Mehul Choksi case: Restitution to defrauded investors back in spotlight
The recipients of this money will include 7.5 lakh people across the country who were duped by the Rose Valley Group/
On Saturday, the same day diamantaire Mehul Choksi was arrested in Belgium at India’s request, Union minister of state for finance Pankaj Chaudhary in New Delhi, handed over a bank demand draft of ₹515.31 crore to Justice (retired) DK Seth. The latter is chairman of the Calcutta high court–appointed Asset Disposal Committee, and the money will be used to pay back defrauded investors in the over ₹17,520 crore Rose Valley Ponzi scam that has its roots in multiple states.
The recipients of this money will include 7.5 lakh people across the country who were duped by the Rose Valley Group that promised gullible investors land parcels and time share in hotels. Following investigation by the Enforcement Directorate 3.1 million claims were registered with the high court-appointed Asset Disposal Committee.
While the ₹515.31 crore recovered is a relatively small amount, for Rahul Navin, director ED, the recovery was yet another step in the agency’s efforts to recoup losses for duped investors and banks. Until July 2024, assets worth ₹15,200 crore had been restituted in three cases--the ₹12,500-crore Punjab National Bank case involving Mehul Choksi and Nirav Modi, the ₹5,600 crore National Stock Exchange Limited case involving Jignesh Shah and the ₹ 9,200 -crore Kingfisher Airlines bank loans cases against Vijay Mallya. All three cases were investigated by ED in Mumbai. But this restitution process has since been accelerated and transformed into a pan-India drive. In the last nine months alone assets worth ₹30,751 crore have been restituted in as many as 34 cases, say officers in the ED who requested they not be quoted.
The Prevention of Money Laundering Act, 2002, (PMLA) provides that the Special Court may order to restore or return any properties, cash or assets found to be involved in money laundering to verified individual victims or a third-party claimant with legitimate interest, including banks. The process is executed after assets under the scanner get attached then confiscated. Dismayed by the slow pace of restitution until then, ED director Navin last August constituted a dedicated Restitution Committee headed by Special Director, eastern region, to give the process a fillip.
The officer who headed the Choksi and Nirav Modi probe as also the NSEL and the Kingfisher Airlines’ case while in Mumbai was sent on a special assignment to the Kolkata- headquartered Eastern Zone, and given jurisdiction over 10 states and a range of cases. “The Directorate of Enforcement has made significant progress successfully restoring properties valued at approximately ₹30,751.71 crore to victims or legitimate claimants,” an ED officer told HT on Monday.
Restitution remains a painstaking and necessarily slow process though. For instance, diamantaire Mehul Choksi owes the Punjab National Bank and the ICICI Bank over ₹6000 crore. In September 2024, ED’s Mumbai unit collaborated with the two banks seeking restitution of assets in the special PMLA court. Subsequently, the court allowed “monetisation of properties” worth ₹2, 565.90 crore attached or seized by ED. In pursuance to that order, the process of handing over of assets was initiated and properties worth more than ₹125 crore were handed over to the liquidator of Choksi-owned M/s Gitanjali Gems Ltd the same month. These included four flats in Mumbai and two factories and a plot of land in Andheri. Restitution proceedings of the rest of the properties is underway.
Similarly, in January, the Mumbai unit of ED transferred immovable properties valued at ₹289.54 crore to the competent authority under the Maharashtra Protection of Interest of Depositors (MPID) Act. These assets, linked to the Pen Urban Co-operative Bank fraud, will get liquidated to compensate the victims. The bank—which had over two lakh depositors and 42,000 shareholders—suffered massive losses due to alleged fraudulent activities, according to ED officials.
ED launched its investigation following an FIR filed by Pen police on March 22, 2011. The investigation uncovered that the bank’s officials, in collusion with auditors, allegedly falsified accounts and created backdated fake entries. This manipulation resulted in a loss of ₹651.35 crore, affecting 2.01 lakh investors. A writ petition by one of the bank’s depositors led to a directive from the Bombay High Court on October 7, 2016, instructing ED to hand over the attached properties to MPID authorities. Subsequently, on February 1, 2019, the MPID authorities filed an application with the PMLA special court seeking the restitution of the properties. This application was granted on January 14, 2025, facilitating the long-awaited relief for victims.
“The Rose Valley case and other restitutions are in line with the agency’s commitment to return the money looted from poor people,” added the ED officer cited in the first instance, asking not to be named. “The agency is actively pursuing investigations in cases of financial fraud, with a firm commitment to ensure that the proceeds of crime are not only traced and confiscated but also put immediately to productive use for the economy by being restored to the victims who have suffered financial loss. For instance, if ED and courts restore ₹25,000 crore to the banks, it will ultimately enable them to give credit worth 10 times of that amount.”
“Of the total funds collected by the accused firms in the Rose Valley case, ₹6,666 crore remained unpaid to the investors and constituted the proceeds of crime in ED’s case,” agency officials said.
