Chennai: ED secures court order for restitution of Rs 235-Cr assets in bank loan-fraud case

New Delhi, Feb 18 (PTI) A special PMLA court in Chennai has ordered restitution of assets worth about Rs 235 crore to the Indian Bank as part of a money-laundering probe against a city-based company, which is alleged to have cheated the lender by way of a loan fraud, official sources said on Tuesday.

The court issued an order to this effect on Monday in a case against Saravana Stores (Gold Palace), even as the framing of charges and the trial of the case are pending, the sources said.

The money-laundering case is being investigated by the Enforcement Directorate (ED) since May 2022, after it took cognisance of an FIR lodged by the CBI.

The Central Bureau of Investigation (CBI) lodged the FIR after the Indian Bank sent it a complaint regarding the alleged fraud with the lender by the said company.

The ED had attached assets worth Rs 234.75 crore during the course of the investigation and the Adjudicating Authority of the Prevention of Money Laundering Act (PMLA) confirmed it later.

The Chennai court has now allowed the restoration of these assets to the bank under section 8(8) of the PMLA that deals with restitution of assets to the rightful claimant of funds who was cheated.

In a statement issued in July 2022, the ED had alleged that late Pallakudurai, P Sujatha and Y P Shiravan, partners of Saravana Stores (Gold Palace), "conspired" with unidentified public servants and others to cheat the Indian Bank branch in the T Nagar area of Chennai.

The business house had "applied for sanctioning of loan by fabricating balance sheet and projecting sound financial health of the firm. There is a huge mismatch between the sales reported and credit entries of the firm", the agency had said.

The firm presented a "cosmetic" picture of its expected turnover for upcoming financial years at the time of availing the loan, the ED had said.

"In order to cheat the Indian Bank, a significant wrongful loss and deriving personal gain, the firm in collusion with property valuer, bank officials and certain private persons proposed to purchase assets at a price which is clearly much higher than the real fair market value.

"The investigation conducted under the Prevention of Money Laundering Act has adequately established the ill motives of the accused individuals and bank officials from the inception," the ED had alleged.

The accused "overstated" the inventory, transferred the assets without the bank's knowledge, used the OCC (open cash credit) limits to repay the term loan, misappropriated and diverted the funds for which those were not sanctioned and committed other irregularities, thereby cheating the bank and causing a wrongful loss to it, the agency had said.

The ED has recently begun the "restitution of assets" process for genuine investors or lenders who lost their money in cases of fraud, including in cases like the Saradha Ponzi scheme and the alleged bank-loan fraud linked to diamantaires Nirav Modi and Mehul Choksi. PTI NES RC

Source: PTI