Chennai / New Delhi: In a major development in a high-value money laundering investigation, the Directorate of Enforcement (ED) has restored properties worth ₹40 crore to Indian Bank in connection with the case against M/s Saravana Stores (Gold Palace) and its partners. The restitution has been carried out in support of an application filed by Indian Bank under Section 8(8) of the Prevention of Money Laundering Act (PMLA), 2002.
This latest restoration follows an earlier order of the Special PMLA Court dated February 17, 2025, through which three properties valued at ₹235 crore were handed back to the bank. With the present order, the total value of properties restored in the case has reached ₹275 crore, marking one of the largest restitutions to a public sector bank in a single money laundering probe.
Origin of the investigation
The ED initiated the probe based on a First Information Report (FIR) registered on the complaint of Indian Bank under various provisions of the Indian Penal Code, 1860, and the Prevention of Corruption Act, 1988. The FIR alleged large-scale financial irregularities by the partners of Saravana Stores (Gold Palace) in availing and utilising bank credit.
According to the complaint, the accused fraudulently obtained credit facilities amounting to ₹240 crore from Indian Bank. It was alleged that the funds were diverted for unauthorised purposes instead of being used for the sanctioned business activities.
Fund diversion and manipulation of records
During the course of the investigation, the ED found that the accused had systematically diverted bank funds and misappropriated working capital. The probe revealed that false and inflated stock statements were submitted to the bank to justify higher drawing power and continued access to credit.
Investigators further established that the accused misused working capital limits, routed substantial amounts to personal accounts, and removed hypothecated stock without the knowledge or consent of the bank. The diverted funds were allegedly used to acquire immovable properties in the names of the firm and its partners.
As a result of these irregularities, the loan account was classified as a non-performing asset (NPA) on July 7, 2019. It was subsequently declared a case of fraud and wilful default, causing a wrongful loss of ₹312.13 crore to Indian Bank.
Attachment of properties under PMLA
In its money laundering investigation, the ED provisionally attached immovable properties worth ₹274.76 crore through two Provisional Attachment Orders issued under the PMLA. These attachment orders were later confirmed by the Adjudicating Authority on January 24, 2023, and October 27, 2023, respectively.
Following confirmation of the attachments, the ED filed a Prosecution Complaint before the Special Court (PMLA) on January 18, 2024, detailing the alleged laundering of proceeds of crime derived from the bank fraud.
Restitution to the victim bank
Indian Bank subsequently moved an application under Section 8(8) of the PMLA seeking restoration of the attached properties. The ED supported the application, stating that the attachment had been carried out primarily for the benefit of the victim bank.
Accepting the plea, the Special PMLA Court, by its order dated February 17, 2025, directed restoration of three properties valued at ₹235 crore to Indian Bank.
The bank later approached the High Court seeking restoration of additional properties worth ₹40 crore. Considering the substantial loss suffered by the public sector bank and the larger public interest involved, the ED conveyed that it had no objection to the prayer.
High Court order
The High Court, by its order dated October 23, 2025, allowed the application and directed restoration of properties worth ₹40 crore to Indian Bank, completing the current phase of restitution in the case.
ED’s stance
ED officials said the case underlines that the objective of money laundering investigations is not limited to prosecution alone but also includes ensuring that victims of financial crimes, particularly public sector banks, are compensated by restoring assets derived from the proceeds of crime. The agency said similar efforts will continue in other cases involving large-scale bank fraud and money laundering.
