Nation

IIE DIGITAL DESK ; September 23: The Enforcement Directorate on Wednesday launched simultaneous searches at around 16 locations across Kolkata, Delhi and Bengaluru as part of a probe under the Foreign Exchange Management Act, 1999, into suspected financial irregularities linked to the acquisition of McNally Bharat Engineering Company Limited (MBECL). The investigation is focused on the source and movement of funds used to acquire control of the Kolkata-based engineering company and possible violations of foreign exchange regulations.

The searches are being conducted by the ED's Kolkata zonal office at premises linked to MBECL and individuals and entities associated with its acquisition. The operation began early Wednesday and remained underway as officials examined financial and corporate records connected with the transaction.

According to officials, the central agency is investigating suspected contraventions of FEMA and is tracing the source, movement and utilisation of funds involved in the process of acquiring control of MBECL. Investigators are also examining the financial transactions surrounding the acquisition to determine whether any provisions of the foreign exchange law were violated.

The probe assumes significance as MBECL recently went through the Corporate Insolvency Resolution Process under the National Company Law Tribunal. The resolution plan submitted by BTL EPC was approved as part of the insolvency proceedings.

The ED is also examining whether the insolvency resolution process was used to indirectly enable individuals who could potentially be ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016, to regain control of the company. The agency is therefore looking beyond the financial transactions to examine the circumstances surrounding the acquisition and the roles played by the persons and entities involved.

The multi-city searches cover premises connected with people and companies associated with the acquisition process. Officials are scrutinising documents and other material that could shed light on the flow of funds and the structure of the transaction.

McNally Bharat Engineering Company Limited, a Kolkata-based engineering firm, recently completed the insolvency resolution process through the NCLT. The company's insolvency proceedings now form an important part of the background to the ED's ongoing investigation.

The agency's action comes as it continues to examine whether the acquisition complied with applicable foreign exchange regulations and whether the insolvency mechanism was used in a manner that could have allowed potentially ineligible persons to exercise indirect control over the company.

The searches were still continuing when the report was filed, and the investigation remains at an ongoing stage. No conclusion about wrongdoing can be drawn merely from the searches, with the ED's findings and any subsequent legal proceedings determining the next course of action.