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Firm director held for alleged fraud

By Our Staff Reporter

NEW DELHI, AUG. 7. The director of a pharmaceutical firm has been arrested by the Economic Offences Wing of the Delhi police for allegedly siphoning off a company loan amount for personal benefits after providing false information to banks. Three other directors of the company have already been arrested.

According to the police, the accused, Mukesh Bhargava, was arrested on Friday and sent by a court to two-day police remand. The police said Mukesh, along with other directors -- Anil Bhargava, Arvind Bhargava and Prabha Rani Bhargava -- of Paam Pharmaceuticals Limited, had entered into an agreement with a consortium of three banks, IndusInd Bank, Punjab National Bank and UTI Bank, regarding loans for the firm in 1997.

As per the agreement, the three banks gave certain credit facilities to the firm against the condition that the stocks, properties and other things hypothecated to the banks shall not be sold without informing them.

However, in 2000, the IndusInd Bank complained to the police that the firm had destroyed huge quantity of drugs without informing the consortium. A case was registered at Connaught Place police station in this regard. Investigations revealed that the firm had destroyed drugs worth Rs. 16.5 crores on July 16, 1998, and then drugs worth Rs. 33.9 crores on November 11, 1999, on the pretext that the drugs had long expired. The banks were not informed about the destruction. Later, fake certificates purportedly issued by Inspectors of Drug Control Department, Uttar Pradesh, were furnished to the consortium. But, these certificates were found to be false.

Subsequently, two officials of the Drug Department, S.N. Gupta, Assistant Drug Controller, and D.D. Upreti, Drug Controller of Uttaranchal, were arrested for allegedly issuing the false certificates.

Meanwhile, after destroying the drugs stock, the accused also appealed in the Board for Industrial and Financial Reconstruction and succeeded in getting their firm declared sick. However, the order was set aside by Appellate Authority for Industrial and Financial Reconstruction on May 26, 2000. Following further investigations, three other directors of the firm, Anil, Arvind and Prabha Rani, were arrested. However, Mukesh appealed for anticipatory bail twice in the High Court and then in the Supreme Court. But his pleas were rejected. Supreme Court observed that the accused resigning from the post of directors on September 30, 1997, did not absolve him of the accusation of the fraud as 90 per cent of the destruction had taken place when he was a member of the board.

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