ED to restore assets mortgaged by economic offenders to the banks
THE POLICY IS SEEN AS THE AGENCY’S WAY OF AVOIDING BEING AT THE LOGGERHEADS WITH THE BANKS
NEW DELHI: The Enforcement Directorate (ED), which investigates financial crimes, has adopted a strategy of not keeping the attached properties of economic offenders that were mortgaged to the banks, a policy seen as the agency’s way of avoiding being at the loggerheads with the banks.
Under the new unwritten policy, not only does the central antimoney laundering probe agency identify and attach the properties made with the proceeds of crime, but it also makes active efforts to restore them to the banks, especially mortgaged assets. The restitution of attached assets worth ₹15,113.91 crore out of attached assets worth ₹19,111.20 crore belonging to three high-profile fugitives — Vijay Mallya, Nirav Modi and Mehul Choksi — to the banks, as stated by solicitor general Tushar Mehta in the Supreme Court last month, is part of this approach. The total fraud amount involving the three fugitives is ₹22,585.83 crore.
“Out of the attached proceeds of crime from these 3 individuals, assets of ₹15,113.91 crore has already been returned back to public sector banks by the ED u/s 8(7) PMLA through the order of the court and assets worth of ₹335.06 crore has been confiscated to the government of India i.e. 66.91% of total loss to the banks in these 3 cases has been returned back to them by the ED,” Mehta said last month.
A similar process is being followed by ED in the Punjab and Maharashtra Cooperative Bank fraud involving HDIL’s Rakesh and Sarang Wadhawan as well, where it has handed over attached properties worth ₹103 crore to the bank. It has also given a no-objection certificate for the bank to recover close to ₹3,000 crore by liquidating mortgaged properties, said an official requesting anonymity.
He said restitution of properties to the lenders in frauds pertaining to Dewan Housing Finance Corporation Ltd (DHFL) and former Yes Bank Managing Director Rana Kapoor, which involves amounts in several thousand crores, “is also under active consideration”.
ED has fought various banks over the years for its powers under the PMLA, which, it says, allows it to attach the properties mortgaged by offenders with the banks and confiscate the same till the trial is over.
In 2018, the PMLA appellate tribunal, while hearing a dispute involving various banks and ED, ruled in favour of banks saying they have the first right over pledged assets.
However, the Delhi high court set aside this order in April 2019 allowing investigating agencies to attach secured properties as well.
“It’s a conscious decision. Earlier, we (ED) were fighting so many cases with the banks in various courts for keeping possession of the assets till the trial is over.
However, lately there is a realisation there is no point fighting the economic offenders as well as the banks,” said this officer. The agency, a second officer said, doesn’t want to be seen as a “villain” by not allowing banks to recover their money while the trial goes on for years.