A Special Central Bureau of Investigation (CBI) court in Delhi has convicted three former directors of Dwarkadheesh Spinners Limited (DSL) in a nearly 25-year-old bank fraud case involving a ₹7 crore loan obtained from UCO Bank. The court held that the accused secured the loan by submitting forged documents and subsequently misused the funds for purposes other than those disclosed to the bank. However, the court acquitted the bank’s former official, Bikash Basu, holding that the prosecution had failed to establish his involvement in the alleged criminal conspiracy or prove that he derived any unlawful benefit from the transaction.
The verdict was delivered by Special CBI Judge Sudhanshu Kaushik at the Rouse Avenue Courts in New Delhi. The court convicted former DSL directors Amit Chaturvedi, Sanjay Chaturvedi and Parveen Juneja of criminal conspiracy, cheating and using forged documents as genuine. The quantum of sentence will be decided during a separate hearing.
According to the prosecution, the case dates back to 2001 when Dwarkadheesh Spinners Limited approached UCO Bank’s Parliament Street branch seeking a ₹7 crore loan. The company initially represented that the funds would be used to prepay an existing loan obtained from the Industrial Finance Corporation of India (IFCI). Based on those representations, the bank processed the loan proposal.
The investigation revealed that after the loan was sanctioned, the company informed the bank that IFCI had declined to accept the proposed prepayment. The borrowers then sought permission to utilise the sanctioned loan under the Central Government’s Technology Upgradation Fund Scheme (TUFS) for the purchase and installation of new machinery. Investigators alleged that this change in the stated purpose formed part of a broader scheme to fraudulently obtain and divert bank funds.
During the investigation, the CBI found that the accused allegedly submitted forged Chartered Accountant certificates and fabricated invoices purportedly issued by a fictitious company to demonstrate that new machinery had been purchased and installed. However, investigators concluded that no such machinery had actually been acquired. Instead, the ₹7 crore loan proceeds were allegedly diverted to other companies belonging to the same business group rather than being used for the sanctioned purpose.
In its detailed judgment running to nearly 160 pages, the court observed that the evidence presented during the trial clearly indicated that the accused had intended to deceive the bank from the very beginning. The court held that the fraudulent representations, forged documents and subsequent diversion of funds established a deliberate and pre-planned conspiracy to obtain the loan through dishonest means.
The court further ruled that the case could not be treated as a simple loan default or a commercial dispute. It observed that where a loan is obtained on the basis of forged documents and the borrowed funds are intentionally misused, the conduct constitutes a criminal offence in addition to any civil liability arising from repayment obligations.
The defence had argued that the criminal proceedings should not continue because the company had subsequently entered into a One-Time Settlement (OTS) with UCO Bank. Rejecting this contention, the court held that settlement of outstanding dues with a financial institution does not extinguish criminal liability arising from fraudulent conduct committed at the time of obtaining the loan. The judgment emphasised that repayment or settlement cannot absolve an accused of offences involving forgery, cheating and criminal conspiracy.
While acquitting former UCO Bank official Bikash Basu, the court noted that he was not the sole authority responsible for recommending or approving the loan proposal. It observed that senior officials had also evaluated and processed the application, and the prosecution had failed to produce sufficient evidence establishing that Basu knowingly participated in the alleged conspiracy or received any illegal benefit. Accordingly, he was given the benefit of doubt and acquitted. Sentencing proceedings against the three convicted former directors will be held at a later date.
