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The CBI had registered an FIR back in 2022 alleging large-scale bank fraud involving UIL, based on a complaint from the State Bank of India.
The EP was charged with failure to discharge his responsibilities relating to fraud as laid down in SA 240, reporting obligations under Section 143(12) of the Act and CARO10 , 2016.
It was alleged that the EP failed to examine the sudden and significant increase in the provisions for Expected Credit Loss (ECL) provision on Trade Receivables and on Advances to Vendors. The ECL had increased by 2,583.39% from Rs.106.57 Crores in FY 2016-17 to Rs.2,859.69 Crore in FY 2017-18 Crores; and the provision for doubtful advances to vendors for purchase of steel amounted to Rs.215.36 Crores.
There was however no evidence in the Audit File that the EP had carried out existence checking for around 17 major foreign parties against whom Rs.2301 Crores was booked as ECL, accounting for approximately 80% of the total ECL on Trade Receivables booked during FY 2017-18. It was also alleged that fresh sales totalling to Rs.53 Crores approx. were made during the FY 2017-18 to the same parties that were in default for one to three years, but the EP did not question the rationale for the same.
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