Kolhapur sugar mill case: ED investigating transactions with ghost companies

The Enforcement Department’s (ED) investigation related to irregularities in the operations of a Kolhapur sugar mill has found suspicious transactions with firms that lacked substantial business, and with at least two companies that existed only on paper and had been struck-off by the Registrar of Companies (ROC), officials said on Tuesday.

Investigation into Irregularities at Kolhapur Sugar Mill

The investigation is looking into the role of former Maharashtra minister and NCP legislator Hasan Mushrif. His three sons are allegedly associated with the Sar Senapati Santaji Ghorpade Sugar Factory Limited. According to the ED, the assistant registrar, ROC, Pune, had filed a complaint against the mill before a judicial magistrate on March 22, 2022, while the Union of India, through ROC (Pune), had filed a complaint dated March 29, 2022, before the sessions court against it, under the Companies Act (2013).

Based on the complaints, the agency registered its case on April 4, 2022, which said that the ROC, Pune, had observed that the mill allegedly raised capital from various individuals and corporate entities by allotting equity and preference shares from time to time, according to ED sources.

Suspicious Transactions with Companies Struck-off by Registrar of Companies

It was alleged that the mill received funds through subscription of shares from various entities, including Rajat Consumer Services and Mount Capital, which have been struck-off by the ROC, the sources claimed. It was alleged that the income source of several firms was not clear and their revenue generation was meagre, an ED official claimed.

“A total of around Rs70.62 crore was raised by the mill in lieu of allotting preference shares. However, further investigation with regard to two of the companies, Rajat Consumer Services and Mount Capital, revealed that both are paper firms that have been struck off by ROC. They did not have actual business but large reserves of surplus that were routed to the mill,” the ED official said. ED’s scrutiny of Mount Capital’s bank account also revealed that funds were allegedly received from three Kolkata firms that have also been struck-off by the ROC, the official said.

Involvement of Former Maharashtra Minister and NCP Legislator Hasan Mushrif

Asked about the allegations, Mushrif’s lawyer, Prashant Patil, said, “It is required to be noted that the order of process passed by the special judge, Pune, dated April 1, 2022, in the Pune ROC case, was stayed by the Bombay High Court’s order of May 2, 2022. The high court’s reasoned order had questioned the legality of the prosecution.”