CBI Court Sentences Three Key Figures in Bank Fraud Scheme, Imposes Rs. 3.22 Crore Fine

(Judicial Quest News Network)

New Delhi, 28, January, 2025.In a significant verdict, the Special Judge for CBI cases at Rouse Avenue Court sentenced three individuals—including a former Senior Executive Director and Executive Director of the National Small Industries Corporation (NSIC) and the former Managing Director of a private company—to prison terms ranging from 1 to 7 years, while also imposing a hefty fine totaling Rs. 3.22 Crore. This comes in connection with a massive bank fraud involving the company M/s Equipment Conductor and Cables Ltd. (ECCL).

The three convicted individuals are:

• Sh. Alok Sharma, the then Managing Director of private firm ECCL, who received a sentence of 7 years of rigorous imprisonment (RI) along with a fine of Rs. 1.10 crore.
• Sh. Mashkoor Ahmed, the then Senior Executive Director (Development) of NSIC, and Sh. B.L. Malhotra, the then Executive Director of NSIC, both of whom were sentenced to 1 year in prison and each fined Rs. 1 lakh.

Furthermore, the Court imposed a significant fine of Rs. 2.10 crore on the private firm ECCL, with Rs. 2 crore earmarked as compensation for NSIC, which had been defrauded in the scheme.

The Central Bureau of Investigation (CBI) had registered the case on March 20, 2003, following allegations of corruption, criminal conspiracy, and fraudulent financial activities related to the loan facilities provided by NSIC to ECCL. The investigation uncovered a series of fraudulent actions by the accused, which resulted in substantial financial losses for NSIC and unjust enrichment for the private firm.

The Fraudulent Scheme Unveiled

According to the CBI’s investigation, ECCL, a small-scale industrial unit (SSI), had availed credit facilities from NSIC under its Raw Material Assistance Scheme and Bill Discounting Scheme. Between 1994 and 1999, Alok Sharma, as the Managing Director of ECCL, conspired with Mashkoor Ahmed to exploit his position at NSIC and fraudulently secure multiple credit limits. Despite ECCL’s mounting dues, which totaled ₹9.10 crore by March 31, 2001, Sh. Mashkoor Ahmed continued to sanction additional loans, totaling ₹5.90 crore, between 1994 and 1999.

In addition to these fraudulent loans, ECCL submitted invalid security in the form of non-transferable shares worth ₹1.10 crore, due to a lock-in period. Furthermore, the company executed fake Powers of Attorney to facilitate bill discounting with the Andhra Pradesh State Electricity Board (APSEB) and the Uttar Pradesh State Electricity Board (UPSEB). They grossly misrepresented the outstanding bills from these entities—claiming amounts as high as ₹352.63 lakh and ₹138.47 lakh, respectively—when in fact, the actual outstanding amounts were either much lower or entirely fabricated.

Through these deceptive actions, ECCL managed to secure undue financial advantages amounting to ₹9.10 crore, causing substantial losses to NSIC. Moreover, the company fraudulently withdrew the Power of Attorney from UPSEB, securing payments directly and further exacerbating NSIC’s losses.

Legal Proceedings and Conviction

After a thorough investigation, the CBI filed a chargesheet on July 1, 2005, and, following trial proceedings, the Court delivered its judgment, convicting the three accused individuals and the company. The sentencing reflects the severity of the fraudulent activities, with the court emphasizing the abuse of positions of trust and authority to defraud a government-backed institution.

The verdict highlights the relentless efforts by the CBI to ensure accountability and penalize those involved in large-scale financial fraud. The case also underscores the importance of safeguarding public sector financial institutions from exploitation and corruption. The investigation and subsequent court proceedings have brought a measure of justice to NSIC, which suffered considerable financial harm due to the fraudulent actions of the accused.

Further investigations into the case are ongoing, as authorities work to address other possible avenues of wrongdoing tied to this elaborate fraud scheme.