The Ministry of Corporate Affairs (MCA) has begun its crackdown on alleged shell companies linked to Shiv Sena leader Yashwant Jadhav and his family members for alleged embezzlement.
It comes after the The Income Tax Department took action against Jadhavwho is the chairman of the standing committee of the Brihanmumbai Municipal Corporations (BMCs), and his associates following complaints of corruption in the awarding of contracts by the committee.
The companies under MCA’s scan are Shauru Trading Pvt Ltd, Pradhan Dealers Pvt Ltd and a few other companies allegedly launched with the aim of embezzling funds and have no actual business dealings. If irregularities are found, action could be taken against Jadhav and others involved under the Companies Act by the MCA.
Sources revealed that when MCA officials went to the mentioned address of Pradhab Dealers Pvt ltd, they could not find the company or where it was located. Sources also said several companies were diverting funds to the company.
Jadhav, as Chairman of the BMC Standing Committee, gives final approval for the funding of the company’s major contracts. Sources said there have been several complaints against Jadhav, his assistants and some of BMC’s major contractors who are wanted by the IT department in recent days.
These entrepreneurs include Bimal Agrawal, who was previously under scanner for bulletproof vest scam. He had also filed a complaint against former Mumbai Police Commissioner Param Bir Singh and others for extortion. The others under the scanner of the IT department are Bipin Jain, Madani, Landmarc Infrastructure and a few others.
Under IT department scanner since 2019
Jadhav has been under the IT department’s scanner since 2019. The department had also written to India’s electoral commission for disqualification of Yashwant Jadhav’s wife, MLA Yamini Jadhav, due to discrepancies in the electoral affidavit filed by her during the Maharashtra Assembly election in 2019.
India Today exclusively reported last year that the IT department discovered anomalies related to certain transactions with a Kolkata-based front company linked to Yamini Yashwant Jadhav, her husband Yashwant Jadhav and other family members. The company allegedly laundered money to the tune of Rs 15 crore.
The findings were highlighted by the IT department after verification of the electoral affidavit, as requested by the EC in accordance with the SOP (Standard Operating Procedure).
What did the IT department find?
The IT department said the candidate, according to the filed affidavit, had benefited from unsecured loans, including one from Pradhan Dealers Pvt Ltd of Rs 1 crore. The department said Pradhan Dealers was a front company run and controlled from Kolkata by entry operators.
According to the investigation details viewed by India Today, the IT department found out that the shareholder companies of Pradhan Dealers Pvt Ltd are two Kolkata-based companies – Skylink Commercial Ltd and Supersoft Suppliers Ltd. Chandrashekhar Rane, Krishna Bhanwarilal Todi and Dhiraj Chawdhary are appointed as directors of these companies.
While investigating and verifying said company, the IT department learned that Pradhan Dealers was a front company. The information was extracted from the database of shell companies developed by the department of Kolkata.
It further showed that the three directors were working under the influence of a certain Uday Shankar Mahawar, a Kolkata-based entrance operator.
Uday Shankar Mahawar is the same entry operator whose name appeared in the National Herald case. He was also investigated by the IT department and he admitted that he had been actively involved in providing housing entries through several front companies.
The Mumbai IT department had recorded the statement from Chandrashekhar Rane, one of the current directors of Pradhan Dealers Pvt Ltd, and Priyesh Jain, one of the company’s former directors.
Rane and Jain, in their statement, admitted to being fictitious directors of said company. They said that the control and management of the affairs of the company belonged to Uday Shankar Mahawar.
Mahawar, meanwhile, admitted that the process of transferring the said company to Yashwant Jadhav started in the 2018-19 fiscal year (December 18, 2018) and was completed in the 2019-20 fiscal year ( January 1, 2020).
Advancement of accommodation of inflows of unsecured loans to Yashwant Jadhav’s family members and parties known to him totaling Rs 15 crore in total, including amounts received after the date of the affidavit, has was carried out during the 2019-20 financial year.
The unsecured housing loans were issued by the said company in lieu of cash, as stated by the directors of the company, the IT department said.
During this process, the money received from the Jadhav family was laundered by Uday Shankar Mahawar, the operator, through many layers and brought back into the books of Pradhan Dealers Pvt Ltd, he said.
The company was then used to pass on the unsecured loans to Yashwant Jadhav’s family members and parties he knew, the IT department said.
Out of Rs 15 crore, at the stage of filing the affidavit, Yamini Yashwant Jadhav had received a sum of Rs 1 crore in the form of an unsecured loan for accommodation which was arranged by Pradhan Dealers Pvt Ltd.
“No loan but clean money”
The IT department said that in the light of the facts collected, it could be deduced that this sum of Rs 1 crore did not have the character of a loan contracted by her but that it was her own money and , therefore, details of liability on this account. disclosed in the affidavit filed by her were incorrect.
Chandrakant Rane, one of the directors of the shell company, in his statement to the IT department said: “I do not know the shareholder of the company. I can state that myself and Krishna Bhanwarilal Todi are the namesake directors. of the society.”
“The company is owned by Uday Shankar Mahawar from Kolkata and Priyesh Jain from Mumbai. All decisions and transactions that are done in the company have been made at the behest of Uday Shankar Mahawar till March 2020 and later business of company were taken over by Priyesh Jain,” Rane said.
“As far as I know, Nikhil Jadhav and Yatin Jadhav, people known to Priyesh Jain were going to be the directors of the company. But, I still hold the position of director of the company,” he added.
Rane, while setting out the business and modus operandi of the company and its controllers, said the companies are prima facie engaged in the business of providing accommodation inflows of unsecured loans or advances to various entities, instead of a cash commission.
This business is controlled and managed from Kolkata by Uday Shankar Mahawar and a Priyesh Jain from Mumbai. There is no real activity going on in these companies, he said.
Comptroller and director of the company Uday Shankar Mahawar opened bank accounts in these companies and put his signatures on the blank check books, he said.
The companies facilitate the granting of unsecured loans and advances for accommodation to various entities in lieu of cash received from them.
Rane also said that he and Krishna Bhanwarilal Todi were only the directors of the companies and had no knowledge of the actual business activities taking place there. Currently, these companies are controlled and managed by Priyesh Jain from Mumbai.
There is more
During the investigation, IT department officials learned that Mahawar had set up shell company Pradhan Dealers 2011-12 and raised huge fictitious share capital there to provide all hosting entries. Later, he sold this business to the Jadhav family.
Mahawar in his statement to the IT department said that he used to set up companies and raise fake capital in those companies. He would then sell these companies for a commission.
Priyesh Jain, in his statement to the IT department, said the promoter of Pradhan Dealers had raised Rs 15 crore share capital in the company by issuing high premium shares to the various other companies, most of which were also shell companies .
how the money flowed
One of these companies, Astvinayak Traders PVT Ltd, is controlled by Uday Shankar Mahawar, and six other companies are shell companies he knows of with no real business activity. It had been used only to increase the share capital of Pradhan Dealers. He created a shell worth Rs 15 crore to be laundered later for potential beneficiaries.
Later, when the beneficiary – Jadhav Group – contacted unaccounted money of Rs 15 crore, it was laundered through Pradhan Dealers after being funneled through various layers and accounts of that company.
This is the usual modus operandi of raising capital in a company by allocating shares with an extraordinarily high premium to companies with no financial value.
Rane, also in his statement, said that control of the business had been handed over by Priyesh Jain to Yatin Jadhav and Nikhil Jadhav – the two sons of Yamini Jadhav and Yashwant Jadhav.
Priyesh Jain has also confirmed the sale of shell company Pradhan Dealers to Yashwant Jadhav. Jadhav then used the money from this road firm by accepting various unsecured loans in lieu of cash given to the promoters of the Uday Shankar Mahawar company. By this, all the capital of the company which was around Rs 15 crore was transferred to entities and companies controlled by Yashwant Jadhav.
Here are the details of the assets as mentioned in the affidavit filed by Shiv Sena MLA Yamini Jadhav in 2019 (gross total market value):
Real Estate (Self): Rs 4,72,50,000
Movable property (auto): Rs.2,74,20,096
Yashwant Kamlakar Jadhav (Applicant’s spouse, Yamini Jadhav)
Real estate: Rs 2,89,50,000
Movable assets: Rs 1,72,67,498
BMC elections are due to take place this year.