ED Restores ₹55.85 Crore Assets to SBI in Veron Aluminium Money Laundering Case

ED Restores ₹55.85 Crore Assets to SBI in Veron Aluminium Money Laundering Case

The Enforcement Directorate (ED), Mumbai Zonal Office, has initiated the restoration of immovable assets worth ₹55.85 crore (2021 valuation) to the State Bank of India (SBI) in the Veron Aluminium Pvt. Ltd. (VAPL) money laundering case. These properties were previously provisionally attached under Section 5 of the Prevention of Money Laundering Act (PMLA).

The restoration follows a comprehensive ED investigation, which established that VAPL, its group entities, and associated individuals orchestrated a multi-layered bank fraud, diverting bank funds for personal enrichment.

CBI FIR as Trigger for ED Probe

The CBI charge sheet identified a key element of the fraud: Canara Bank had issued a manual Letter of Credit (LC) worth ₹300 crore for VAPL in the name of its group company, VACPL. Bank of India subsequently discounted the LC based on forged documents, bypassing standard due diligence protocols.

Discovery of ‘Rolling LC Mechanism’

ED’s in-depth investigation revealed a sophisticated ‘rolling LC mechanism’, involving:

• Opening new LCs to settle outstanding ones.

• Transactions circulating among VAPL, VIPL, and multiple shell entities.

• Artificially reducing cash credit (CC) utilisation and inflating the balance sheet.

These transactions, masked as routine commercial operations, were in fact structured layers of financial deception, facilitating fund diversion and money laundering.

Following these findings, the ED issued two provisional attachment orders, freezing immovable assets valued at ₹179.27 crore.

Section 8(8) PMLA: Protection of Legitimate Claimants

Section 8(8) of PMLA safeguards assets legitimately owned by innocent parties, even if associated with proceeds of crime. The ED actively encourages banks and financial institutions to submit restoration claims during money laundering investigations.

SBI’s Restoration Application

Acting on ED’s guidance, SBI filed a formal application under Section 8(8) before the Special PMLA Court, Mumbai, seeking restoration of three immovable properties, collectively valued at ₹55.85 crore (2021 assessment).

Court Approval and ED Support

The ED submitted an affidavit supporting SBI’s claim, and on 26 September 2025, the Special PMLA Court, Mumbai, ordered:

• Restoration of three immovable properties

• Valued at ₹55.85 crore

• Transferred to the State Bank of India

The decision is seen as a critical milestone in strengthening institutional confidence and providing relief to banks impacted by large-scale financial fraud.

Broader Significance

The ruling reinforces:

• The PMLA restoration mechanism in cases of major bank fraud.

• The ED’s commitment to recovery and restitution for victim institutions.

• Incentives for other banks to file claims on attached properties.

The Veron Aluminium case underscores the risks of LC misuse, layered transactions, and structural fraud. The coordinated efforts of the ED and CBI were pivotal in dismantling the scheme and revealing its magnitude.

Case Overview

The investigation originated from multiple FIRs registered by the CBI and BS&FC Mumbai against VAPL and associates, alleging:

• Bank of India losses: ₹293.74 crore

• SBI losses: ₹401.25 crore

• Total bank fraud exceeding: ₹695 crore

The court’s decision sets a precedent for high-value bank fraud cases, providing a structured framework for restitution of financial losses to lending institutions.