6017-03-01-Final Report On 10.09.2018-18

INVESTIGATIVE AUDIT REPORT
OF
JMD OILS PRIVATE LIMITED
A.K.G. & ASSOCIATES

Chartered Accountants
11-CSC, DDA Market, A-Block, Saraswati Vihar, Delhi-110034

Phone: 011-27020489, 27016986, 9810046631
E-mail: audit@akgandassociates.com
Website: www.akgandassociates.com
A.K.G & Associates
Investigative Audit Report

of
JMD Oils Private Limited
TABLE OF CONTENTS
PREFACE ...........................................................................................................4
PART A .............................................................................................................5
CHAPTER I- List of Abbreviations ........................................................................6
CHAPTER II –OBJECTIVE AND METHODOLOGY ....................................................7
1. Objectives ...................................................................................................7
2. Scope of Work .............................................................................................7
3. Methodology Adopted ..................................................................................7
4. Limitations of Audit/Disclaimers ....................................................................8
CHAPTER III–EXECUTIVE SUMMARY ................................................................. 10
1. Introduction .............................................................................................. 10
2. Summarized Timeline of the Audit ............................................................... 11
3. Observations in Brief .................................................................................. 13
4. Brief Profile of JMD Oils Private Limited ....................................................... 15
5. Related Parties Details ............................................................................... 17
6. Financial Performance ................................................................................ 18
CHAPTER IV - DETAILED OBSERVATIONS.......................................................... 19
1. Companies Under The Same Management ................................................... 19
2. Potential Fraud By Fake Purchases of Rs. 527.17 cr Through L/Cs.................. 21
3. Purchases from Related Parties ................................................................... 25
4. Sales v/s Production Trend ......................................................................... 30
5. Sales to Related Parties .............................................................................. 31
6. Money Trail and End Use of Funds .............................................................. 37
7. Limits Outside the Consortium .................................................................... 39
8. Other Observations .................................................................................... 39
9. Conclusion ................................................................................................ 40
CHAPTER V- Correspondence with Auditee and Consortium Member Banks........... 42
PART B ........................................................................................................... 47
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JMD Oils Private Limited –Investigative Audit Report
CONFIDENTIAL PLEASE DO NOT CIRCULATE
A.K.G & Associates
1. Annexure A: Statutory Provisions of Form F………………………………………………….48

2. Annexure B: Goods Transported by Same Vehicles on Consecutive Days….……..52
3. Annexure C: Details of Goods Transported by Same Vehicles on Same Days …..99
4. Annexure D: Details of Goods Transported by Bus.……………….…………….………102
5. Annexure E: Details of Goods Transported by Motor Cycle/Scooter.……………..103
6. Annexure F: Details of Goods Transported through other modes of Vehicle……104
7. Annexure G: Details of Goods Transported through Vehicles for which records
were not available in public domain………………………………………………………….……110
8. Annexure H: Ownership Details of Vehicles Mentioned in SIA Report.……………144
9. Annexure I: Copy of Letters sent to Auditee and Consortium Member Banks….148
DISCLAIMER……………………………………………………………………………………………….176
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PREFACE
JMD Oils Private Limited incorporated in the year 1995, availed

credit facilities under the consortium of State Bank of India, Pun-
jab National Bank, Dena Bank, Central Bank of India, Union Bank
of India led by Indian Overseas Bank. The advance was classified
as Non-performing asset and subjected to Investigative Audit by
Asset Recovery Management Branch, India Overseas Bank, Rachna
Building, 4th Floor, 2, Rajendra Place, Pusa Road, New Delhi –
110008.
The above said investigation was entrusted to us vide letter No.

BR/ARMB/2017-18 dated 11.12.2017 to ascertain whether the
Company had indulged in any diversion/siphoning off of funds ex-
tended to them by the Consortium Banks with IOB as leader.
The only data provided for audit was Audited Financial State-
ments, Special Investigative Audit Report, Sanction letters of the
consortium banks and invoices attached with devolved LCs since
no access to books of accounts was allowed.
The Report has been divided in to two parts, Part A which contains
the main report and Part B which contains the annexures to the
report. In Part A, List of Abbreviations” is covered in Chapter I, the
complete methodology for audit has been explained in Chapter II
“Objective and Methodology”. Chapter III contains the “Executive
Summary”. “Compliance of Scope of work” is covered in Chapter I
and “. The details of correspondence held with consortium mem-
ber banks and auditee are covered in Chapter V.
The audit report with Annexures should be read in totality with

the observations and limitations attached thereto.
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PART A
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CHAPTER I- LIST OF ABBREVIATIONS
Abbreviation
Full Form
Used
ARM Asset Recovery Management
CBoI Central Bank of India
CC Cash Credit
CST Central Sales Tax
GR Good Receipt
IOB India Overseas Bank
JOPL JMD Oils Private Limited
LC Letter of Credit
PNB Punjab National Bank
SBI State Bank of India
SIA Special Investigative Audit
UBI Union Bank of India
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CHAPTER II –OBJECTIVE AND METHODOLOGY
1. OBJECTIVES
JMD Oils Private Limited was sanctioned various credit facilities by under the consor-
tium of State Bank of India, Punjab National Bank, Dena Bank, Central Bank of In-
dia, Union Bank of India led by Indian Overseas Bank who is the lead bank. The
bank wanted to ensure that the funds extended by the consortium banks (with IOB
as leader) have been utilized by the company for the purpose for which these were
sanctioned. For their satisfaction the bank preferred an Investigative Audit of the
Company and appointed our firm to conduct the audit.
2. SCOPE OF WORK
As per the letter received from Indian Overseas Bank, the Investigative Audit had to
be conducted from the year 2008 with the following scope of work: -
a) Receivables Audit including validation of debtors
b) Details of sales proceeds routed through other banks
c) Funds utilized for acquisition of fixed assets/repayment of Term loan
d) End use verification of funds extended by consortium banks
e) Related party transactions towards associates/sister concerns
f) Comparison of valuation of stock shown in stock statements and stock records
of the Company
g) Verification of high value debits/credits from Cash Credit account/ Term Loan.
h) Account opened by the company with other Banks other than consortium Banks
i) Any other relevant aspect as considered essential during audit in consultation
with lead bank/JLF.
3. METHODOLOGY ADOPTED
While carrying out the assignment for the period starting from the year 2008 on-
wards, we have adopted the following methodology:
a) Collection of available Information/Records/Documents from the Consortium
Banks.
b) Conducting initial discussions with the Consortium banks based upon prelimi-
nary document review and data analysis.
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c) Acquiring the knowledge of working of the Vegetable and Edible Oils Industry.
d) Visit to manufacturing unit of the company situated at Gandhidham, Gujarat.
e) Extracted the data/ useful information by using various tools and from Public
domain.
f) Identification and Analysis of Transactions with Related Parties.
g) Issuing a letter to the company containing the detailed list of requirements.
However, despite of various reminders through letter, emails and telephonic
conversations, the company did not provide the books of accounts and other
critical data for audit.
h) Since the books of accounts and other critical data was not provided by the
company; therefore, we have analyzed the previous Special Investigative Re-
port and Balance sheets of the company.
i) Preparation of the draft report detailing the procedures conducted and evi-
dence/facts gathered during the assignment which was presented in JLM
wherein it was discussed that the only option available was to verify the pur-
chases from the LCs devolved.
j) Submission of Interim Report dated 11.07.2018.
k) Discussion of draft audit report with the Banks after incorporating the analysis
of LCs in the interim report.
l) Submission of Final Report.
4. LIMITATIONS OF AUDIT/DISCLAIMERS
While utmost care has been taken in carrying out the given assignment, there are
certain limitations for use of this audit report as under:
a) While carrying out the assignment we were not provided the access to books of
accounts of the company and other critical data for audit, therefore, we are un-
able to comment upon the transaction wise details of the company.
b) The report is primarily based only on the following information and records
made available by the Consortium member banks:
i. Special Investigative Report
ii. Stock Audit Reports
iii. Sanction Letters
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iv. Bank Statements

v. Documents in respect of Letter of Credits devolved
c) The financial records of the company have not been provided to us for verifica-
tion. Therefore, the effect of the same has not been covered in our report.
d) We were provided with the Audited Balance sheets till the financial year ended
31.03.2015, sanction letters and various bank statements. Since the financial
records were not available, Bank statements could not be analyzed.
e) We have relied upon management’s expertise for industry related explanations.
f) Neither our Firm/Partner nor any of our employees undertakes responsibility in
any way whatsoever to any person in respect of any error in this report arising
from incorrect information provided to us by the staff/employees of the corpo-
rate debtor.
g) During our professional services, we were provided with both written and verbal
information, which has been relied upon us to be accurate. Nothing has come to
our knowledge to reason a belief that the facts and data set forth in this report
are not true or incorrect. Therefore, we assume no responsibility arising from in-
formation furnished and believe it to be reliable.
h) Legal aspects have not been covered in this audit.
i) Information regarding the existence and operations of the customers and ven-
dors was gathered through public domain search. Such information may not be
always accurate or reliable when identified as being alleged or of unknown relia-
bility and we do not vouch for the accuracy or completeness of this information.
j) This report is meant for the Consortium Banks hence should not be quoted, re-
ferred or distributed to anybody without their prior written consent.
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CHAPTER III–EXECUTIVE SUMMARY
1. INTRODUCTION
• The company was incorporated in the year 1995 in the name of “JMD Oils Pri-
vate Limited”.
• The company was primarily engaged in the business of refining, purchase and
sale of edible oils. The company has its manufacturing unit located at Gandhi-
dham, Gujarat and had 22 depots for managing its operations.
• The company was availing credit facilities in the form of working capital by way
of consortium loan in which Indian Overseas Bank is the lead bank and other
bankers were State Bank of India, Central Bank of India, Union Bank, Dena Bank
and Punjab National Bank.
• The internal controls of the company were very weak since there were no de-
fined policies for the sales and purchases made by the company. They were do-
ing business without verifying the background and financial soundness of the
parties.
• The sales invoices were issued without the supporting documents like G.R.,
weighment slips etc. due to which the movement of material could not be veri-
fied. Further, in case of purchases, the G.R. receipts were issued by a firm which
was also managed by the promoters of the company.
• There has been increase in sales however a downfall in production. Thus, it can
be inferred that company is resorting to trading of goods despite primarily being
a manufacturing concern.
• The debtors of the company were on increasing trend with the major portion be-
longing to the related parties of the promoters. However, trade payables were
being paid on time through working capital facilities financed by consortium
banks.
• The financial position of the company deteriorated due to payment to related
party creditors and non-realization of related party debtors.
• The transactions of sales and purchases were made in such a simple manner for
converting the LCs/CC limit into sundry debtors.
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2. SUMMARIZED TIMELINE OF THE AUDIT
• The assignment was allotted to us via Indian Overseas Bank through letter dat-
ed 11.12.2017 to ensure that funds were utilized for the purpose for which they
were sanctioned.
• However, the auditee despite several reminders and discussion, did not made
available the information/documents required for the purpose of the audit,
which resulted into substantial delay in the assignment.
• Under these circumstances, we were constrained to prepare our report on the
basis of information available in the public domain and data collected from
banks.
• We had presented our preliminary draft report in the Joint Lender’s Meeting held
on 24.05.2018, wherein it was discussed that the member banks would direct
the auditee to make available the information/documents for the audit and the
member banks will also make available all the documents in respect of the pur-
chases made by the auditee through Letter of credit.
• However, even after the intervention from the member banks, the auditee did
not extend the requisite cooperation.
• We had requested the member banks to provide the required information on
25.05.2018. The information/records from the member banks were received in
the following manner:
S. No. Name of the Bank Date of Receipt of Information
1. Dena Bank 26.05.2018
2. Punjab National Bank 04.06.2018
3. Central Bank of India 08.06.2018
4. State Bank of India 12.06.2018
5. Indian Overseas Bank 07.07.2018
6. Union Bank of India 13.08.2018
• We had submitted our interim report on 11.07.2018 on the request of Indian

Overseas Bank based on apparent analysis of information and records.
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• Our interim report was submitted without analyzing the information received
from Indian Overseas Bank and the information from Union Bank of India was
still awaited.
• On 30.07.2018, we had sent a reminder mail to all consortium banks and re-
quested to provide the data within three working days, otherwise, we will be
constrained to finalize our report on the basis of information and data available
with us.
• However, no response was received from anyone till 08.08.2018. Thereafter, we
had sent final reminder mail that “we have commenced the preparation of our
report on the basis of information and data available with us and from public
domain. Therefore, now we will not be obliged to consider any infor-
mation/data/records, hereinafter”.
• On 09.08.2018, we had received a call from Union Bank of India, stating that
the data is ready and may be collected from their Noida Branch office. On
13.08.2018, we had collected the data from their said branch office.
• The data from the Auditee was still awaited and after having discussions with
the lead bank on 17.08.208, the bank directed us to prepare the final report on
the basis of information collected till date.
• Therefore, now we have analyzed the data received from member banks and
have prepared the final report.
• Copies of letters, mail sent/received with client and consortium member banks
are covered in Chapter V to this report.
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3. OBSERVATIONS IN BRIEF
As stated earlier, the auditee despite of various reminders and discussions have not ex-
tended the requisite cooperation and did provided the access to books of accounts.
Therefore, after the discussion with the banks, we have analyzed the purchases made
by the auditee against the devolved letter of credit and on the analysis on the same, we
are of the opinion that it is difficult to prove the genuineness of purchases made
by the company against letter of credit which were devolved subsequently,
the corresponding sales made from these purchases may not also be genuine,
making it apparently impossible to realize the trade receivables.
3.1 Potential misuse of LCs sanctioned by the consortium Members
3.1.1 The company had purchased goods worth Rs. 653.68 crore during the period
from September 2012 to May 2015 through Letter of Credits which were eventu-
ally devolved.
3.1.2 As per the details provided by consortium member banks, approximately 67.49%
of purchases amounting to Rs. 441.16 crore were made through “Form F” (which
is used in case of stock transfer to branch / consignment agent), however, we
have observed that the auditee was not the consignment agent/branch of the
seller who has sold the goods to the auditee.
3.1.3 It was also observed that in 438 instances goods worth Rs. 242.54 crore were
transported from one state to another through same vehicle on consecutive
days. For example, it was observed that the vehicle no. GJ-12-AT-5694 was used
to transport goods from Delhi to Gandhidham on 29.07.2014 and 30.07.2014
through invoice no. 1209 and 1379 respectively each carrying 25,000 kg of Soy-
abean oil.
3.1.4 38 instances were noted where goods worth Rs. 11.89 crore were transported
from one state to another through same vehicle on same day. For example, ve-
hicle no GJ-12Y-9476 was used to transport 25,000 kg of Soyabean oil through
invoice no. 1113 and 1232 from New Delhi to Gandhidham.
3.1.5 On verification of vehicles records through information available in public do-
main, we have observed that the vehicles such as Bus, Motor Cycle/Scooter, Mo-
tor Cab, Excavator etc. which are not feasible for transportation were used to
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transport the goods from one state to another and total value of such goods
transported was worth Rs. 46.71 crore.
3.1.6 It was observed that in most cases, entire business cycle of execution of trade
was completed in one day; i.e. issuance of LC, purchase of goods, transportation
of goods and submission of LCs documents to the issuer bank were performed
on the same day.
3.1.7 Based on above observations, it indicates that the company has booked fake
purchases amounting to Rs. 527.17 crore (out of the total purchases verified
worth Rs. 653.68 crore) and there is a potential diversion of funds by the com-
pany.
3.2 Analysis of Special Investigative Audit Report
3.2.1 From the analysis of the Special Investigative Audit Report we had observed that
although the turnover of the company was on increasing trend, the production of
the company was continuously decreasing. It possibly indicates that the company
was resorting to trading of goods rather than manufacturing of goods.
3.2.2 It was noted that the sales to the companies related to company and its promot-
er kept on increasing over the year. From being 39.92% of the total sales in FY
2011-12, it went up to 76.55% during the period from 01.04.2014 to
30.11.2014. However, the realization from these debtors was continuously de-
creasing.
3.2.3 Similarly, the purchases from the concerns related to the company and its pro-
moters also kept on increasing. From being 53.92% in FY 2012-13, it went upto
89.10% during the period from 01.04.2014 to 30.11.2014.
3.2.4 However, in spite of funds being blocked up with the debtors, the company kept
on continuously buying the goods against LCs. This is evident from the fact the
Trade Payable were Rs. 181.93 crore as on 31.03.2012 which came down to Rs.
67.30 crore as on 31.03.2015. Whereas Trade Receivable were Rs. 300.03 crore
as on 31.03.2012 which went upto Rs. 773.58 crore as on 31.03.2015.
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4. BRIEF PROFILE OF JMD OILS PRIVATE LIMITED
Name JMD Oils Private Limited
Date of In-
23.07.1995
corporation
CIN U74899DL1995PTC066690
Constitution Company limited by Shares
Date of
DIN Name Designation
Directors of Appointment
the company
00025411 Naresh Dhingra Director 15.12.2003
as on
22.05.2018 00938965 Krishan Dhingra Director 23.03.1995
01037716 Ramji Lal Sharma Director 01.04.1999
Registered
5/24 Ramesh Nagar, New Delhi, Delhi-110015 India
Office
Factory Loca- Survey No. 320, Village Bhimasar, Taluka Anjar, Gandhidham, District
tion Kutch, Gujarat
S. No. Name of the Bank
a) Indian Overseas Bank
b) State Bank of India
Details of
c) Central Bank of India
Bankers
d) Union Bank
e) Dena Bank
f) Punjab National Bank
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g) HDFC Bank Limited
h) Yes Bank Limited
i) Axis Bank Limited
j) ICICI Bank Limited
k) Syndicate Bank
Following are the brief of open charges on the company as registered

with ROC as on 22.05.2018.
Charge Date of
Bank/Institution Amount
ID Creation
10490155 Dena Bank 06.02.2014 10,00,00,000
10477389 Bank of Baroda 24.01.2014 46,61,62,500
10449570 Punjab National Bank 31.08.2013 1,00,00,000
10408432 Central Bank of India 09.02.2013 28,40,00,000
Details of 10328842 State Bank of India 05.12.2011 1,52,00,00,000

Charges 10179965 Indian Overseas Bank 22.09.2009 12,00,00,000
10153665 Punjab National Bank 31.03.2009 2,36,20,00,000
10077230 ICICI Bank Limited 15.11.2007 45,80,00,000
10042668 Indian Overseas Bank 28.02.2007 7,92,35,00,000
10042669 Indian Overseas Bank 28.02.2007 15,93,00,000
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5. RELATED PARTIES DETAILS
S.
Nature of Relation Name of the Company
No.
1. Krishan Dhingra
Key Managerial Personnel
2. Naresh Dhingra
3. Gulshan Kumar HUF
4. Gulshan Dhingra
5. Palka Dhingra
Relatives of Key Manage-
rial Personnel
6. Pinki Dhingra
7. Pratik Dhingra
8. Jamma Devi Dhingra
9. Super Veg Oils Private Limited

Enterprises in which Key
10. managerial personnel or JMD Proteins Private Limited
their relatives were able
Delta Agro Tech Private Limited
to exercise significant in-
11. (Formerly known as JMD Veg Oils Private Lim-
fluence
ited)
12. Wholly Owned Subsidiary Pullman Company Limited
13. Joint Venture JMD Heritage Lawns Private Limited
Source: Financial Statements
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6. FINANCIAL PERFORMANCE
(Fig. Rs. in Crore)
Particulars FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14 FY 14-15
Share Capital 7.80 8.74 10.13 10.13 10.33 10.33 10.33
Reserves & Surplus 38.44 64.06 112.98 129.51 153.77 153.93 -47.05
Loan from Consortium Banks 163.41 194.86 200.21 238.38 267.77 355.44 849.31
Trade Payables 71.49 113.46 155.69 181.93 206.39 279.82 67.30
Inventories 122.67 185.81 227.99 255.30 264.18 299.28 133.19
Trade Receivables 147.95 196.20 247.91 300.03 353.88 484.32 773.58
Revenue from Operations 981.07 990.94 1,161.40 1,509.26 1,796.81 2,090.12 1,400.10
Cost of Material Consumed 922.93 923.12 1,094.98 1,393.53 1,677.18 1,988.71 1,304.61
Finance Cost 31.85 43.81 30.24 43.16 48.28 84.74 120.94
Profit Before Tax 15.81 15.90 20.34 23.92 24.02 0.23 -120.72
Source: Financial Statements
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CHAPTER IV - DETAILED OBSERVATIONS
As stated earlier, the auditee despite of various reminders and discussions have not
extended the requisite cooperation and did provided the access to books of ac-
counts. Therefore, after the discussion with the banks, it was decided that the com-
pliance of scope of work as mentioned in the appointment letter was not feasible.
Therefore, we have reviewed the Special Investigative Audit Report and financial
statements for the period under review and our observations as per the scope of
work is detailed as under:
1. COMPANIES UNDER THE SAME MANAGEMENT
On perusal of Special Investigative Audit Report, Balance Sheets and other doc-
uments, we have observed that there were several companies which were being
controlled by the management, details of which are given below:
1.1 Entities being controlled by the Promoters:
JMD Oils Private Limited is managed by Gulshan Dhingra, Krishan Dhingra and
Naresh Dhingra and below mentioned companies are under common manage-
ment of one or more promoters:
S. Nature of Rela-
Particulars
No. tion
1. Super Veg Oils Private Limited Sister Concern
2. JMD Heritage Lawns Private Limited Joint Venture
3. JMD Proteins Private Limited Sister Concern
Delta Agro Tech Private Limited Sister Concern
4.
(Formerly known as JMD Veg Oils Private Limited) (Debtor)
Wholly owned
5. Pullman Company Limited, Hongkong
Subsidiary
Controlled by
6. Delhi Super Roadways
Promoters
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1.2 Entities being controlled by the Relatives of Promoters
During the audit, we observed that the company was having significant
sales/purchase with the companies which are the concerns of relatives of pro-
moters of the company. Details of such concerns is given below:
S. Nature of Re-
Particulars
No. lation
1. Chawla Agencies Private Limited Creditors
2. Galux International Debtor
3. R K Super Edible Oils Private Limited Debtor
4. Mannat Agencies Private Limited Debtor
1.3 Entities Under Same Group:
During verification, we have observed that the company was having multiple
transactions with companies under the common control of Sidharth Gulati (di-
rector in all three companies)
S. Nature of Re-
Particulars
No. lation
Varada Expo Mark & Marketing Private Limited (For- Debtor
1.
merly known as Shiv Expomark Private Limited)
2. Tribhuvan Mark Plus Private Limited Debtor
3. Hy Link Overseas Private Limited Creditors
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2. POTENTIAL FRAUD BY FAKE PURCHASES OF RS. 527.17 CR THROUGH L/CS
2.1 We have analyzed the purchases made by the company through devolved let-
ter of credit as made available by the banks which raises considerable doubts
on the genuineness of the purchases on the basis of following observations:
2.2 Modus Operandi: The company has shown the purchase of goods against
“Form F”. And/or Transported the goods on vehicles which were not feasible
for transportation. Details of such are given below:
2.2.1 The company had purchased total goods worth Rs. 653.68 crore during the
period from September 2012 to May 2015 through Letter of Credits which
were eventually devolved.
2.2.2 Out of the total purchases, we have observed that most of the interstate pur-
chases were against Form “F” (which is used in case of stock transfer to
branch / consignment agent as per Section 6A of Central Sales Tax Act, 1956
read with Rule 8 of Central Sales Tax (Delhi) Rules, 2005), however, we have
observed that the auditee was not the consignment agent/branch of the sell-
er who has sold the goods to the auditee. Further, even if the company has
purchased goods through “Form F” it means that the ownership of goods was
not transferred and if the ownership was not transferred the auditee could
not have booked it as purchases and make the payment by LCs. This is seri-
ous lapse to indicate the in genuine purchases for which company has also
not paid the applicable taxes. (The relevant provisions of the applicable laws
and rules in respect of “Form F” are attached in Annexure A to the report).
The details of such purchases are given below:
S. Amount
Name of the Seller Item
No. (in Rs.)
1. CBS Steel Private Limited Tin Plate 8,73,24,705
2. Chawla Agencies Private Limited Soyabean Oil 74,93,50,000
3. Delight Industries Tin Plate 1,29,95,000
4. Hy-Link Overseas Private Limited Soyabean Oil 2,83,81,25,000
5. MRB Steels Limited Iron Sheets 4,00,00,275
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S. Amount
Name of the Seller Item
No. (in Rs.)
6. Nav Ratan Pipe and Profile Limited Tin Plate 41,32,15,535
7. Raksha Global Steel Private Limited Tin Plate 11,34,49,740
8. SGM Steels Private Limited Tin Plate 7,88,15,805
9. Sidhivinayak Imports Limited Iron Sheets 83,62,200
10. Sidhivinayak Imports Limited Tin Plate 7,00,02,370
Grand Total 4,41,16,40,630
2.2.3 It was observed that the criminal proceedings were initiated against CBS
Steel Private Limited and Raksha Global Steel Private Limited and their direc-
tors for perpetrating frauds.
2.2.4 The transporter for transportation of goods was common in all cases, i.e.
“Delhi Super Roadways” which happens to be a related party of the auditee
and the GRN issued does not contain the Service Tax Registration No, PAN
and does not indicate the freight amount (which is to be paid in most of
transaction).
2.2.5 In case of purchase of Soyabean Oil, it was observed that all invoices were
for same quantity i.e. 25,000 Kg and all were without weighment slips.
2.2.6 During the analysis of invoices and goods receipt note, it was found in many
cases that same vehicles were used to transport goods from Delhi to Gandhi-
dham on consecutive dates. For example, it was observed that the vehicle no.
GJ-12-AT-5694 was used to transport goods from Delhi to Gandhidham on
29.07.2014 and 30.07.2014. The total value of such goods amount to Rs.
2,42,54,25,095. The details of such type of instances in covered in Annex-
ure B from Page 52-98 of the report.
S. No. of Qty Amount
Item
No. Invoices (in Kg) ( in Rs.)
1. Soyabean Oil 1,046 2,61,50,000 2,19,04,62,500
2. Tin Plate 122 41,58,630 23,49,62,595
Grand Total 1,168 3,03,08,630 2,42,54,25,095
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2.2.7 Further, it was also observed that even on the same day the goods were
transported through same vehicles. For example, Vehicle No. GJ-12Y-9476
was used to transport goods on 29.07.2014, through bill no. 1113 and 1232
each containing 25,000 kg of Soyabean oil which was transported from New
Delhi to Gandhidham. The total value of such goods amount to Rs.
11,89,44,730. The details of such type of instances in covered in Annexure
C from Page 99-101 of the report.
Item
1. Soyabean Oil 70 17,50,000 10,93,50,000
2. Tin Plate 5 1,69,820 95,94,730
Grand Total 75 19,19,820 11,89,44,730
2.2.8 On analysis of vehicles through which goods were transported, we found that
6,50,000 kg of Soyabean oil worth Rs. 6,00,06,250 (26 invoices each carrying
25,000 kg of Soyabean Oil) were transported through “Bus” which was
owned by “Apeejay School”. The details of such type of instances in covered
in Annexure D on Page 102 of the report.
2.2.9 Further, it was also observed that 3,50,710 kg of goods (including Iron
Sheets, Tin Plate and Soyabean Oil) having value of Rs. 1,96,61,615 were
transported through Motor Cycle/Scooter. It is pertinent to note that more
than 25,000 kg of goods were constantly being transported through Motorcy-
cle/Scooter. The details of such type of instances in covered in Annexure E
on Page 103 of the report.
Item
1. Iron Sheets 4 1,22,750 64,44,375
2. Soyabean Oil 1 25,000 17,50,000
3. Tin Plate 6 2,02,960 1,14,67,240
Grand Total 11 3,50,710 1,96,61,615
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2.2.10 In some other cases it was also observed that goods were being transported
through Excavator, Crane Mounted Vehicle, Motor Cab, Three-Wheeler Pas-
senger Vehicle. The summarized details of those events are given below, and
details are covered in Annexure F from Page 104-109 of the report:
S. No. of
Qty Amount
No Class of Vehicle Invoic-
(in Kg) ( in Rs.)
. es
Three-Wheeler (Passen-
1. 49 12,32,520 1141,22,380
ger)
2. Motor Car (L) 46 11,56,780 1091,21,820
3. Three-Wheeler (Goods) 37 9,25,000 930,32,500
4. Motor Cab (L) 21 5,25,000 511,38,750
5. Crane Mounted Vehicle 9 2,25,000 149,12,500
6. Excavator (NT) (O) 2 50,000 31,25,000
7. Agricultural Tractor 1 34,400 19,43,600
Grand Total 165 41,48,700 38,73,96,550
2.2.11 It was also observed that in 963 cases, goods were transported having value
of Rs. 1,89,79,94,930 through vehicles for which records were not available
in public domain. The details of such type of instances in covered in Annex-
ure G from Page 110-143 of the report.
2.2.12 All these material events raise a serious doubt on the genuineness of the
transactions entered by the company and it may be safely concluded that ac-
tual purchases of goods may not have been taken place.
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3. PURCHASES FROM RELATED PARTIES
3.1 As per Special Investigative Audit Report, we have observed that the
purchases from related parties have increased rapidly over the period
of time. The details of purchases made from related parties is given
below:
(Fig. Rs. in Crore)

2014-15
S.
Name of the Party 2012-13 2013-14 (Till
No.
30.11.2014)
1 Hy Link Overseas Private Limited 590.50 719.25 337.99
2 Delta Agrotech Private Limited 114.82 122.79 6.84
3 Chawla Agencies Private Limited 189.42 458.95 636.02
Total (A) 894.74 1300.99 980.85
Total Purchases for the period (B) 1,659.52 1,947.57 1,100.90
% (A/B) 53.92 66.80 89.10
3.2 Analysis of Purchases through LCs Devolved
3.2.1 On analysis of the purchases invoices made available by consortium banks in

respect of LCs devolved, we have that out of the purchases mentioned in pa-
ra 3.1 of the report, the company had made purchases of Rs. 358.75 crore
from the above-mentioned related parties through “F Form”, details of which
are as follows:
(Fig. Rs. in Crore)
S. Grand
Particulars 2012-13 2013-14 2014-15
No. Total
1. Chawla Agencies Private Limited - - 74.94 74.94
2. Hy-Link Overseas Private Limited 30.78 181.09 71.95 283.81
Grand Total 30.78 181.09 146.88 358.75
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3.3 Purchase Concentration
3.3.1 The details of purchases made by the company for last three years is given
below:
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3.4 Other Observations w.r.t Creditors
3.4.1 Hy Link Overseas Private Limited

a) The director of the company is Mr. Sidharth Gulati who is also a director in
Varada Expo Mark & Marketing Private Limited (formerly known as Shiv
Expomark Private Limited).
b) As per the said report, JOPL was continuously making payments against pur-
chases to the above said company, while it was unable to realize the sum
due on accounts of sales made to its group companies.
3.4.2 Chawla Agencies Private Limited

a) The director of the company is Om Prakash Chawla who is also the proprie-
tor of Galux International.
b) The net worth of the company was only Rs. 1.49 crore as on 31.03.2015,
whereas the company has purchased goods worth Rs. 1,284.39 crore from
01.04.2012 to 30.11.2015.
c) As per the data available in public domain, the total trade receivables of
Chawla Agencies Private Limited as on 31.03.2014 was Rs. 20.49 crore,
whereas as per the SIA report, the total amount payable to Chawla Agencies
Private Limited as on 31.03.2014 was Rs. 222.45 crore.
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d) Further, as per the SIA report, the company has provided advance to Chawla
Agencies Private Limited in October 2014 amounting to Rs. 73.25 crore de-
spite facing financial crunch as well as non-receipt of sums due on sales
made to group entities of such creditor. However, later in the month of No-
vember 2014 this advance was adjusted by booking purchase.
3.5 Decrease in Creditors
3.5.1 While verification of the special investigative audit report, we have observed
that although the purchases of the company has increased during the last
three years, the trade payables have decreased rapidly, which means that the
company was utilizing the working capital for making the payments to its
creditors since the company was not realizing its trade receivables. This can
be depicted in the chart given below:
Trend of Receivables, Payables and Short -

Term Borrowings
900
849.31
800
773.58
700
600
500 484.32
400 300.03
247.91 353.88 355.44
300 194.86
267.77 279.82
147.95 238.38
200 200.21 206.39
196.20
100 163.41 113.46 155.69 181.93
71.49 67.30
-
2008 2009 2010 2011 2012 2013 2014 2015 2016
Receivables Trade Payables Short-Term Borrowings
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3.6 Holding Levels of Debtors and Creditors
3.6.1 While verifying the balance sheets of the company, we have observed that
the holding levels of the company in respect of receivables was increasing
over the year, on the other hand the holding levels of purchase was continu-
ously decreasing. This can be explained in the chart given below:
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4. SALES V/S PRODUCTION TREND
a) During the verification of balance sheet, we have observed that although the
sales of the company have increased during the last four years, the produc-
tion of the company was on declining trend. The details of Sales and Produc-
tion from the year 2011 onwards is given below:
Year Sales (in Crore) Production Qty (in MT)

2011 1,161.40 2,17,692
2012 1,509.26 1,91,257
2013 1,796.81 1,82,304
2014 2,090.12 1,65,962
b) From the above graph it appears that the company is resorting to trading of
goods rather than manufacturing of goods.
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5. SALES TO RELATED PARTIES
5.1 As per Special Investigative Audit Report, we have noted that the
sales to related parties have increased rapidly over the period of
time.
(Fig. Rs. in crore)
2014-15
S. 2011- 2012- 2013-
Name of the Party (Till
No. 12 13 14
30.11.14)
1 Delta Agrotech Private Limited 74.77 201.29 452.66 345.07
2 Galux International 104.39 310.81 621.59 353.76
3 R K Super Edible Oils Private Limited 368.56 287.77 157.91 202.00

Varada Expo Mark & Marketing Pri-
4 32.67 95.07 145.50 -
vate Limited
5 Tribhuvan Mark Plus Private Limited - - 21.90 4.48
6 Shiv Expomark Private Limited 22.15 23.24 - -
Total (A) 602.54 918.18 1399.56 905.31
Total Turnover for the period

1509.26 1796.8 2090.12 1182.68
(B)
% (A/B) 39.92 51.10 66.96 76.55
The sales concentration of the company for last four year is given below in the
following charts:
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From the above table and charts it can be observed that although the sales of
the company have increased, but the major portion of sales was concentrated
with related parties/persons.
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5.2 While verifying the debtors, we have observed that while the sales of
the company was on increasing trend, the realization from debtors
was on decreasing trend because the debtors were increasing con-
stantly. The details of debtors are given below:
(Fig. Rs. in crore)

Bal- Bal- Bal-
Balance
S. ance ance ance
as on
No Name of the Party as on as on as on
30.11.20
. 31.03. 31.03. 31.03.
14
12 13 14
1 Delta Agrotech Private Limited - - - 181.69
2 Galux International 92.02 69.36 37.68 161.47
3 R K Super Edible Oils Private Limited - 4.42 21.51 143.77
Varada Expo Mark & Marketing Private

4 - - 109.15 87.08
Limited
5 Tribhuvan Mark Plus Private Limited - - 5.45 9.93
6 Shiv Expomark Private Limited 13.99 - - 0.95
Total (A) 106.01 73.78 173.79 584.89
Total Debtor for the period (B) 277.19 353.88 484.32 790.63
% (A/B) 38.24 20.85 35.88 73.98
5.3 Observations w.r.t Sales and Debtors
5.3.1 Delta Agrotech Private Limited

a) The name of the company was changed from “JMD Veg Oils Private Limited”
to “Delta Agrotech Private Limited”.
b) The director of the company is Ramit Popli who happens to be the close rela-
tive of promoters of the company.
c) The registered address of the company is 5/25, Ramesh Nagar, New Delhi-
110015 which is adjacent to the registered address of JMD Oils Private Lim-
ited.
d) The net worth of the company as on 31.03.2015 was only Rs. 60 lakhs while
the company has sold goods worth Rs. 1073.79 crore from 01.04.2011 to
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30.11.2015. The company has also purchased goods worth Rs. 244.45 crore
from the same company for the period 01.04.2012 to 30.11.2015.
e) Further, as per the Special Investigative Audit Report, the said company was
making majority of sales to Super Veg Oils Limited (which is again controlled
by the promoters of the company), Chawla Agencies Private Limited (which
is a supplier of the company).
f) The account of Super Veg Oil Private Limited is with Indian Overseas Bank
which is again an NPA Account.
g) This company was not able to explain the reasons of not making the pay-
ment to JMD Oils Private Limited, and JOPL could not provide any documen-
tary evidence to substantiate the movement of goods.
5.3.2 Galux International

a) The Firm is a concern of the close relative of the promoter. The proprietor
of the firm is Om Prakash Chawla who is also a director of Chawla Agencies
Private Limited (which is a supplier of the company).
b) As per the latest stock audit report, the said firm is engaged in trading of
Electrical appliances like lamps, tubes etc. Further, the said audit report
states that the invoices do not contain any truck/lorry receipt and weighing
receipts.
c) The registered address of the firm is 10, Ramesh Nagar, New Market
110015.
d) Further, the Special Investigative audit report states that JOPL is regularly
making payment for goods purchased from Chawla Agencies Private Limited
while JOPL is not getting payment from Galux International resulting in huge
increase in debtors.
e) The total outstanding from Galux International was Rs. 181.69 crore as on
30.11.2014 which accounts for 22.98% of the total debtors.
5.3.3 R K Super Edible Oils Private Limited

a) The company is related to the promoters of the company as the director of
this company Radha Krishan Dhingra, is uncle of promoters of JOPL.
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b) The registered address of this company is 49, New Market, Ramesh Nagar
New Delhi 110015.
c) The net worth of the company as on 31.03.2015 was only Rs. 47 lakhs while
the company has sold goods worth Rs. 169.70 crore from 01.04.2011 to
30.11.2015.
d) As per data available from public domain, the total trade payable by this
company as on 31.03.2014 was Rs. 17.12 crore whereas the amount receiv-
able from this company was Rs. 21.51 crore. These differences in the bal-
ance cast a significant doubt about the genuineness of the transactions held
by the company.
e) The total outstanding from Galux International was Rs. 143.77 crore as on
30.11.2014 which accounts for 18.18% of the total debtors
f) This company was not able to explain the reasons of not making the pay-
ment to JMD Oils Private Limited, and JOPL could not provide any documen-
tary evidence to substantiate the movement of goods.
5.3.4 Varada Expo Mark & Marketing Private Limited & Tribhuvan Markplus Private
Limited
a) The director of Varada Expo Mark & Marketing Private Limited (formerly
known as Shiv Expomark Private Limited) is Sidharth Gulati who is also a di-
rector of the Hy Link Overseas Private Limited (which is a supplier of the
company).
b) Tribhuvan Markplus Private Limited is also a concern of close relative of Si-
dharth Gulati.
c) The registered of the above-mentioned company is also same i.e. 327, Hauz
Qazi New Delhi-110006.
d) The company is constantly making payments to Hy Link Overseas Private
Limited rather than adjusting the dues from Hy-Link overseas Private Limited
and also not receiving payments from the above-mentioned companies.
Further, the recoverability of these huge amounts from these parties is really a mat-
ter of concern, since the company has never sent any written reminder nor filed any
legal case for the recovery.
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6. MONEY TRAIL AND END USE OF FUNDS
6.1 Sales
6.1.1 During the course of audit, we have observed that there was an increase in
sales and that increase in sales was on account of trading activities only. Fur-
ther, the major sales belong to the company which are related to the pro-
moters which was also on increasing trend for last four year. The details of
sales to such companies are given below:
(Fig. Rs. in Crore)
14-15
S.
Particulars 11-12 12-13 13-14 (till
No.
30.11.14)
Sales related to Promoters

1. 547.72 799.87 1232.06 905.32
of the company
Sales related to supplier of

2. 54.82 118.31 167.4 -
the company
Sales to other parties for

3. 532.06 551.80 417.88 204.56
more than Rs. 5.00 crore
Sales to other parties below

4. 374.03 324.33 272.78 72.8
Rs. 5.00 crore
Total 1508.63 1794.31 2090.12 1182.68
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6.2 Purchases
6.2.1 During the course of audit, we have observed that there was an increase in
purchases from the companies related to the promoters of the company and
decrease in the imported/high seas purchases. The details of purchases made
by the company is given below:
(Fig. Rs. in Crore)
14-15
S.
Particulars 12-13 13-14 (till
No.
30.11.2014)
Purchases related to Promoters of

1. 894.74 1,300.99 980.85
the company
Purchases related to Imported/High

2. 369.95 212.06 76.11
Seas purchases
Purchases from other parties for

3. 259.72 319.49 -
more than Rs. 10.00 crore
Purchases from other parties below

4. 135.11 115.03 30.76
Rs. 10.00 crore
Total 1,659.52 1,947.57 1,087.72
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7. LIMITS OUTSIDE THE CONSORTIUM
7.1 As per the SIA report, the company is maintaining the following ac-
counts outside the consortium.
S.
Particulars Bank Account No Nature of Account
No.
1. HDFC Bank Limited 00030310010291 Current Account
2. Yes Bank Limited 000381400001391 Current Account
3. Axis Bank Limited 066010200023515 Current Account
4. ICICI Bank Limited 00751000306 Current Account
5. Syndicate Bank 71203070003489 Current Account
7.2 Since the bank statements of these accounts were not made available
on record, therefore, we are unable to comment upon the use of
these accounts by the company
8. OTHER OBSERVATIONS
8.1 As per the latest Stock Audit Report available on record, the company has con-
sidered advances made to suppliers while determining drawing power. Howev-
er, there was no such provisions in the sanction letters assigned for the same.
8.2 As per the latest Stock Audit Report available on record, on verification of in-
voices raised to them it was observed that the sales invoices did not have
truck/lorrie receipts/GR /weighing receipts. As such the movement of goods
could not be verified.
8.3 As per the Special Investigative Audit Report, it was observed that Lorry Re-
ceipts (i.e. bilty) have been issued by M/s Delhi Super Roadways in all cases
and that too in continuous serial nos. This firm is in the name of an employee
of the company and the firm doesn’t own any vehicle. All the vehicles were
owned and provided by JOPL. Therefore, the issue of the lorry receipts is also
managed and controlled by JOPL on whose strength LC documents have been
39 | P a g e
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negotiated. This also raises serious concerns on the activities being carried out
by the company and the movement of material cannot be ensured.
8.4 Ownership details of the Vehicles held by the company
8.4.1 On verification of the SIA report, we have observed that there were 94 vehi-
cles which were maintained by the company.
8.4.2 However, on verification of the registration of these vehicles online we found
that only 13 vehicles were registered in the name of JMD Oils Private Limited.
39 vehicles were registered in some other name and for 42 vehicles registra-
tion number did not existed on the official sites (www.parivhan.gov.in and
www.vahan.nic.in). The details of vehicles are annexed in Annexure H from
Page 144-147 of this report.
9. CONCLUSION
9.1 From the above it is clear that JOPL is selling goods to Galux International,
Delta Agrotech and R K Super Edible Oils Private Limited and is purchasing
goods from Hy Link Overseas Private Limited, Chawla Agencies and Delta Agro-
tech Private Limited.
9.2 Further, as per the report, Galux International, Delta Agrotech and R K Super
Edible Oils Private Limited are further selling goods to Hy Link Overseas Private
Limited and Chawla Agencies Private Limited.
9.3 Hy Link Overseas Private Limited and Chawla Agencies Private Limited in turn
sell goods to JMD Oils Private Limited.
9.4 The transactions are also routed through Super Veg Oil Private Limited which is
managed by the promoter of the company Gulshan Kumar Dhingra.
9.5 After purchasing goods from Hy Link Overseas Private Limited and Chawla
Agencies Private Limited, JOPL makes the payment to these companies which
in turn makes payments to Super Veg Oils Private Limited.
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9.6 Super Veg Oils Private Limited which is controlled by Gulshan Kumar Dhingra
holds the payment of Delta Agrotech Private Limited and Galux International
which in turn are holding the payment of JMD Oils Private Limited.
9.7 It is clearly visible that the purchases and sales are routed among the entities
related to the promoters of the company. And the net result of such transac-
tions is that the company is purchasing goods through LC whereas the compa-
ny sells goods on credit.
9.8 The impact of such transactions is that the entire CC limit of the company got
converted into Trade Receivables who are the related parties of the promoters
or are related to suppliers.
9.9 It appears that the promoters have booked fake purchases and it is difficult to
prove the genuineness of the purchases for which payments were eventually
made through devolvement of LCs. They may have diverted the funds to the
creditors. The other possibility is they may have resorted to fictitious sales
(since the purchase appears to be fictitious) and have shown fictitious debtors,
making it apparently impossible to realize the trade receivable.
For AKG and ASSOCIATES

FRN No. 002688N
CA. HARVINDER SINGH

Place: Delhi
M. No. 087889
Dated: 10th September 2018
Partner
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CHAPTER V- CORRESPONDENCE WITH AUDITEE AND CONSORTIUM MEMBER BANKS
The highlights of the correspondences held with the auditee and consortium member
banks from the date of allotment of audit till the completion date is given below:
S.
Date From/To Document/Information
No.
Appointment Letter received. (copy of

1 11.12.2017 IOB ARM Branch
letter attached on Page 148)
IOB ARMB & Other

2 13.12.2017 consortium member Acceptance Letter sent.
Banks
Visit to SAM Branch, Delhi for review of

3 13.12.2017 SBI SAM Branch
documents at Bank.
PNB Central Market, Visit to PNB Central Market, Delhi for

4 14.12.2017
Delhi review of documents at Bank.
Visit to IOB ARM Branch, Delhi for re-

view of documents at Bank.
Central Bank of India, Visit to Central Bank of India, Gandhi-

13 30.12.2017
Gandhidham dham for review of documents at Bank.
Dena Bank, Gandhi- Visit to Dena Bank, Gandhidham for

14 30.12.2017
dham review of documents at Bank.
Visit to Union Bank of India, Noida for

15 02.01.2018 Union Bank of India
review of documents at Bank
Letter of reminder sent via mail and

Central Bank of India,
18 03.01.2018 speed post (copy of letter attached on
Gandhidham
Page 150)
Letter of reminder sent via mail and

Dena Bank, Gandhi-
19 03.01.2018 speed post (copy of letter attached on
dham
Page 151)
20 03.01.2018 Punjab National Bank, Letter of reminder sent via mail and
42 | P a g e
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S.
No.
Delhi speed post (copy of letter attached on
Page 152)
Visit by our senior partner to update

the branch about the audit and a re-
quest was also made to provide the
missing documents.

22 09.01.2018 Documents received via courier.
Gandhidham
Letter was sent asking for inspection of

23 18.01.2018 IOB ARM Branch Plant at Gandhidham (copy of letter
attached on Page 153).
Mail sent regarding visit to Gandhi-

dham Plant.
28.02.2018 Visited factory of JMD Oils Private Lim-

26 to Visit to Gandhidham ited along in presence of Mr. Krishan
01.03.2018 Dhingra (MD).
List of Requirements was sent to

27 06.03.2018 Krishan Dhingra Krishan Dhingra (copy of letter at-
tached on Page 154).
Reminder letter send via mail and cou-

JMD and consortium
28 17.03.2018 rier (copy of letter attached on Page
member banks
156).
Meeting with Mr. Gulshan Dhingra of

1. Gulshan Dhingra
29 21.03.2018 our senior partner regarding list of
2. Naresh Dhingra
documents/records/information.
Reminder letter send via mail and cou-

JMD and consortium
30 28.03.2018 rier. (copy of letter attached on Page1
member banks
158).
31 17.04.2018 JMD Oils Private Lim- Copy of sanction letters and Annual
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S.
No.
ited Report till 31.03.2015 were received
Final Reminder letter regarding docu-

JMD and consortium
32 01.05.2018 ments sent via mail and speed post.
member banks
(copy of letter attached on Page 150).
Reminder letter regarding documents

JMD and consortium
34 11.05.2018 sent via mail. (copy of letter attached
member banks
on Page 161).
The auditee provided copy of bank

JMD Oils Private Lim-
35 13.05.2018 statements in hard copy (which were
ited
not in readable format)
Our Senior partner attended Joint

Lender's Meeting and updated the
36 24.05.2018 JLM Meeting
member banks about the progress
made and submitted the draft report.
Letter sent via mail and speed post as

All consortium mem-
37 25.05.2018 per the discussion held in JLM. (copy of
ber banks
Dena Bank, Gandhi- Documents in respect of Letter of

38 26.05.2018
dham Credit received via courier.
Visit to IOB, SBI and PNB of our senior

39 28.05.2018 IOB, SBI and PNB partner to provide the documents in
respect of Letter of Credit.
Visit by our team for collection of doc-

46 04.06.2018 PNB, Punjabi Bagh uments in respect of Letter of Credit
devolved.
Letter sent dated 04.06.2018 via mail

All consortium mem- and courier informing that still there is
48 05.06.2018
ber banks no cooperation from the auditee. (copy
of letter attached on Page 165)
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S.
No.

49 08.06.2018 LC Documents received via courier.
Gandhidham
50 12.06.2018 SBI SAM Branch LC Document Received

All consortium mem- and courier regarding updating the sta-
51 20.06.2018
ber banks tus of information received. (copy of

All consortium mem- and courier regarding last reminder for
54 02.07.2018
ber banks supply of documents. (copy of letter
attached on Page 169)
Visit by our senior partner to request to

58 06.07.2018 IOB, Rajouri Garden
the provide the requisite documents.
Visit by our team for collection of doc-

59 07.07.2018 IOB, Rajouri Garden uments in respect of Letter of Credit
devolved.
Interim Audit report sent via mail and

All consortium mem-
60 11.07.2018 Courier to all consortium member
ber banks
banks.
Mail sent requesting to provide the

pending documents in respect of LC’s
61 17.07.2018 Union Bank of India
devolved. (copy of mail attached on
Page 171)
Mail sent for intimating to all consorti-

um members to provide the required
data within 3 working days, otherwise
All consortium mem-
62 30.07.2018 we will be constrained to finalize our
ber banks
report on the basis of information and
data available with us. (copy of mail
attached on Page 172)
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S.
No.
Mail sent to all member banks inform-

ing that we have commenced the
preparation of our report on the basis
All consortium mem- of information and data available with
63 08.08.2018
ber banks us and from public domain. Therefore,
now we will not be obliged to consider
any information/data/records, hereinaf-
ter. (copy of mail attached 174)
Union Bank of India, Documents in respect of Letter of

64 13.08.2018
Noida Credits received from UBI.
Discussion of our senior partner with

the lead bank to prepare the final re-
port on the basis of available infor-
mation and records.
All consortium mem-

66 10.09.2018 Submission of our final report.
ber banks
*The copy of letters (wherever mentioned) are attached in Annexure I from Page
148-175 of our report.
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A.K.G & Associates
PART B
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Annexure A: Statutory Provisions of Form F
A. Section 6A of Central Sales Tax Act, 1956 (as on 5th March 2014): Burden
of proof, etc., in case of transfer of goods claimed otherwise than by way
of sale
1. “Where any dealer claims that he is not liable to pay tax under this Act,
in respect of any goods, on the ground that the movement of such
goods from one State to another was occasioned by reason of
transfer of such goods by him to any other place of his busi-
ness or to his agent or principal, as the case may be, and not by
reason of sale, the burden of proving that the movement of those
goods was so occasioned shall be on that dealer and for this purpose
he may furnish to the assessing authority, within the prescribed time
or within such further time as that authority may, for sufficient cause,
permit, a declaration, duly filled and signed by the principal officer of
the other place of business, or his agent or principal, as the case may
be, containing the prescribed particulars in the prescribed form ob-
tained from the prescribed authority, along with the evidence of dis-
patch of such goods.
2. If the assessing authority is satisfied after making such inquiry as he
may deem necessary that the particulars contained in the declaration
furnished by a dealer under sub-section (1) 3 [are true and that no in-
ter-State sale has been effected, he may, at the time of, or at any time
before, the assessment of the tax payable by the dealer under this Act,
make an order to that effect and thereupon the movement of goods to
which the declaration relates shall, subject to the provisions of sub-
section (3),] be deemed for the purposes of this Act to have been oc-
casioned otherwise than as a result of sale.
Explanation - In this section, “assessing authority”, in relation to a
dealer, means the authority for the time being competent to assess the
tax payable by the dealer under this Act.]
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A.K.G & Associates
3. Nothing contained in sub-section (2) shall preclude reassessment by

the assessing authority on the ground of discovery of new facts or re-
vision by a higher authority on the ground that the findings of the as-
sessing authority are contrary to law, and such reassessment or revi-
sion may be done in accordance with the provisions of general sales
tax law of the State”.
B. Rule 8 of Central Sales Tax (Delhi) Rules, 2005: Authority from whom
Declaration Form ‘F’ may be obtained, used and maintenance of record of
such Forms and matters incidental thereto:
1. A registered dealer who intends to issue a Declaration in Form ‘F’ re-

ferred to in sub-rule (5) of rule 12 of the Central Rules, for the pur-
pose of section 6A of the Act, shall obtain the same from the Commissioner
to the extent required by him on payment at the rate of one rupee per form
and such payment shall be made in the form of court-fee stamps.
2. The provision of sub-rules (2) to (4) of Rule 5 in relation to Declaration Form
‘C’ referred to therein shall also apply to certificate in Form ‘F’, with such
change, as circumstances required.
3. Before furnishing the Declaration in Form ‘F’ he shall fill in all the particulars
in the Form and affix his usual signature in the space provided and retain the
counterfoil and issue the copies marked “Original” and “Duplicate”. The coun-
terfoil of the Declaration Form shall be preserved by him for a period of five
years or such further period as may be prescribed by the Commissioner.
4. Every Declaration Form obtained from the Commissioner by a registered
dealer shall be kept by him in safe custody and he shall be personally respon-
sible for the loss, destruction or theft of any such Form or the loss of the
Government revenue, if any, resulting directly or indirectly from such loss,
destruction or theft.
5. Every registered dealer to whom any Declaration Form is issued by the Com-
missioner shall maintain, in a register in Form ‘5’, a true and complete ac-
count of every such Forms received from the Commissioner. If any such Form
49 | P a g e
A.K.G & Associates
is lost, destroyed or stolen, the dealer shall report the fact to the Commis-
sioner immediately and shall make appropriate entries in the remarks column
of the register in Form ‘5’ and take such other steps to issue public notice of
the loss, destruction or theft as the Commissioner may direct.
6. Any unused Declaration Forms remaining in stock with a registered dealer on
the cancellation of his Certificate of registration shall be surrendered to the
Commissioner.
7. No registered dealer to whom a Declaration Form has been issued by the
Commissioner shall, either directly or through any other person, transfer the
same to another person except for the lawful purpose of sub-rule (1).
8. A Declaration Form in respect of which a report has been received by the
Commissioner under sub-rule (5) shall not be valid for the purpose of sub-
rule (1).
9. The Commissioner shall, from time to time, publish in the Official Gazette the
particulars of the Declaration Forms in respect of which a report is received
under sub-rule (5).
10. The Commissioner shall, from time to time, publish in the Official Gazette the
particulars of the Declaration Forms in respect of which a report is received
under sub-rule (5).
11. When a notification, declaring Forms of a particular series, design or colour
obsolete and invalid, is published under sub-rule (10), all registered dealers
shall, on or before the date with effect from which the Forms are so declared
obsolete and invalid, surrender to the Commissioner all unused Forms of that
series, design or colour which may be in their possession and obtain in ex-
change such new Forms as may be substituted for the Forms declared obso-
lete and invalid.
PROVIDED that new Forms shall not be issued to a dealer until he has ren-
dered account of the old Forms lying with him and returned the balance, if
any, in his hand to the Commissioner.
12. Where any dealer issues a Declaration in Form ‘F’ for the purpose of section
6A of the Act, he shall maintain a Register in Form ‘6’ recording therein the
true and correct particulars in respect of the goods covered by the Declara-
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A.K.G & Associates
tion in Form ‘F’. He shall produce this Register for inspection before the
Commissioner and shall furnish such other particulars as may be required by
him. He will furnish copies of entries of this Register and such other particu-
lars relating to the entries made therein as may be required by the Commis-
sioner.
13. Every registered dealer to whom any declaration form is issued by the Com-
missioner shall furnish to the Commissioner utilization account in Form ‘2B’
within a period of three months after the end of the quarter to which the dec-
laration relates. In case no declaration form is utilized during any quarter, in
that event also the dealer shall furnish to the Commissioner utilization ac-
count in Form ‘2B’ stating nil utilisation.
PROVIDED that the utilization account in Form ‘2B’ of the forms relating to
the transactions prior to 1st October, 2005 shall be furnished within a period
of three months after the end of the quarter in which such declaration forms
are issued to him by the Commissioner.
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A.K.G & Associates
DISCLAIMER
The issues identified and proposed action plans in this report are based on our dis-
cussions with the people engaged in the process, review of relevant docu-
ments/records and our physical observation of the activities in the process.
We made specific efforts to verify the accuracy and authenticity of the information
gathered only in those cases where it was felt necessary. Consequently, this report
may not necessarily comment on all the function / process related matters.
This report is solely for the information of Bank and should not be used, circulated,
quoted or otherwise referred to for any other purpose, nor included or referred to in
whole or in part in any document without our prior written consent.
This review is in the nature of a fact-finding engagement and is not a re-audit / audit
of the account balances/financial statements or parts thereof. The procedures per-
formed for this fact-finding review do not constitute an audit conducted in accord-
ance with Indian GAAS or any other national or international auditing or accounting
standards. Under no circumstances shall we be liable, for any loss or damage, of
whatsoever nature, arising from information being withheld or concealed from us or
misrepresented to us by any person/agency to which information requests were
made. We are not intending or agreeing to act as an expert witness or provide an
expert opinion or expert testimony during the course of any legal proceeding or be
deemed as representing or advocating any position on behalf of any party in any le-
gal matter or proceeding, unless taken up as a separate professional assignment.
176 | P a g e

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INVESTIGATIVE AUDIT REPORT

JMD OILS PRIVATE LIMITED

A.K.G. & ASSOCIATES

11-CSC, DDA Market, A-Block, Saraswati Vihar, Delhi-110034

Investigative Audit Report

1. Annexure A: Statutory Provisions of Form F………………………………………………….48

JMD Oils Private Limited incorporated in the year 1995, availed

The above said investigation was entrusted to us vide letter No.

The audit report with Annexures should be read in totality with

CHAPTER I- LIST OF ABBREVIATIONS

ARM Asset Recovery Management

CBoI Central Bank of India

CST Central Sales Tax

IOB India Overseas Bank

JOPL JMD Oils Private Limited

PNB Punjab National Bank

SBI State Bank of India

SIA Special Investigative Audit

UBI Union Bank of India

CHAPTER II –OBJECTIVE AND METHODOLOGY

iv. Bank Statements

CHAPTER III–EXECUTIVE SUMMARY

2. SUMMARIZED TIMELINE OF THE AUDIT

S. No. Name of the Bank Date of Receipt of Information

1. Dena Bank 26.05.2018

2. Punjab National Bank 04.06.2018

3. Central Bank of India 08.06.2018

4. State Bank of India 12.06.2018

5. Indian Overseas Bank 07.07.2018

6. Union Bank of India 13.08.2018

• We had submitted our interim report on 11.07.2018 on the request of Indian

3.1 Potential misuse of LCs sanctioned by the consortium Members

3.2 Analysis of Special Investigative Audit Report

4. BRIEF PROFILE OF JMD OILS PRIVATE LIMITED

Name JMD Oils Private Limited

Constitution Company limited by Shares

01037716 Ramji Lal Sharma Director 01.04.1999

S. No. Name of the Bank

a) Indian Overseas Bank

b) State Bank of India

f) Punjab National Bank

g) HDFC Bank Limited

h) Yes Bank Limited

i) Axis Bank Limited

j) ICICI Bank Limited

Following are the brief of open charges on the company as registered

10490155 Dena Bank 06.02.2014 10,00,00,000

10477389 Bank of Baroda 24.01.2014 46,61,62,500

10449570 Punjab National Bank 31.08.2013 1,00,00,000

10408432 Central Bank of India 09.02.2013 28,40,00,000

Details of 10328842 State Bank of India 05.12.2011 1,52,00,00,000

10173818 Punjab National Bank 20.08.2009 16,80,00,000

10153665 Punjab National Bank 31.03.2009 2,36,20,00,000

10077230 ICICI Bank Limited 15.11.2007 45,80,00,000

10048659 Punjab National Bank 30.04.2007 35,00,00,000

10042668 Indian Overseas Bank 28.02.2007 7,92,35,00,000

10042669 Indian Overseas Bank 28.02.2007 15,93,00,000

80000396 Indian Overseas Bank 26.02.2005 7,92,35,00,000

80000395 Indian Overseas Bank 01.11.2004 3,07,43,00,000

5. RELATED PARTIES DETAILS

3. Gulshan Kumar HUF

8. Jamma Devi Dhingra