongful losses to several banks by diversion and siphoning of loan funds, coupled with accounting manipulations.

ED’s Findings

• The investigation unearthed a conspiracy involving the creation of multiple shell entities to facilitate round-tripping transactions.

• Spurious Letters of Credit and Cash Credit transactions were used to divert funds for private gains.

• Bogus sales and purchase entries were recorded, and deliberate losses were shown to siphon off loan amounts obtained for business purposes.

• The Proceeds of Crime generated from the fraud were concealed and disguised through layered financial transactions.

Outcome of Search Operations

• Bank balances exceeding ₹20 lakh belonging to the accused persons and their family members were frozen.

• Cash amounting to more than ₹23 lakh was seized.

• Incriminating documents and digital devices establishing the roles of the accused persons were recovered and seized.

Status of Investigation

• Further investigation in the matter is under progress.

Legal Provisions Involved:

• Prevention of Money Laundering Act, 2002 – Investigation, search, seizure, and attachment of Proceeds of Crime.

• Indian Penal Code, 1860 – Offences relating to cheating, criminal conspiracy, and fraud (as invoked through CBI FIRs).

• Code of Criminal Procedure / BNSS (as applicable) – Procedural aspects of investigation.