18 ECIRs Registered Against Co-Operative Societies/Banks, Large Scale Money Laundering Being Carried Out: ED Tells Kerala High Court

The affidavit by the ED was submitted before the Division Bench of Justice Amit Rawal and Justice K.V. Jayakumar. It was submitted that large scale money laundering have been carried out in Co-operative Societies and Banks in Kerala and that the ED is carrying investigation for taking action under the Prevention of Money-Laundering Act, 2002.

The ED informed this to the Court pursuant to an order of the Court in a writ appeal. The writ appeal was filed by depositors who made fixed deposits to Co-operative Societies and Banks, alleging claiming that they were unable to withdraw their Fixed Deposits upon maturity or access the funds from their Savings Bank Accounts using cheques due to large scale misappropriation of money.

The writ petition was thus filed seeking direction to Co-operative Societies and Banks for releasing Fixed Deposits/Saving Bank Deposit amounts to the depositors. The writ petition was disposed of by directing Co-operative Societies and Banks to avail financial assistance under the Kerala Co-operative Deposit Guarantee Scheme, 2018 and the Kerala Co-operative Revival Scheme, 2024 for discharging their liability. The Co-operative Societies and Banks were also permitted to recover outstanding amounts for paying Fixed Deposits/Saving Bank Deposit amounts to the depositors.

However, the writ appeal was filed by the appellant-fixed depositors claiming that Co-operative Societies and Banks availing financial assistance under the government schemes would not help depositors in getting back their loan amounts. On noting that misappropriation of funds by the Co-operative Societies and Banks, the Court had suo moto impleaded the ED as an additional respondent in the writ appeal. The Court had also directed ED to file an affidavit giving details of pending cases.

In the affidavit filed by ED, it was stated that Co-operative Societies were granting illegal loans with or without the knowledge of borrowers. It was also stated that irregular loans were granted by over valuing mortgaged property and even multiple loans were granted on the same mortgaged property. It is also stated that loans were granted to ineligible persons and outside the jurisdictional limits of Co-operative Societies.

ED further that many Co Operative Societies were not initiating recovery proceedings for overdue loans while the offenders were in positions of authority within the Societies.

The matter has been posted to March 03, for further hearing.

Case Title: K.S.Purushothaman v State of Kerala

Case No: WA 2045/2024