Setback for Electrotherm: PMLA Authority Upholds ED’s Asset Retention in Loan Fraud Case; Company Discloses Financial Impact [Read Order]

Electrotherm (India) Ltd., a listed company headquartered in Ahmedabad, has suffered a major setback after the Adjudicating Authority under the Prevention of Money Laundering Act (PMLA), New Delhi, upheld the Enforcement Directorate’s (ED) decision to retain the company’s frozen bank balances and seized assets. The development is linked to an ongoing investigation into a loan fraud case involving the company and its directors.

The company reported on on June 18, 2025, confirmed that the Adjudicating Authority allowed the ED’s Original Application No. 49 of 2025, filed under Section 17(4) of the PMLA, to retain movable properties, including two frozen bank accounts totaling Rs. 34.29 crore, one personal bank account of Executive Vice Chairman Mr. Shailesh Bhandari holding Rs. 83.18 lakh, and a seized vehicle. According to the ED, this retention is necessary for the continuation of its investigation.

The case arose from a First Information Report (FIR) filed by the Central Bureau of Investigation (CBI), Bank Securities and Fraud Branch (BS&FB), Mumbai in December 2021. The FIR was based on a complaint lodged by the Bank of India, which alleged that Electrotherm and its directors were responsible for a financial loss of Rs. 81.97 crore. This loss represents the gap between the outstanding dues of Rs. 631.97 crore and the amount of Rs. 550 crore for which the loan was assigned to Edelweiss Asset Reconstruction Company Ltd. on June 30, 2014.

In its disclosure, Electrotherm confirmed that the CBI FIR has been mentioned in its financial statements and annual reports since 2022. The company also pointed out that it had filed a petition before the Gujarat High Court in April 2024, seeking to quash the FIR. The High Court had issued notice on April 26, 2024, and proceedings remain pending.

In a related development, Electrotherm and Mr. Bhandari filed a separate petition in March 2025 to quash the ED’s Enforcement Case Information Report (ECIR). The Gujarat High Court issued notice on March 28, 2025, in that matter as well. Both cases are currently awaiting further hearing.

Electrotherm had earlier challenged the ED’s freezing of bank accounts before the Gujarat High Court. On January 29, 2025, the court passed an interim order, allowing the company and Mr. Bhandari to operate the bank accounts beyond the frozen amounts, pending further proceedings. The latest ruling from the PMLA Adjudicating Authority enables the ED to retain control over the frozen assets, reinforcing the seriousness of the investigation.

In its filing, the company explained that it will continue to pursue legal remedies and will make all required disclosures to the stock exchanges as per the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.

From a financial standpoint, the Rs. 34.29 crore frozen across bank accounts has a direct impact on the company’s liquidity. Electrotherm has not disclosed any broader operational disruption at this time.

The ED's ongoing investigation, coupled with the CBI FIR and the retention of significant funds, poses both reputational and financial challenges for the company. Investors and stakeholders will be closely watching the outcome of the High Court proceedings, which could determine whether Electrotherm is able to regain access to its assets and clear its name in the alleged loan fraud.

The situation remains fluid, and further developments are expected as the court cases progress.

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