CBI files fresh case against former PEC chief in Rs 194 crore cheating case

The CBI has filed a fresh case against former chairman and managing director of PEC Arun Kumar Mirchandani and other former officials for allegedly causing a loss of Rs 194.61 crore to the public sector company, officials said on Monday.

The CBI has filed multiple cases against Mirchandani and former officials of the PEC, a government enterprise under the Ministry of Commerce that facilitates import and export of commodities and grants financial assistance to importers.

In the present case, it has been alleged that Morena-based KS Oils availed financial assistance from PEC Ltd for the import of crude edible oil under the foreign letter of credit (FLC) process entering into associateship agreements.

KS Oils had secured the financing aid through seven letters of credit established in 2012-13, for which it submitted post-dated cheques (PDCs) as security. Letters of credit (LC) are a guarantee that a bank gives on behalf of its customer to honour the payment commitment.

PEC took the buyer's credit from corresponding foreign banks.

"The foreign suppliers negotiated the documents under the LC and were paid on acceptance of documents by the LC opening bank, and PEC availed buyer's credit at the cost of KS Oils. Since KS Oils fraudulently obtained the delivery of goods with the promise of making good the liability on the basis of PDCs, but KS Oils did not make its outstanding within the credit period," the PEC alleged.

PEC had to pay the buyer's credit obligation on due dates with total outstanding dues towards PEC to be around Rs 194.61 crore, of which the principal amount stands at Rs 59.82 crore, PEC said in its complaint dated July 14, which has now become part of the FIR.

The foreign letters of credit were opened to provide a trade facility to KS Oils. PEC entered into 'High Sea Sale' agreements and a 'Deed of Pledge' to take lien over the stock financed to gain trade margin as per the agreements between PEC and KS Oils.

The company kept increasing the credit period by rolling over the FLCs from time to time with the approval of the competent authority.

"It is pertinent to mention that the post-dated cheques, which were kept as a security against de-pledging of stock and KS Oils, were rolled over to enhance the credit period in the garb of making the liability good, but ultimately, PEC had to deposit the cheques with the bank to realise the money, but they returned unpaid," the FIR said.

An internal enquiry by the PEC's Vigilance Department said that Mirchandani, who had relinquished the charge on June 30, 2014, had approved the release of goods against PDCs and failed to protect the interest of the company and disregarded the said provision of the associateship agreement.

The PEC alleged that Mirchandani also allowed increasing the financial limit of KS Oils on the basis of collateral security of agricultural land worth Rs 72 crore in spite of valuation reports, which suggested that the land pledged was for Rs 25.65 crore only.

"Moreover, these were third-party agricultural land in multiple parcels against which neither equitable mortgage was created nor was it freely saleable to secure the interest of PEC. Mirchandani, as a member of Committee of Management, approved the proposal for enhancement of financial limit from Rs 100 crore to Rs 150 crore...against the aforesaid property document of agricultural land," the FIR said.

PEC alleged that he failed to protect the interest of the company while approving proposals.

In its FIR, the CBI has also named former director and chief general manager of PEC Rajiv Chaturvedi, former GM SK Mamtani, former chief marketing managers SC Rishi and SK Virmani and other former officials, besides KS Oils and its managing director Ramesh Chand Garg.