The Central Bureau of Investigation (CBI) has booked Essel Group founder Subhash Chandra in a major financial fraud case.

The case involves an alleged loss of ₹1,322 crore to public sector lender LIC Housing Finance Limited (LICHFL). Investigators registered the First Information Report (FIR) on August 31.

However, agency officials disclosed the case details on Saturday. In addition to Chandra, the agency named several directors of group entities as co-accused.

Complaint Points to Inflated Personal Wealth

The CBI initiated the criminal case after receiving a formal complaint from LICHFL management. Neeta Menghani, General Manager (Legal) at the financial institution, submitted the complaint.

According to ThePrint, Chandra allegedly misrepresented his financial strength to secure massive credit lines.

Specifically, the FIR alleges that Chandra submitted personal financial statements showing inflated net worth figures. He backed the loan facilities with personal guarantees.

Consequently, the lender sanctioned large credit facilities based on these high valuation claims. LICHFL believed the business tycoon held sufficient personal liquidity to cover any repayment shortfalls.

Diversion of Credit Across Group Firms

The investigation focuses on credit facilities disbursed to multiple corporate entities linked to Essel Group. These borrower companies include Asian Satellite Broadcast, Jay Properties, and Konti Infrapower & Multiventures.

The companies originally sought loans for designated business operations and real estate development.

However, forensic audits revealed a completely different money trail. The agency found that borrower firms diverted the sanctioned capital through complex circular transactions.

Instead of deploying the capital into real estate assets, the firms moved money into unrelated shell entities. As a result, the borrower companies stripped cash reserves away from the primary business projects.

Default Leaves Lender With Massive Losses

The loan accounts soon deteriorated into severe delinquency. Eventually, LICHFL declared the credit lines as Non-Performing Assets (NPAs).

The lender attempted to recover outstanding dues by invoking Chandra’s personal guarantees.

However, the guarantees failed to yield the promised repayments. LICHFL stated that Chandra’s actual liquid assets fell far below his original sworn declarations.

Consequently, the institution suffered a wrongful loss of ₹1,322 crore in unpaid principal and interest. In contrast, the accused promoters derived substantial wrongful financial gains, as reported by The Free Press Journal.

Multiple Criminal Charges Invoked

The CBI’s Banking Securities Fraud Branch in Mumbai is leading the ongoing probe.

Officers booked Chandra and his associates under provisions of the Indian Penal Code and the Prevention of Corruption Act. The charges include criminal conspiracy, cheating, and criminal breach of trust.

Furthermore, investigators are examining the role of internal bank officials. The CBI seeks to determine whether bank personnel colluded with promoters to overlook compliance rules during loan approvals.

Pressure Mounts on Troubled Conglomerate

This new criminal case adds to the growing legal troubles facing the Essel Group leadership.

The conglomerate already faces multiple insolvency proceedings before the National Company Law Tribunal (NCLT). Creditors have filed claims totaling over ₹22,000 crore against various group arms under the Insolvency and Bankruptcy Code.

Meanwhile, investigative teams are reviewing transaction ledgers and financial audit logs across Mumbai and Delhi. Official summons will follow soon for questioning key company executives.

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