Mumbai PMLA court clears ₹393.79 crore asset return in ₹828 crore Nakoda bank fraud
Synopsis
A Mumbai PMLA court has ordered the release of ₹393.79 crore in attached properties to legitimate claimants — largely the 13-bank consortium defrauded by Nakoda Limited. The ruling is a rare instance of PMLA restitution converging with insolvency liquidation, and signals courts' growing willingness to unwind frozen assets toward actual victims rather than leaving them in indefinite state attachment.
Key Takeaways
A Special PMLA Court in Mumbai ordered release of ₹393.79 crore in attached immovable properties to bonafide claimants in the Nakoda Limited bank fraud case.
Nakoda Limited , controlled by Babulal Gumanmal Jain and Devendra Babulal Jain , defrauded a 13-bank consortium led by Canara Bank of ₹828 crore .
The fraud involved 202 Inland LCs worth ₹827.98 crore discounted using fake Bills of Exchange without actual goods supply.
The ED had attached properties worth ₹375.71 crore in 2018 and ₹18.08 crore in 2019 under PMLA, 2002.
After the insolvency resolution process failed, NCLT Ahmedabad initiated liquidation; the liquidator sought and obtained the restitution order.
The ED submitted no objection to the release, citing PMLA's intent to restore proceeds of crime to legitimate claimants.
A Special Prevention of Money Laundering Act (PMLA) Court in Mumbai has ordered the release of attached immovable properties worth ₹393.79 crore to legitimate claimants in connection with an ₹828 crore bank loan fraud case involving Nakoda Limited and its promoters. The Enforcement Directorate's Surat Sub Zonal Office secured the favourable order on Tuesday, 5 August 2025, marking a significant step toward restitution in one of the larger money laundering cases pursued under PMLA.
Background: How the Fraud Was Executed
According to the ED, Nakoda Limited — owned and controlled by Babulal Gumanmal Jain and Devendra Babulal Jain — systematically defrauded a 13-bank consortium led by Canara Bank of ₹828 crore. The scheme involved routing funds through group entities using fraudulent Letters of Credit (LCs).
Of the 1,212 LCs worth ₹4,204.25 crore opened in favour of Nakoda Limited's vendors, 202 Inland LCs amounting to ₹827.98 crore devolved due to non-payment. Vendors had discounted these LCs using fake Bills of Exchange and invoices accepted by Nakoda Limited — without any actual supply of goods.
ED's Attachment and Legal Proceedings
The ED initiated its PMLA investigation and provisionally attached immovable properties worth ₹375.71 crore in 2018 and a further ₹18.08 crore worth of properties in 2019. Both sets of attachments were subsequently confirmed by the adjudicating authority.
The agency also filed a charge sheet and supplementary charge sheet before the Special PMLA Court in Mumbai, seeking confiscation of the attached assets as proceeds of crime. This is consistent with the ED's broader mandate to pursue proceeds of financial fraud under PMLA, 2002.
Insolvency Process and the Restitution Order
Separately, the National Company Law Tribunal (NCLT) at Ahmedabad initiated a Corporate Insolvency Resolution Process (CIRP) against Nakoda Limited. After the resolution process failed, liquidation proceedings commenced and the court-appointed liquidator filed an application before the Special PMLA Court seeking restoration of the attached properties.
Recognising the PMLA's intent to restore proceeds of crime to bonafide legitimate claimants, the ED submitted no objection to the release. The Special PMLA Court accordingly ordered the release of properties worth ₹393.79 crore to the liquidator, who will in turn disburse them to verified claimants — primarily the defrauded banks in the consortium.
Significance of the Order
This ruling underscores a growing judicial recognition that PMLA attachments, while essential for freezing illicit assets, must ultimately serve restitution — not indefinite state custody. Notably, this is one of the larger asset-return orders under PMLA in recent years, and it comes at a time when courts and insolvency tribunals are increasingly coordinating to resolve overlapping jurisdiction between PMLA and the Insolvency and Bankruptcy Code (IBC). The defrauded banks, which bore the brunt of the ₹828 crore loss, stand to recover a significant portion through this process.
Point of View
Not an end. For years, critics have argued that the ED's aggressive attachment strategy leaves victims — in this case, thirteen banks — waiting indefinitely while assets sit frozen in legal limbo. The coordination between the PMLA court and the NCLT liquidation process here is precisely the kind of institutional alignment that the IBC-PMLA overlap has historically struggled to produce. The real question is whether this becomes a template for faster restitution in other large fraud cases, or remains an exception driven by a failed resolution process forcing the issue.
NationPress
6 Aug 2026
Frequently Asked Questions
What is the Nakoda Limited bank fraud case?
Nakoda Limited, controlled by Babulal Gumanmal Jain and Devendra Babulal Jain, defrauded a 13-bank consortium led by Canara Bank of ₹828 crore by using fake Letters of Credit, Bills of Exchange, and invoices for goods that were never actually supplied. The ED investigated the case under PMLA, 2002, and attached properties worth over ₹393 crore across 2018 and 2019.
What did the Mumbai PMLA court order?
The Special PMLA Court in Mumbai ordered the release of attached immovable properties worth ₹393.79 crore to the court-appointed liquidator, who will disburse them to bonafide legitimate claimants — primarily the defrauded banks. The order was secured by the ED's Surat Sub Zonal Office on 5 August 2025.
Why did the ED not oppose the asset release?
The ED submitted no objection because PMLA's stated intent includes restitution of proceeds of crime to legitimate claimants. Since the insolvency resolution process for Nakoda Limited had failed and liquidation was underway, restoring the assets to verified creditors aligned with the law's purpose.
What role did the NCLT play in this case?
The National Company Law Tribunal (NCLT) at Ahmedabad initiated a Corporate Insolvency Resolution Process against Nakoda Limited. After that process failed, liquidation proceedings began and the liquidator filed an application before the PMLA court seeking restoration of the attached properties, which led to the restitution order.
Which banks were affected by the Nakoda Limited fraud?
A consortium of 13 banks led by Canara Bank was defrauded. The banks had issued Letters of Credit to Nakoda Limited's vendors; 202 of those LCs worth ₹827.98 crore devolved due to non-payment, leaving the consortium exposed to the full fraud amount.
