ED Restores ₹40 Crore to Indian Bank in Saravana Stores Case

Chennai / New Delhi: The Enforcement Directorate (ED) has restored immovable properties worth ₹40 crore to Indian Bank in connection with its money laundering investigation against M/s Saravana Stores (Gold Palace) and its partners. The restitution was carried out following a High Court order and marks a significant step toward compensating public sector banks affected by large-scale financial fraud.

The restoration was executed under Section 8(8) of the Prevention of Money Laundering Act (PMLA), 2002, which allows assets derived from proceeds of crime to be returned to victims. With this development, the total value of properties restored to Indian Bank in the case has risen to ₹275 crore.

The ED’s investigation originated from an FIR filed on the complaint of Indian Bank, alleging serious irregularities in the availing and utilisation of credit facilities by Saravana Stores (Gold Palace). According to investigators, the accused fraudulently obtained loans amounting to ₹240 crore and diverted the funds for purposes unrelated to sanctioned business activities.

During the probe, the agency uncovered manipulation of stock statements and misrepresentation of inventory levels to artificially inflate drawing power. Investigators found that working capital limits were misused, hypothecated stock was removed without the bank’s consent, and large sums were routed into personal accounts. These diverted funds were allegedly used to acquire high-value immovable properties.

Due to these irregularities, the loan account was classified as a non-performing asset in July 2019 and later declared a case of fraud and wilful default. Indian Bank suffered a wrongful loss of over ₹312 crore, prompting parallel criminal and money laundering proceedings.

As part of its enforcement action, the ED provisionally attached properties worth ₹274.76 crore through multiple attachment orders under the PMLA. These were later confirmed by the adjudicating authority, following which a prosecution complaint was filed before the Special PMLA Court in January 2024.

In February 2025, the Special Court ordered the restoration of properties valued at ₹235 crore to Indian Bank. Subsequently, the bank approached the High Court seeking the return of additional assets worth ₹40 crore. Considering the magnitude of public funds involved and the interests of the victim bank, the court allowed the request, with the ED stating it had no objection.

Officials said the case reflects the broader objective of financial crime enforcement—ensuring accountability while enabling recovery for affected institutions. Strong forensic scrutiny and financial examination, similar to practices followed in professional auditing services in India, played a key role in establishing fund diversion and asset tracing in the case.

The ED said efforts will continue to prioritise restitution in major bank fraud and money laundering cases to safeguard public money and reinforce confidence in the financial system.