In a significant move, the Enforcement Directorate (ED) has restored immovable properties worth Rs 289.54 crore in the Pen Co-operative Urban Bank Ltd scam. These properties, now returned to the Competent Authority under the Maharashtra Protection of Interest of Depositors (MPID) Act, were previously attached by the ED as part of its investigation into financial irregularities and criminal activities tied to the bank.
The investigation was triggered by a complaint filed at Pen Police Station in Raigad district, Maharashtra. The ED’s probe revealed that the former office bearers of Pen Co-operative Urban Bank, in collaboration with the bank’s auditors, had engaged in criminal conspiracy. They allegedly manipulated the bank’s financial records to falsely report profits, causing a massive financial loss of Rs. 651.35 crore to the institution.
According to ED officials, the culprits had also misused the bank’s resources to finance their private investments. The funds were siphoned off through fraudulent cash credit accounts created within the bank, with the assistance of cheque discounters operating in the market. As a result, the ED provisionally attached several properties under Section 5 of the Prevention of Money Laundering Act (PMLA), 2002, in order to prevent the accused from further profiting from their criminal activities.
A total of 70.9 acres of Benami properties, estimated to be worth Rs. 25.20 crore, were initially attached in 2014 and 2015, as they were purchased using the illicit funds. These properties, located in Raigad district, were found to be registered under third-party names in an attempt to conceal the origin of the money.
As the investigation progressed, the ED filed a prosecution complaint in 2018 before the Hon’ble Special Court under PMLA, and the trial is currently ongoing. However, a legal complication arose when one of the depositors of Pen Urban Cooperative Bank filed a petition before the Bombay High Court in 2016, seeking the release of the attached properties. The court ruled in favor of the petitioner, directing the ED to hand over the properties to the MPID.
In response, the ED filed a Special Leave Petition (SLP) before the Supreme Court, which granted a stay on the Bombay High Court’s order. In the interim, the MPID authorities sought the confiscation of the attached properties under PMLA, and this request was filed before the Special Court in 2019.
Pen Co-operative Urban Bank Ltd, which had approximately 2 lakh depositors and 42,000 shareholders, faced a major financial collapse when these fraudulent activities came to light. The bank’s failure has resulted in substantial losses for the depositors who have been deprived of their hard-earned money.
Given the ongoing restitution efforts and the larger interest of the depositors, the ED eventually decided to take a pragmatic approach and withdrew the SLP before the Supreme Court. An affidavit was filed before the court, which allowed the withdrawal of the petition on December 13, 2024. This decision opened the door for the restoration of the properties as per the earlier Bombay High Court order.
On January 14, 2025, the Special Court under PMLA granted approval for the ED’s application, allowing the restitution of 29 immovable properties worth Rs. 289.54 crore to the Competent Authority under the MPID Act. This move is expected to benefit the depositors of Pen Co-operative Urban Bank Ltd, who have been waiting for justice after their financial losses.
The restitution of these assets is a major victory for the ED and signals the government’s commitment to protecting the interests of depositors. As the investigation into the Pen Co-operative Urban Bank scam continues, the restoration of properties marks a significant step toward bringing justice to those affected by the fraudulent activities that led to the collapse of the bank.
