A lawsuit has been filed against an Indian electrical equipment manufacturer that used letters of credit (L/Cs) in an alleged conspiracy that cheated Andhra Bank out of some US$10.7 million.

Responding to a complaint from Andhra Bank, the Central Bank of India (CBI) has brought the case against Best and Crompton Engineering Projects and its five directors.

Allegations

The lawsuit alleges several charges including criminal conspiracy, cheating and forgery.

The CBI says that Andhra Bank extended working capital, bank guarantee and L/Cs worth some US$9 million to the company.

Extended credit

Subsequently, the CBI lead a consortium that would extend the firm's credit limit from around US$46.6 million to US$135.3 million according to the lawsuit.

It says that on the basis of this extended credit the Chennai based company took on new projects but was apparently unable to finish them.

On investigation, the consortium found evidence of fictitious sales in the company's accounts and indications that the directors were diverting funds.

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