Indian Authorities Return Seized Assets in Multi-Crore Bank Fraud Investigation

Indian enforcement authorities have restituted immovable properties valued at Rs 1.44 crore (£135,000) to the Bank of India as part of a complex loan fraud investigation that exposed how corporate entities allegedly used forged documents to obtain substantial credit facilities from financial institutions. The case, which originated from a 2014 police complaint, highlights ongoing challenges in India's financial crime enforcement and the decade-long journey to recover misappropriated funds.

Background and Context

The investigation traces back to May 19, 2014, when Haroli Police Station in Una district of Himachal Pradesh registered FIR No. 92 against Arvind Casting and others under various sections of the Indian Penal Code. The complaint alleged systematic fraud wherein the company secured loans from financial institutions through fabricated documentation, subsequently defaulting on repayment obligations. This case represents a broader pattern of banking fraud that has prompted increased regulatory scrutiny in India's financial sector, where such schemes have historically cost lenders billions annually.

Key Figures and Entities

Central to the investigation is Arvind Casting, a private manufacturing company accused of orchestrating the loan fraud scheme. According to Enforcement Directorate findings, the company and associated individuals obtained credit facilities in 2014 through deliberate misrepresentation and document forgery. Rather than utilizing the funds for their stated business purposes, investigators determined that the money was systematically diverted to related entities, creating a complex web of transactions that obscured the ultimate destination of the misappropriated funds. The Bank of India emerged as the primary victim institution, though the investigation suggests the scheme may have involved multiple financial entities.

Legal and Financial Mechanisms

The Enforcement Directorate's investigation operated under the Prevention of Money Laundering Act (PMLA), 2002, which provides authorities with powers to attach and subsequently confiscate proceeds of crime. The agency initially provisionally attached properties worth approximately Rs 3.51 crore, which were later confirmed by the Adjudicating Authority under the PMLA. On June 15, 2020, the ED filed a prosecution complaint before the Special Judge (PMLA) in Dharamshala, which took cognizance on March 1, 2021. The recent restitution follows a legal process wherein the ED submitted a no-objection before the Special Judge, seeking partial release of attached assets to compensate the victim bank—a mechanism designed under the PMLA to restore losses to legitimate claimants while maintaining broader confiscation objectives.

International Implications and Policy Response

While this case remains within India's jurisdiction, it reflects global challenges in combating sophisticated financial crimes and demonstrates the importance of robust asset recovery mechanisms. The decade-long timeline from initial investigation to partial restitution highlights systemic delays that undermine the deterrent effect of anti-money laundering measures worldwide. International bodies, including the Financial Action Task Force, have consistently emphasized the need for more efficient asset recovery processes, noting that extended legal proceedings significantly reduce the likelihood of successful restitution. This case contributes to ongoing policy discussions in India and internationally about balancing rigorous investigation with timely victim compensation, particularly in banking fraud cases that directly impact financial stability and public trust in lending institutions.

Sources

This report draws on official statements from the Enforcement Directorate, court documents from the Special Judge (PMLA) in Dharamshala, police records from Himachal Pradesh, and the Indian Penal Code. The case progression was tracked through legal filings between 2014 and 2026, with the final restitution order issued on January 6, 2026.