Madras High Court dismisses Farouk Irani's bail plea

Irani was arrested in June by the Enforcement Directorate under Prevention of Money Laundering Act

The Madras High Court today rejected the bail request of Farouk Irani, former managing director of First Leasing Company of India Ltd (FLCIL). He was arrested last month by the Enforcement Directorate (ED), Chennai Zonal office, under Prevention of Money Laundering Act (PMLA), 2002.

A legal source confirmed that Justice S Vaidyanathan dismissed the request moved by Irani today. However, the grounds on which bail plea was moved are not known.

In June 14, the ED issued a statement that it had arrested Irani, "on the reasonable belief" that he was involved in money laundering. The ED also recovered fixed deposits of about Rs 51 crore in the name of his family members and the Irani Family Maintenance Trust.

The official statement added that the Central Bureau of Investigation had registered a First Investigation Report (FIR) against FLCIL and its key personnel on a complaint filed by IDBI Bank, accusing them of a fraud of Rs 274 crore. The Chennai Zonal office of the Enforcement Directorate also registered a money laundering case against the company and others.

During the course of the investigation under PMLA, the ED also learnt that the CBI had registered another case filed by State Bank of India (SBI) against the company and other parties on January 8, for a case of alleged fraud to the tune of Rs 248 crore.

The ED alleges that as per the investigation, Irani is instrumental in cheating the IDBI Bank and SBI and enriched himself along with others in the act.

The ED, on August 1, said that it has arrested two persons in connection with the alleged bank fraud case, S Dilliraj, ex-vice president and CFO and L Sivaramakrishnan, former CFO of the company.

The official statement also said that the both admitted their rold in fudging of accounts of FLCIL to obtain undue loans from the banks.

Dilliraj is also president of Bharat Financial Inclusion Ltd, formerly known as SKS Microfinance Ltd, and the company stated that he has already stated that he was relieved from the FLCIL in January, 2008.

According to earlier reports, a consortium of lending banks has alleged that the accounts of FLCIL were falsified and conducted a forensic audit, which according to reports, revealed that the accounts were falsified to show inflated incomes and profits to the tune of over Rs 1,600 crore. It is in connection to this, the banks have approached the investigation agency for action.