CHENNAI: The Enforcement Directorate (ED) has identified properties worth around Rs 7,324 crore, attached under the Prevention of Money Laundering Act (PMLA) in 64 cases in Tamil Nadu, Karnataka, Andhra Pradesh, Telangana and Kerala, which can be auctioned off to restore them to the victims of the very economic crimes through which they were obtained.
Sources said the central agency will be working closely with the respective state police personnel and banks to ensure that proceeds of financial crime are returned to the affected parties.
These 64 cases across the five southern states, earmarked for restitution, are broadly divided into two categories: firstly, those involving gullible investors who were cheated by entities running Ponzi schemes, promising high rate of returns; secondly, banks cheated by businessmen/industrialists who had diverted loans in a fraudulent manner to amass ill-gotten wealth.
The process of restitution is governed by Section 8 (8) of the PMLA and the PML (Restoration of Confiscated Property) Rules, 2016, under which affected parties can approach the special PMLA court conducting the trial to restore properties or assets involved in money laundering.
The court can then allow auction off the property and disburse the proceeds to the victims. This was done in the cases of Vijay Mallya, Nirav Modi and Mehul Choksi, where Rs 15,113 crore of assets were restituted to public sector banks who were defrauded by them.
In bank fraud cases, the victim bank directly files the application, while for Ponzi scheme cases, the state police file it to take possession of the properties on behalf of the cheated citizens, sources said. ED has started talks with police agencies of the southern states and banks to persuade them to file applications before the PMLA court to initiate the restitution process, they added.
Such a procedure has been adopted in cases filed by the Economic Offences Wing (EOW) of Karnataka police under the Karnataka Protection of Interest of Depositors (KPID) Act, sources said. TN police’s EOW, which also investigates cases under a similar TNPID Act, is also being persuaded in this regard as ED has identified at least Rs 2,000 crore worth attached properties in Tamil Nadu for restitution.
Once the banks/police file an application, ED files a No-Objection Certificate (NOC) before the court, giving their consent to transfer the properties attached in these cases to the aggrieved parties. The properties can then be auctioned to restore it to the victims.
Recently, ED successfully restored properties worth Rs 25.38 crore attached in a case in Tamil Nadu to the Indian Bank. Similarly, properties worth Rs 6,000 crore — a portion of which is in Andhra Pradesh, worth Rs 800 crore — is in the process of being restituted to 32 lakh victims of the Agri Gold ponzi scheme.
ED will file an NOC in response
Once the banks/police file an application, ED files a No-Objection Certificate, giving consent to transfer properties attached in these cases to the aggrieved parties