What began as a ₹350-crore fraud complaint, in the aftermath of the collapse of Infrastructure Leasing & Financial Services (IL&FS), has now morphed into a stunning story of how the allegation of fraud itself was a fabrication against a colluding party.
In January-February 2019, the Dalmia Cement group filed complaints with the market regulator, the depository and the economic offences wing (EOW) of the police, alleging theft and fraud involving mutual fund units worth approximately ₹350 crore. The complaint implicated IL&FS Securities Services Limited (ISSL), Awanish Kumar Mishra, who operated a partnership firm, MoneyMishra Financial Services (MoneyMishra) and Allied Financial Services Private Limited (Allied Financial), a brokerage firm.
Seven years later, a report by the serious fraud investigation office (SFIO) has categorically said “these complaints were false.” On the contrary, it alleges that Puneet Dalmia, managing director of Dalmia Bharat group (DBG), had pledged these securities and, “in consideration, earned illegal fixed income” of ₹40 crore through entities, named Cointribe and Vinimay, promoted by him.
The SFIO investigation, which turns the original complaint on its head, offers a grim study of unchecked fraud, misdirection and regulatory inertia, even in the face of damning findings. Even as this column goes to press, Puneet Dalmia continues to head the group; his companies have reported strong financial performance and have made no disclosures to stock exchanges about the SFIO report.
In 2019, just months after IL&FS, a giant conglomerate of over 340 entities, triggered a systemic crisis with its collapse, it may have been convenient to accuse ISSL, a group entity, of fraud in collusion with a broker.
It was also a time when the National Stock Exchange (NSE) saw multiple broker defaults, primarily due to reckless derivatives trading financed through the misuse of client securities and funds. Awanish Mishra appears to have been running a similar operation offering an illegal ‘fixed return’ of 2% per month (24% annually) to entities that allowed him to pledge their securities as collateral for derivatives trading. ISSL, as clearing member for Allied Financial, was drawn into the ‘false complaint’ for advancing legitimate funds.
The SFIO investigation traces the origins of Dalmia Bharat’s dealings to 2016, when Awanish Mishra was introduced to Puneet Dalmia as well as Jayesh Doshi and Bijay Kumar Agarwal, then group chief financial officer and treasury head of Dalmia Bharat, respectively.
The introducer, Vinod Poddar, was the father-in-law of Puneet Dalmia and already a client of Awanish. In 2016, Dalmia Bharat opened three demat accounts with Allied Financial, holding approximately ₹350 crore in mutual fund units and liquid securities belonging to group entities OCL India Limited (OCL) and Dalmia Cement (East) Limited (DCEL). It formalised an agreement with Allied Financial only in 2017, when it also installed broker terminals with viewing access to monitor trades executed by Awanish’s firms.
The Fabrications
Predictably, derivatives trading did not yield the promised returns. Instead, Awanish’s firms incurred losses of ₹183.72 crore between April 2017 and February 2019. According to the SFIO report, the bulk of these losses arose from Bank Nifty options (₹135.71 crore) and Dalmia Bharat Limited (DBL) futures (₹43.60 crore).
In his deposition, Awanish claimed that Puneet Dalmia directed him to build positions in DBL futures, anticipating gains from the proposed acquisition of Binani Cement Limited. However, Dalmia Bharat lost the bid to UltraTech Cement Limited, and the resulting fall in DBL’s share price led to significant losses. Awanish further alleged that Dalmia reneged on an assurance to absorb these losses and, instead, initiated legal proceedings against him.
Since the securities had been unlawfully pledged by listed entities, a cover-up became necessary. The SFIO report states that three entities linked to Puneet Dalmia—Cointribe Technologies, Vinimay and Glow Homes—were used to record fictitious profits of approximately ₹45 crore through fabricated contract notes issued by Allied Financial. The report cites email trails indicating that Dalmia Bharat’s treasury team supervised the fabrication. It also references communications showing a downward revision in the ‘guaranteed return’ offered by Awanish from 2.5% to 0.6% per month, reinforcing the finding that the arrangement with him was structured and monitored by the corporate group.
Money Flows and Linkages
The SFIO investigation also uncovered other unlawful financial flows. These include a payment of ₹50 lakh to the Serendipity Arts Foundation, where Puneet Dalmia and his wife Avantika Dalmia are listed as patrons. This was made on instructions from the DBG finance team. Separately, payments totalling ₹1 crore were reportedly directed to two foundations in 2018, including the Avanee Foundation, named after Puneet Dalmia’s daughter.
The report also identifies instances of fictitious profits and other financial benefits credited to accounts linked to Bijay Kumar Agarwal. It suggests that this is a diversion of distributor commissions which is explicitly violation of mutual fund code of conduct.
In 2018, the government-appointed board headed by banker Uday Kotak had taken charge of the resolution of IL&FS whose liabilities were nearly ₹1 lakh crore. SFIO notes that Dalmia Bharat’s misdirection and false allegation of fraud prevented ISSL from recovering nearly₹416 crore in margin money and led to legal costs.
The investigation further alleges an instance of market manipulation in April 2017, involving gains of approximately ₹600 crore. An entity, named Himshikhar Investment linked to DBG, is said to have engaged in concentrated buying to push DBL’s share price from ₹1,972.75 to ₹2,113.40. Allied Financial acted as broker, with pledged securities used as margin.
This activity is linked to a structured transaction, involving KKR Mauritius Cement Investments Limited, where DBL agreed to buy back a 15% stake in Dalmia Cement (Bharat) Limited, signed in January 2016. The terms of the placement letter made the transaction more favourable, if DBL’s share price increased.
Regulatory Inertia
The SFIO report presents granular evidence—emails, WhatsApp messages, call records, NSE trade logs and forensic audit findings—detailing and analysing multiple violations that should have triggered independent action by the Securities and Exchange Board of India (SEBI), the national financial reporting authority (NFRA) and the central bureau of investigation (CBI). Each of them has a copy of the report. These include:
Filing false complaints alleging theft to mislead regulators and obstruct justice, preventing the recovery of ₹416 crore in margin money that was legitimately advanced by ISSL.
Participating in an illegal fixed-return scheme in violation SEBI rules.
Unauthorised pledging of mutual fund units without board authorisation (₹350 crore of mutual fund units belonging to OCL and DCEL).
Fabrication of contract notes and financial statements by Cointribe, Vinimay and Glow Homes to report fake profit.
Alleged insider trading linked to acquisition plans (purchase of DBL futures April 2017).
Market manipulation and price ramping through Himshikhar Investment.
Fabrication and back dating of general body records alleged in the ₹1,021 crore acquisition of 26.7% OCL shares by DCBL on 25 February 2015 to prevent non-promoter from voting.
Misuse of a listed company's treasury for the personal gain.
Related-party transaction violations in the ₹1,021 crore OCL share acquisition.
Submission of fabricated depository statements. SFIO alleges that 14 out of 22 holding statements on the National Securities Depository Ltd (NSDL) letterhead were fabricated to alter address and securities held.
The false allegations effectively weaponised the regulatory and legal process. Awanish was arrested – arguably on legitimate grounds -- but innocent officials of ISSL and NSDL faced prolonged investigation, harassment and reputational damage.
In February 2019, SEBI acted against Allied Financial’s illegal schemes and imposed minor penalties. However, regulatory response to the far more serious findings against Dalmia Bharat appears slow.
SFIO has produced a detailed report and arrived at definitive conclusions. Typically, any enforcement action against a large corporate group is contested through prolonged litigation lasting decades. It is an unequal battle where investigative momentum fades, personnel change and institutional memory weakens. The outcome is consistently low conviction rates. In this case, regulators are already dragging their feet, despite an explosive SFIO report.
Wonderful report. ISSL got ruined due to false complaint of DBG. Investors of Allied are still trapped in bureaucratic apathy. Would SEBI chairman take action against DBG?
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