ED Conducted Search operations in Punjab and Himachal Pradesh for FEMA Violations by Saber Papers

On March 30, 2022, the Directorate of Enforcement (ED) conducted search operations in Punjab and Himachal Pradesh to investigate a prima facia violation of Section 4 of the Foreign Exchange Management Act (FEMA), 1999 by persons resident in India for acquiring, holding, owning, possessing, and transferring foreign exchange, foreign security, or any immovable property located outside India. Seven different locations were searched in total. Many incriminating documents in the form of loose papers and property documents revealing financial transactions between persons resident in India/business entities owned/controlled by them and various business entities in India/Switzerland were recovered and seized as a result of the search.

An investigation was launched after receiving information that LoCs had been issued against Dinesh Soin, Abhishek Soin, and others of M/s Saber Papers Ltd., Ludhiana (“SPL”). The ED launched an investigation, which revealed that Dinesh Soin, Abhishek Soin, and other members of the Soin family were shareholders/directors of SPL and M/s Saber Paper Boards Pvt. Ltd., Ludhiana (“SPBPL”).

Further investigation revealed that the aforementioned individuals had established Wholly Owned Subsidiary and Joint Venture entities in Cyprus and Switzerland, respectively, and that mandatory reporting required under FEMA provisions had not been completed for a significant number of years.

Furthermore, investigations revealed that SPL and SPBPL, said Dinesh Soin and Abhishek Soin, had invested Rs. 9.7 Crore in various entities in a foreign jurisdiction and later apportioned the assets and liabilities among those entities, revealing that more than Rs. 120 Crore in assets had accrued in the name of those companies in Switzerland. The Soins had only remitted Rs. 9.7 Crore through banking channels, reinforcing suspicions that funds transferred from India through non-banking channels had been infused into those entities.

According to information gathered, the SPL and SPBPL obtained bank loans totaling more than Rs. 400 crore, for which insolvency proceedings were initiated by the lending banks before the NCLT.