The Enforcement Directorate has frozen 215 bank accounts and seized ₹20 lakh in cash during searches linked to an alleged ₹820.86 crore bank fraud and money-laundering case involving companies of the Tayal Group.
The searches were conducted at 12 locations in Mumbai and Ahmedabad on September 30 under the Prevention of Money Laundering Act.
The investigation targets promoters Pravin Tayal and Saurabh Tayal, other group-linked entities and certain resolution professionals.
ED alleges that bank funds were diverted through shell companies and that insolvency proceedings were later used to try to protect or regain control of assets already under enforcement action.
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₹820.86 Crore Alleged Proceeds of Crime
The money-laundering investigation arises from alleged bank fraud involving Tayal Group companies including K Lifestyle & Industries Ltd, Actif Corporation Ltd and Jaybharat Textiles & Real Estate Ltd.
ED has estimated the alleged proceeds of crime in the cases at approximately ₹820.86 crore.
According to the agency, the companies obtained bank funds using allegedly falsified stock statements and inflated production claims.
ED also alleges that machinery pledged to lenders was sold without authorisation.
The resulting funds were then allegedly routed through shell companies and ultimately diverted into real-estate assets.
These allegations have not yet been proved in court.
215 Bank Accounts Frozen
The searches led investigators to records relating to numerous bank accounts opened with cooperative banks in the names of associates linked to the accused, according to ED.
The agency subsequently froze 215 accounts under Section 17(1A) of the PMLA.
It also seized ₹20 lakh in cash from the residence of Pravin Tayal.
Investigators say they recovered documents relating to the creation and operation of alleged shell companies.
Records concerning several immovable properties were also found.
ED claims some of those properties had not previously been disclosed either to the investigating agency or to lending banks.
ED Says Fresh NPAs Were Also Found
The searches also led investigators to what ED described as fresh non-performing assets created by group companies.
A loan becomes a non-performing asset, or NPA, when repayments remain overdue beyond the period prescribed under banking rules.
In fraud investigations, investigators examine whether defaults arose from genuine business failure or whether borrowed money was deliberately diverted away from the stated purpose.
ED’s case is that funds raised through bank facilities were systematically routed through related or shell entities.
Empress Mall Among Properties Already Attached
One major asset identified earlier in the investigation is Empress Mall in Nagpur.
ED had provisionally attached the property along with other immovable assets and valued the mall at around ₹483 crore in 2019.
The agency had earlier alleged that Tayal-linked companies fraudulently obtained loans and diverted the money into other assets.
Separately, ED had also attached properties worth about ₹234 crore in another Tayal Group-linked case involving UCO Bank.
These earlier attachments form part of the background to the latest allegation that insolvency proceedings were used to challenge or circumvent PMLA enforcement.
Insolvency Process Now Under Scrutiny
The most significant part of the latest ED action concerns the Insolvency and Bankruptcy Code.
ED alleges that after certain assets were attached under the PMLA, group-linked entities initiated Corporate Insolvency Resolution Process proceedings through shell companies presented as creditors.
According to the agency, these entities were actually controlled or occupied by persons connected with the accused.
ED alleges that the insolvency process was therefore being used not simply to resolve genuine debt, but to protect assets from money-laundering enforcement.
That allegation, if established, would raise serious questions about the use of bankruptcy proceedings as a shield against financial-crime investigations.
Resolution Professionals’ Premises Searched
ED also searched premises linked to resolution professionals Kiran C Shah, Vinod P Ambavat and Ravi Kapoor, along with associated entities.
The agency alleges that some resolution professionals admitted unverified and inflated claims submitted by related parties during insolvency proceedings.
Such claims could affect voting rights inside a committee of creditors.
Under the IBC, voting shares determine how much influence creditors have over decisions involving resolution plans and company restructuring.
ED alleges that admitting inflated related-party claims reduced the voting strength of genuine secured lenders.
The allegations against the resolution professionals remain under investigation and have not been judicially established.
PMLA Attachments Allegedly Challenged Through IBC
ED further alleges that applications were filed to overturn or interfere with PMLA attachments.
The agency claims adverse court and tribunal orders were sometimes suppressed and that encumbrances were created over attached properties.
According to ED, this prevented it from taking possession of rental income generated by certain properties.
That rent allegedly ran into several crores of rupees and continued to be received by companies linked to the accused.
The investigation therefore goes beyond the original question of how bank loans were obtained and spent.
It now examines whether corporate insolvency procedures were later used to frustrate enforcement action.
Similar Allegation Emerges in Ahmedabad Case
ED says its Ahmedabad Zonal Office encountered a similar structure in a separate Tayal Group-linked investigation.
That case concerns Vidhant Realty Pvt Ltd.
The agency alleges that insolvency proceedings were initiated against the company through Kausar Textiles Pvt Ltd, another group-linked entity.
Cubical Realty Pvt Ltd later emerged as the successful resolution applicant.
ED alleges this violated Section 29A of the IBC because Cubical Realty was beneficially owned by members of the Tayal family, including Pravin Kumar Tayal and Navin Kumar Tayal.
Section 29A restricts certain promoters and connected persons from regaining companies through the insolvency resolution process when specified disqualifications apply.
The purpose is to prevent people responsible for a company’s financial distress from simply buying back the same assets through insolvency on favourable terms.
Bank Fraud Probe Now Expands Into IBC Governance
The latest searches therefore make the Tayal Group investigation more than a conventional loan-diversion case.
ED is effectively alleging a two-stage structure.
First, bank funds were allegedly obtained and diverted through shell companies into assets.
Later, when those assets came under PMLA attachment, related entities and insolvency proceedings were allegedly used to preserve control over them.
The agency says it has found a nexus involving promoter-directors, shell companies and certain resolution professionals.
Its investigation is continuing.
No court has yet determined criminal liability arising from the latest allegations.
What this means for you
The case shows why insolvency proceedings themselves can become part of financial-crime investigations. The IBC is meant to resolve genuine corporate distress, but regulators are increasingly examining whether related parties, shell creditors or inflated claims are being used to manipulate control over valuable assets.
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