Central Agencies Target Insolvency Process Manipulation
The Enforcement Directorate (ED) has launched a major crackdown on the alleged manipulation of the Insolvency and Bankruptcy Code (IBC) process and bid rigging before the National Company Law Tribunal (NCLT). The investigation has uncovered systematic abuse of the legal framework designed to protect creditors and homebuyers.
Multiple Raids Uncover Evidence of Corruption
On November 20, the ED conducted coordinated searches at six locations across Delhi and Gurgaon targeting middlemen involved in the insolvency process. The operation focused on resolution professionals, an NCLT advocate, and the buyer of significantly undervalued property - RDB Infrastructure & Power Ltd.
The agency made significant seizures during these raids, including crucial evidence of bid rigging and unexplained cash amounting to ₹50 lakh. Digital evidence recovered from mobile phones contained draft invoices showing proposed illicit payments, indicating arrangements for illegal gains outside the approved IBC and NCLT framework.
ED officials stated that the evidence clearly showed manipulation of the bidding process through predetermined and artificially suppressed bids. Shockingly, one bid was submitted by the middleman advocate himself, demonstrating clear collusion among the parties involved.
High-Profile Arrest in Real Estate Fraud Case
In a related development, the ED arrested Amit Katyal, a close associate of former railway minister Lalu Prasad Yadav, on November 17. Katyal has become a frequent visitor to the ED headquarters due to multiple cases against him.
The arrest concerns a real estate fraud case involving Angle Infrastructure Pvt Ltd, where Katyal is accused of failing to deliver flats in the Krrish Florence Estate project in Gurgaon's Sector 70. Investigators discovered that Katyal made fraudulent bookings to third parties in a project originally intended for central government employees.
During insolvency proceedings, Katyal allegedly alienated part of the licensed land - approximately 2 acres valued at ₹130 crore - to a third party at significantly undervalued rates. This action represents a clear abuse of the IBC legal process according to the ED.
Bank Official Collusion and Homebuyer Betrayal
The investigation has revealed disturbing collusion between a private bank official and individuals associated with the insolvency process. The secured creditor bank agreed to substantial haircuts despite significant appreciation in land value, facilitating the sale of properties at massively undervalued prices.
Homebuyers were kept completely in the dark about these developments, with the resolution professional failing to inform them about critical decisions affecting their investments. The case specifically involves Universal BuildWell and its promoters, who are accused of not completing real estate projects and cheating numerous homebuyers.
Katyal faces additional accusations of money laundering involving loans obtained from several banks and has multiple FIRs registered against him by Gurugram police. This isn't his first encounter with law enforcement, having been previously arrested in the 2023 Railways jobs for land scam.
The ongoing investigations signal a significant tightening of scrutiny around the insolvency resolution process, which has seen increasing instances of manipulation and corruption despite its intended purpose of streamlining business closures and recoveries.
