Directors of Mastana Foods Sentenced for Fraudulent Activities

Delhi Court Hands Down Prison Sentences in ₹91 Crore SBI Loan Fraud Involving Mastana Foods Directors

New Delhi, July 2025 — In a strong message to corporate wrongdoers, a special court under the Central Bureau of Investigation (CBI) has convicted and sentenced two directors of M/s Mastana Foods Private Limited in a large-scale bank fraud case. The court found that the accused had masterminded an elaborate conspiracy to defraud the State Bank of India (SBI) of over ₹91 crore by inflating company accounts and fabricating commercial activity through a network of shell entities.

Who Was Sentenced?

The two directors—Krishan Mohan Mendiratta and Anil Khurana, both residents of Kaithal in Haryana—were sentenced to two and a half years in jail by Special Judicial Magistrate Anil Kumar Yadav, with an additional fine of ₹10,000 each. The company itself, based out of Delhi’s Naya Bazar, was also found guilty and slapped with a separate fine of ₹10,000.

The Modus Operandi

The CBI’s investigation revealed a complex web of dummy firms, fake sales, and falsified debtors. The court found that the accused had:

Floated shell companies to simulate fake trade activity.
Logged non-existent purchases and sales on company books.
Fudged receivables to inflate the company’s financial health.
Used these doctored records to mislead SBI into sanctioning large credit facilities.

The court noted that there was no real movement of goods—just numbers on paper aimed at presenting a “rosy picture” of financial strength. Based on these inflated figures, SBI extended massive loans, which eventually turned sour.

Applicable Legal Charges

The directors were convicted under Sections 120-B (criminal conspiracy) and 420 (cheating) of the Indian Penal Code. The original CBI chargesheet had also cited more serious provisions, including:

Section 406 – Criminal breach of trust
Section 467 – Forgery of valuable securities
Section 468 – Forgery for the purpose of cheating
Section 471 – Using forged documents as genuine

However, convictions were ultimately secured for conspiracy and cheating—both carrying significant weight in white-collar crime cases.

What the Court Said

In a sharply worded verdict, the judge observed:

“The prosecution has duly proved dishonest intention of the borrower company to cheat the bank by dealing with dummy/shell firms for the purpose of showing a rosy picture of its financial position... thereby induced the bank to sanction loan by relying upon those fake entries... and by failure to pay the loan amount... caused wrongful loss of ₹91.10 crore to the complainant bank and corresponding wrongful gain to themselves in collusion with each other.”

Ripple Effects — Other Major Crackdowns

The Mastana Foods case isn’t isolated. It comes amid a wave of enforcement actions against financial fraud and corporate misconduct:

Unnati Group Scam

In April 2025, the Enforcement Directorate arrested Anil Mithas, promoter of the Unnati Group, under the PMLA (Prevention of Money Laundering Act). Investigations revealed that over ₹522 crore collected from homebuyers in a Noida housing project was siphoned off through layers of shell entities. The result: stalled construction and heavy losses for both buyers and lenders.

Black Money Act — Ambani Case

In another high-profile matter, the Bombay High Court recently sought clarifications from the Income Tax Department over its notice to Anil Ambani under the Black Money Act, signalling growing judicial scrutiny over undisclosed foreign assets and income held by powerful individuals.

Why This Matters

The Mastana Foods ruling is more than just another conviction—it’s part of a broader shift in how Indian courts and regulators are approaching corporate fraud:

Accountability at the top: Directors and promoters are being held personally responsible for financial misconduct.
Banking system integrity: With public sector banks repeatedly exposed to bad loans stemming from cooked-up company books, this verdict serves as a deterrent.
Investor and public confidence: In an era of rising credit fraud, the judiciary is sending out a clear message—financial misdeeds will not go unpunished.

Closing Thoughts

This judgment against Mastana Foods marks a significant milestone in India’s battle against loan fraud and financial misrepresentation. The days when shell companies and fake ledgers could quietly funnel money from public banks into private pockets appear to be numbered. With both imprisonment and financial penalties handed down to the company and its directors, it’s a cautionary tale for any business tempted to cut corners or mislead creditors.