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In a significant development highlighting serious concerns over misuse of the insolvency framework, the Directorate of Enforcement (ED), Gurugram Zonal Office, has arrested Arvind Kumar, former Resolution Professional (RP) of M/s Richa Industries Limited (RIL), under the provisions of the Prevention of Money-laundering Act (PMLA), 2002.

The arrest was made on 3 February 2026, and Arvind Kumar was produced before the Hon’ble Special Court, Gurugram, which has granted 8 days of ED custody. Earlier, the ex-promoter and suspended Managing Director, Sandeep Gupta, had already been arrested under Section 19 of the PMLA in the same case.

Background of the Case

The ED initiated its investigation based on an FIR registered by the CBI under various provisions of the IPC, 1860 and the Prevention of Corruption Act, 1988. The allegations relate to criminal conspiracy, cheating, and criminal misconduct, which resulted in wrongful gains to the accused and caused losses of around ₹236 crore to public sector banks during the period 2015 to 2018.

Alleged Role of the Resolution Professional

According to the ED’s investigation, Arvind Kumar was not merely negligent but actively involved in money laundering and personal enrichment during his tenure as RP (December 2018 to June 2025).

The probe revealed that:

• Substantial funds of Richa Industries Limited were diverted through layered transactions to individuals and entities closely connected to him, including associates and employees linked to his own business interests.

• Large payments were routed from the corporate debtor’s accounts to intermediaries, who later transferred significant amounts back to Arvind Kumar’s personal bank accounts.

• Bank records show unexplained cash deposits exceeding ₹80 lakh in his personal accounts during his tenure.

• Credits of over ₹1 crore were received from related parties who had earlier benefited from payments made by the company.

These findings indicate that the RP allegedly projected illicit funds as legitimate receipts, disguising them as part of CIRP-related operations.

Key Modus Operandi Alleged by ED

The ED has outlined several serious violations allegedly committed by the RP, including:

• Manipulation of the Committee of Creditors (CoC) by admitting sham and inflated claims of unsecured financial creditors, many of them dummy entities controlled by ex-promoters, thereby sidelining genuine public sector bank creditors.

• Facilitating diversion and siphoning of crores of rupees during the CIRP under the guise of sub-contracts, remuneration, and operational payments.

• Collusion with suspended promoters, allowing them continued operational control and decision-making powers.

• Deliberate non-filing of avoidance applications under IBC despite clear red flags of preferential, undervalued, fraudulent, and extortionate transactions highlighted in audit reports.

• Forwarding ineligible resolution plans submitted by promoter-controlled entities in violation of Section 29A of the IBC, with the intent of restoring assets to the very persons who committed the fraud.

• Collecting crores from third parties on the pretext of sale of company assets without authorization or proper documentation.

Impact on Public Sector Banks

Due to the alleged “pro-promoter” conspiracy, public sector banks suffered a staggering 94% haircut. After liquidation of Richa Industries Limited, banks recovered only ₹40 crore against admitted claims of ₹708 crore.

It is also noteworthy that the IBBI had earlier suspended Arvind Kumar’s registration for two years for related contraventions.

Why This Case Matters

The ED has emphasized that such alleged misuse of the insolvency process:

• Defeats the very objective of the Insolvency and Bankruptcy Code,

• Undermines creditor confidence, and

• Erodes public trust in the financial and insolvency systems.

Further investigation is ongoing to trace the complete flow of funds and identify all persons involved.