A Delhi special court has convicted three former directors of a textile company in connection with an alleged ₹7 crore bank loan fraud involving UCO Bank in 2001. The court held them guilty of criminal conspiracy, cheating and using forged documents as genuine after finding that the loan was allegedly obtained through fabricated records and later diverted for purposes other than those for which it had been sanctioned. At the same time, the court acquitted a former UCO Bank official, holding that the prosecution failed to establish his involvement in the alleged conspiracy. The court further observed that a subsequent one-time settlement with the bank could not absolve the accused of criminal liability.
The court convicted former Dwarkadhish Spinners Ltd. (DSL) directors Amit Chaturvedi, Sanjay Chaturvedi and Parvin Juneja. However, former UCO Bank official Bikash Basu was acquitted after the court found no credible evidence proving that he had participated in the conspiracy, received any illegal gratification or acted with criminal intent.
The case originates from a Central Bureau of Investigation (CBI) FIR registered in 2009. According to the investigating agency, the accused allegedly conspired in 2001 to obtain a ₹7 crore loan from UCO Bank’s Parliament Street branch in New Delhi. The loan application initially stated that the funds would be used to prepay an outstanding loan from the Industrial Financial Corporation of India (IFCI).
According to the CBI, after the loan was sanctioned, the company directors informed the bank that IFCI had declined to accept the prepayment. They subsequently persuaded the bank to convert the facility into a machinery financing loan under the Government of India’s Technology Upgradation Fund Scheme (TUFS). The agency alleged that to secure the release of the funds, the accused submitted a forged Chartered Accountant (CA) certificate and a fabricated invoice purportedly issued by a dummy firm, falsely claiming that new machinery had already been purchased and installed.
The CBI investigation further alleged that no machinery was actually purchased and that the entire loan amount was diverted to companies associated with the business group. In its nearly 160-page judgment, the court observed that the circumstances demonstrated a criminal intention to cheat the bank from the very beginning and that the accused acted in concert to divert the sanctioned funds from their intended purpose.
The court also held that the evidence on record clearly established that the accused obtained the loan by making false representations regarding the purchase of machinery and subsequently diverted the funds intentionally. According to the judgment, each of the convicted directors was fully aware of the process through which the loan was sanctioned, disbursed and ultimately diverted, reinforcing the finding of criminal conspiracy.
During the trial, the defence argued that the company had entered into a one-time settlement with the bank and therefore the criminal proceedings should not continue. Rejecting this contention, the court held that the matter was not a mere case of loan default but one involving the alleged procurement of bank funds through forged documents and their deliberate diversion. The court observed that such conduct gives rise to both civil and criminal liability and that a financial settlement with the bank cannot erase criminal responsibility. The court will hear arguments on the quantum of sentence at a later date before determining the punishment for the convicted directors.
