The Enforcement Directorate (ED), Mumbai Zonal Office, has initiated the process to restore immovable assets worth ₹55.85 crore (as per the 2021 valuation) to the State Bank of India (SBI) in the Veron Aluminium Pvt. Ltd. (VAPL) money laundering case. These properties had been provisionally attached under Section 5 of the Prevention of Money Laundering Act (PMLA).
The restoration move comes after extensive findings by the ED, which revealed that VAPL, along with its group entities and associated individuals, orchestrated a multi-layered bank fraud and diverted bank funds for personal gains.
ED Probe Triggered by CBI FIR
The ED’s investigation stemmed from multiple FIRs registered by the CBI, BS&FC, Mumbai, against VAPL and others. According to the allegations: Bank of India suffered losses of ₹293.74 crore, SBI incurred losses of ₹401.25 crore, bringing the total bank fraud to more than ₹695 crore.
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The CBI charge sheet highlighted a key element of the fraud: Canara Bank had issued a manual Letter of Credit (LC) worth ₹300 crore on behalf of VAPL in the name of its group company, VACPL. Bank of India went on to discount this LC on the basis of forged documents, bypassing due diligence norms.
‘Rolling LC Mechanism’ Uncovered
ED’s deeper probe exposed a sophisticated ‘rolling LC mechanism’ used to keep the fraud alive. Investigators found that:
- Fresh LCs were constantly opened to settle outstanding LCs.
- This cycle was run between VAPL, VIPL, and multiple shell companies.
- The arrangement was designed to mask liabilities, artificially reduce cash credit (CC) utilisation, and inflate the balance sheet.
What appeared to be routine commercial transactions were, in fact, carefully constructed layers to cover up debt misuse. The pattern not only constituted financial fraud but also served as a conduit for laundering illicit funds.
Based on these findings, the ED issued two separate provisional attachment orders, freezing immovable assets valued at ₹179.27 crore.
Section 8(8) PMLA: Safeguarding Rights of Legitimate Claimants
Section 8(8) of the PMLA serves a critical purpose: it ensures that assets linked to proceeds of crime but legitimately owned by an innocent party can be restored to the rightful entity.
Upholding this principle, the ED has repeatedly encouraged banks and financial institutions to submit restoration claims for properties attached during money laundering investigations.
SBI Files Restoration Plea
Acting on ED’s outreach, SBI approached the Special PMLA Court, Mumbai, with a formal application under Section 8(8). The bank sought restoration of three immovable properties valued collectively at ₹55.85 crore, as per the 2021 assessment.
ED Supports Claim; Court Orders Restoration
During the proceedings, the ED submitted an affidavit endorsing SBI’s claim and conveyed its approval for the restoration of the attached properties.
Following this, on 26 September 2025, the Special PMLA Court, Mumbai, accepted SBI’s application and ordered:
- Restoration of three immovable properties,
- Valued at ₹55.85 crore,
- To the State Bank of India.
This directive is being viewed as a significant development toward strengthening institutional confidence and providing relief to banks affected by large-scale financial crimes.
A Case of Wider Significance
The ruling carries broader implications:
- It reinforces the restoration mechanism under PMLA in major bank fraud matters.
- It underlines the seriousness with which the ED is pursuing recovery and restitution for victim institutions.
- It is likely to encourage more banks to file claims on attached properties.
The Veron Aluminium case has emerged as a striking example of LC misuse, layered transactions, and structural fraud. The coordinated action by the ED and CBI has been instrumental in dismantling the scheme and bringing its scale to light.
The court’s decision is expected to set a precedent for similar high-stake bank fraud cases in the pipeline, offering a clearer roadmap for the restitution of losses suffered by lending institutions.
