ED arrests former Richa Industries promoter in Rs 236-crore bank fraud case

The Enforcement Directorate has arrested Sandeep Gupta, former promoter and suspended managing director of Richa Industries Ltd. (RIL), in connection with an alleged Rs 236-crore bank fraud and money laundering case.

Gupta was arrested under the Prevention of Money Laundering Act (PMLA), 2002, and produced before a special court in Gurugram, which granted the ED eight days of custodial remand.

The probe stems from an FIR registered by the Central Bureau of Investigation (CBI) alleging criminal conspiracy, cheating and criminal misconduct. According to investigators, the accused caused wrongful gains to themselves and losses of about 236 crore to public sector banks between 2015 and 2018.

FAKE SALES, INFLATED TURNOVER

The ED alleged that Richa Industries booked fictitious sales without actual supply of goods to inflate turnover and mislead lenders. These included fabricated cotton fabric sales worth Rs 7.42 crore and bogus solar-related sales of Rs 8.50 crore to shell companies operated by entry operators.

Invoices and ledger entries were allegedly forged, while outstanding balances and inter-division transfers were used to mask non-payment. Investigators said this led to deliberate misrepresentation of the company’s financial position.

The agency also found that RIL booked fake purchases of Zero Liquid Discharge (ZLD) plants and machinery worth Rs 9.23 crore from a non-operational entity whose business profile and GST records did not match such supplies.

DIVERSION THROUGH RELATED PARTIES

The investigation revealed large-scale diversion of funds through related-party transactions. Between FY 2015–16 and FY 2017–18, about Rs 16.40 crore was allegedly siphoned off to group entities under the pretext of loan repayments.

In FY 2018–19, company funds were allegedly used to acquire controlling interest in Richa Krishna Constructions Pvt. Ltd., diverting a valuable Rohtak project during the Corporate Insolvency Resolution Process (CIRP). Shares of another group firm, Richa Infrastructure Ltd., were also transferred at a substantial undervaluation, causing losses to RIL.

ASSET STRIPPING BEFORE INSOLVENCY

The ED alleged that Gupta played a central role in diverting key assets shortly before the initiation of CIRP. Several shell entities were allegedly floated to facilitate asset transfers at different stages.

RIL entered CIRP in December 2018, which eventually failed to attract a viable resolution plan. The National Company Law Tribunal ordered liquidation on June 11, 2025, and appointed a liquidator. In an e-auction held in October 2025, the company was sold as a going concern at a reserve price of Rs 96 crore.

Public sector banks, including Indian Overseas Bank and Union Bank, recovered only Rs 40.29 crore against admitted claims of Rs 696 crore, amounting to a haircut of nearly 94 per cent, the agency said.

ALLEGED BID TO INFLUENCE INSOLVENCY PROCESS

Investigators also suspect a conspiracy by Gupta, his family members and associates to influence the insolvency proceedings. Just before CIRP began in October 2018, RIL allegedly issued corporate guarantees exceeding Rs 232 crore to six promoter-linked entities, which together held 48.25 per cent voting rights in the Committee of Creditors (CoC).

In another instance, Gupta allegedly incorporated Saariga Constructions Pvt. Ltd. in the name of a former employee acting as a benamidar to secure voting rights in the CoC.

The ED further alleged that during the insolvency period, Gupta and his family retained unlawful operational control over RIL, entered into agreements and drew remuneration in violation of statutory provisions. A major Mussoorie project was allegedly subcontracted to a promoter-controlled entity, resulting in dissipation of nearly Rs 40 crore during the CIRP.

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