The Enforcement Directorate (ED) has attached movable and immovable properties worth Rs 117 crores of Prakash Industries in a money laundering case in connection with coal block allocation scam.
The CBI had registered an FIR against Prakash Industries Ltd., alleging that the company had applied for allocation of Coal Block vide an application dated January 12, 2007 to the Ministry of Coal in response to an advertisement issues on November 13, 2006.
According to the CBI FIR, the application was found to be containing false net-worth details and on the basis of such misrepresentation, the company got allocated Fatehpur Coal Block on February 6, 2008. The block was subsequently de-allocated in the year 2014 after the coal scam was unearthed. Taking cognizance of the CBI FIR, the ED registered a case under Prevention of Money Laundering Act August 30, 2014.
The ED probe revealed that the company filed false declaration with the Bombay Stock Exchange (BSE) on November 17, 2007 intimating allocation of the coal block which was actually awarded on February 6. 2008 jointly to Prakash Industries Ltd. and SKS Ispat Power Ltd.
"As a result of filing of this false declaration, the shares of M/s Prakash Industries recorded an astronomical rise in their value. At one point in time i.e. on 02.04.2007, the share price was Rs 31 per share whereas on 04.01.2008, the share price was Rs 351 per share," the ED said in a statement.
In order to encash the artificially created rise in the share value, the company issued 62,50,000 preferential shares at a premium of Rs 180 per share and sold these shares to five selected companies. In the process, the company generated Rs 118.75 crores in the form of share capital.
The amount of Rs 118.75 crores, which was generated as a result of the offence under PMLA and amounted to "proceeds of crime".
"On investigation to the effect, it was found that the above said proceeds of crime had been generated and used in the continuous expansion related to manufacturing activities, therefore the value of Rs 117.09 crores was attached in the form of movable and immovable properties of the company under the provisions of PMLA," the agency statement added.
