Fabrication charge in factoring deal

Shibaji Panja was arrested for defrauding the government-run IFCI Factors Ltd out of Rs 18 crore, Delhi police said today.

By Imran Ahmed Siddiqui
  • Published 23.02.15
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New Delhi, Feb. 22: Shibaji Panja was arrested for defrauding the government-run IFCI Factors Ltd out of Rs 18 crore, Delhi police said today.

IFCI Factors Ltd is a subsidiary of the IFCI, a leading government-run financial institution.

Satish Golcha, joint commissioner of Delhi police (economic offences wing), said the lookout notice against Panja was issued a few days ago after he failed to respond to summons.

"Panja is one of the directors of RP Infosystems Ltd and had taken a short-term assistance of Rs 18 crore from IFCI Factors in 2012. When the amount could not be collected back, IFCI Factors lodged a complaint with us," Golcha told The Telegraph.

"During the probe, we found that he had fabricated and forged documents to show fictitious trade between his company and other companies to get the loan."

Jivan Kumar, senior vice-president at IFCI Factors, had filed the police complaint. The FIR (No. 629/14) was registered against Panja on July 21 last year.

Strictly speaking, the assistance Panja took from IFCI Factors was not a loan but something called "factoring".

One of the oldest forms of business financing, factoring is a cash-management tool that companies fall back on when they need raw material to fulfil supply commitments but are short of funds.

Under the mechanism, the factor (in this case IFCI Factors) provides most of the cash - minus a fee - to the client (Panja's RP Infosystems) which delivers the product (computers) to its customers and generates invoices. The factor basically buys the right to collect on the invoices from those who bought the product.

The factor is concerned more about the ability of the client's customers to pay than the client's own solvency. This means a company with creditworthy customers may be able to strike factoring deals even if it can't qualify for a loan.

B.K. Singh, Delhi police's additional deputy commissioner (economic offences wing), said: "While applying for the loan, Panja had submitted several forged and fabricated documents of purported supply of computers to several firms in the country. But when we contacted those firms, they said they had not ordered any computers from Panja's company."

The investigations revealed that IFCI Factors had disbursed the loan against fake documents and false representations by the company. "It is a clear case of cheating and forgery and the relevant sections of the IPC have been invoked against Panja," Singh added.

Another officer said that "the purchase order, invoices, ferry receipts, acknowledgement notes - all had been forged to obtain the credit. The officials of the purported buying firms also corroborated that they had never entered into such agreement."

When Singh spoke to this newspaper, word had not yet reached him that Panja had been granted bail.

Informed of the bail, Singh said: "Our team is leaving for Calcutta tonight to bring Panja to Delhi. If he has been granted bail, we will approach the court on Monday morning and seek directions from it so that the accused can be asked join the probe."

He said Panja had not been cooperating with the police and had failed to turn up several