Former IL&FS managing director Ramesh Bawa arrested

Former IL&FS managing director and CEO Ramesh Bawa has been arrested by the Serious Fraud Investigation Office (SFIO) in connection with the ongoing investigations against IL&FS and its group entities, news agency ANI reported. 

As per reports, Bawa has been held under Section 447 of the Companies Act that enables SFIO to arrest a person for committing fraud. 

The Supreme Court, earlier this week, has dismissed Bawa's petition which sought to stop the SFIO's criminal proceedings against him.

IL&FS's former vice chairman Hari Sankaran was arrested on April 1 which was also the first arrest made by the probe agency in the IL&FS case. 

Sankaran was arrested in Mumbai in connection with the ongoing investigations into the affairs of IL&FS and its group entities.

Sources said Sankaran has been arrested on the grounds of abusing his powers in IL&FS Financial Services Ltd through fraudulent conduct and in granting loans to entities that were not credit-worthy or were declared as non-performing accounts. Such actions caused wrongful loss to the company and its creditors, new agency ANI reported. 

IL&FS Financial Services had borrowings of more than Rs 17,000 crore through debt instruments and bank loans. Provident funds, pension funds, gratuity funds, mutual funds, public and private sector banks, are among those who have invested in these debt instruments, the sources said.

The alleged financial irregularities at the IL&FS came to light last year after some group entities defaulted on debt repayments. The government, which superseded the company's board, is working on a resolution plan.

The SFIO, the investigating arm of Ministry of Corporate Affairs, has been probing a series of defaults by the infrastructure financing major. 

(With inputs from agencies)