The Directorate of Enforcement (ED) has initiated the process to restitute immovable properties valued at ₹55.85 crore to the State Bank of India (SBI) in the Varron Aluminium Pvt. Ltd. (VAPL) money laundering case. The attached assets were originally seized under Section 5 of the Prevention of Money Laundering Act (PMLA).
FRAUD ORIGINATED FROM ₹700 CRORE BANK SCAM
The action stems from FIRs filed by the CBI’s Banking Securities & Fraud Cell (BS&FC) alleging that Varron Aluminium and its group entities defrauded:
- Bank of India: ₹293.74 crore
- State Bank of India: ₹401.25 crore
As per the CBI chargesheet, a manual Letter of Credit (LC) of ₹300 crore was issued by Canara Bank in favour of group company VACPL, which Bank of India discounted without proper verification.
ED FINDINGS: CYCLICAL LCs AND SHELL ENTITIES
ED’s investigation revealed that:
- Payments for earlier LCs were repeatedly made by opening new LCs in favour of VAPL, VIPL, and related shell companies.
- The cycle was used to repay old loans, reduce cash credit exposure, and inflate the books of group companies.
During the probe, ED identified proceeds of crime and attached immovable properties worth ₹179.27 crore through two separate orders.
SECTION 8(8) OF PMLA: BASIS FOR RESTITUTION
The agency said the restitution aligns with Section 8(8) of PMLA, which permits restoration of attached or confiscated properties to victims or legitimate claimants when properties—though tied to illicit activity—legally belong to innocent parties.
ED added that it continues to encourage banks and financial institutions to seek restoration of claims using this provision.
SBI’S CLAIM AND COURT ORDER
SBI filed a miscellaneous application before the Special Court (PMLA), Mumbai, seeking restoration of three attached properties valued at ₹55.85 crore (valuation year 2021).
During proceedings, ED submitted an affidavit confirming its willingness to restitute the properties to SBI.
On 26 September 2025, the Special Court allowed the application and ordered the restoration of all three immovable assets to SBI.
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