The Enforcement Directorate (ED) has filed a prosecution complaint before a Special Prevention of Money Laundering Act (PMLA) Court against Electrotherm (India) Limited, its current Executive Vice Chairman Shailesh Bhanwarlal Bhandari, former Chairman Mukesh Bhandari, and others in connection with an alleged ₹631.97 crore bank loan fraud and money laundering case. The Special PMLA Court has taken cognisance of the complaint, issued process against the accused, and scheduled the next hearing for July.
The investigative actions represent a major push to address institutional asset siphoning within corporate credit accounts.
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The Multi-Stage Loan Diversion Pipeline
The ED’s money laundering investigation originated from a Central Bureau of Investigation (CBI) FIR registered in late 2021 on the basis of a complaint filed by Bank of India. According to the agency, Electrotherm (India) Limited, located in Palodia near Gandhinagar, systematically manipulated credit facilities instead of utilizing them for sanctioned industrial development purposes.
The extensive siphoning and layering ring operated via a distinct four-stage allocation cycle:
- Supplier Front Creation: The network onboarded several external commercial entities portrayed as valid raw material providers, which the ED’s investigation subsequently identified as ghost suppliers having no genuine business dealings with the manufacturer.
- Invoicing Falsification: Using these shadow entities, the company generated fake purchase invoices, fabricated delivery challans, and questionable Letter of Credit (LC) discounting setups to project a false layout of ongoing trade transactions.
- Shell Entity Routing: The credit funds drawn from public sector banks were routed through these multi-layered dealer nodes, immediately exiting the legitimate corporate network.
- Immediate Cash Depletion: The pipeline concluded with rapid asset depletion, where the multi-crore tranches transferred into the shell accounts were completely withdrawn in physical cash on the exact same day or within a short window to shatter any direct auditing trail.
Summons Evasion and Structural Seizures
The prosecution complaint further alleges that Executive Vice Chairman Shailesh Bhandari actively non-cooperated with central investigators. Despite being served multiple statutory summons to assist in mapping the fund flow, he repeatedly skipped scheduled appearances before enforcement officers, citing varying health-related reasons.
In January 2025, the ED’s Ahmedabad Zonal Office intensified its tracking mechanism, executing coordinated search operations across five core premises linked to the promoters. During those targeted raids, the central agency froze 41 separate bank accounts tied to the enterprise and secured judicial permission to place a strict financial lien on approximately ₹35.11 crore in active balances. Cumulative asset freezes and provisional attachment blocks executed over the course of the multi-year probe have now reached an estimated ₹839 crore.
Financial Losses and Stressed Account Offloading
According to formal accounting audits, Electrotherm allegedly misutilized approximately ₹931.97 crore obtained through various credit facilities between 2007 and 2013, causing severe operational constraints to the primary lender, Bank of India. The manufacturing firm’s credit ledger was officially classified as a Non-Performing Asset (NPA) on December 1, 2012, after consecutive repayment defaults.
A specific ₹100 crore corporate loan sanctioned by Bank of India, which was legally bound for the company’s manufacturing expansion program, was allegedly hijacked. Investigators discovered that the capital was completely redirected to clear older, pending debts and interest liabilities owed to separate banking consortiums. To minimize its exposure, Bank of India eventually sold off the heavily stressed loan account to an asset reconstruction company for a discounted value of ₹550 crore, resulting in an immediate and substantial write-off loss.
The extensive findings are currently under active judicial consideration by the Special PMLA bench, and the trial court will evaluate the complete cross-examination of digital invoices to determine ultimate structural accountability.
