This action follows ED's earlier raids in November 2024 on 15 locations in Delhi-NCR, targeting the former promoters and associated shell companies. The ED's investigation is based on a First Information Report (FIR) filed by the Central Bureau of Investigation (CBI) in September 2020, alleging that Kwality Ltd. and its directors engaged in falsification of accounts, misrepresentation of sales and purchases, and ultimately defrauded a consortium of banks of ₹1,400.62 crore.
The ED's probe revealed that the promoters manipulated financial records to inflate sales figures and debtor accounts. Significant trading activities were recorded without actual physical delivery or receipt of goods at the company's facilities. Additionally, sham companies operated by dummy owners were utilized to divert bank funds. The diverted funds were layered and circulated to obscure their origin, eventually being routed to various accounts as directed by the promoters for unauthorized purposes.
In the November 2024 searches, the ED seized ₹1.3 crore in cash and uncovered evidence related to multiple shell companies controlled by the promoters. Luxury vehicles, including Porsche, Mercedes, and BMW models valued at approximately ₹4 crore, along with demat accounts worth ₹2.5 crore, were also frozen under the Prevention of Money Laundering Act (PMLA).