In a significant move, the Mumbai Directorate of Enforcement (ED) has handed over immovable assets worth ₹289.54 crore to the competent authority under the Maharashtra Protection of Interest of Depositors (MPID) Act. This action pertains to a long-running investigation into financial irregularities at Pen Co-operative Urban Bank Ltd.
The ED’s probe stemmed from an FIR filed at the Pen police station in Maharashtra’s Raigad district. According to the chargesheet, the bank’s former office-bearers, in collusion with auditors, falsified financial statements to report inflated profits. This manipulation allegedly enabled them to misappropriate funds, causing a financial loss of ₹651.35 crore to the institution. Investigators discovered that the misappropriated money was funneled through fraudulent cash credit accounts within the bank. The laundered funds were used to acquire 70.9 acres of properties in Raigad district, which were held under false ownership or ‘benami’ names. These assets, valued at ₹25.2 crore, were provisionally attached by the ED in 2014 under the Prevention of Money Laundering Act (PMLA), 2002.
The case advanced in 2018 when the ED filed a prosecution complaint with the PMLA court, though the trial remains ongoing. During the same period, a depositor of the bank petitioned the Bombay High Court, seeking the release of the attached properties. In 2016, the High Court directed the ED to transfer the properties to MPID authorities. However, the ED challenged the order in the Supreme Court, which granted a stay in November 2017.
In February 2019, the MPID authority filed an application with the PMLA court, requesting the confiscation of the assets for restitution to the bank’s depositors and shareholders. To expedite the process of compensating over 2 lakh depositors and 42,000 shareholders, the ED agreed to comply with the High Court’s order and withdrew its Supreme Court petition in December 2024. On January 14, 2025, the PMLA court approved the restoration of 29 immovable properties to the MPID authority. Valued at ₹289.54 crore, these assets will now be used to compensate the affected individuals.
The ED’s move marks a significant step in addressing the losses incurred by the depositors and shareholders, ensuring justice in a case that has lingered for over a decade.