ED Issues Provisional Attachment Order In Andaman And Nicobar State Co-operative Bank Fraud Case
The Enforcement Directorate has provisionally attached 40 properties valued at approximately 121.35 crore rupees in a case of alleged large-scale loan fraud involving the Andaman and Nicobar State Co-operative Bank Limited.
The second provisional attachment order was issued on 5 November 2026 by the Kolkata Zonal Office-II of the agency and made public through a press release on 11 November 2026.
According to the Enforcement Directorate, the matter centres on alleged irregularities in the sanctioning and disbursement of loans by the bank. The agency has named former Member of Parliament and former Vice-Chairman of the bank Kuldeep Rai Sharma, certain bank officials and their associates as persons who allegedly facilitated loans through shell companies. The Enforcement Directorate states that the loan proceeds were diverted and used to acquire land, hotels and other assets.
The agency has identified total proceeds of crime exceeding 500 crore rupees in the investigation. With the second provisional attachment order, the total value of properties attached in the case stands at approximately 326.91 crore rupees. An earlier provisional attachment order issued on 10 February 2026 had covered 51 immovable properties valued at about 205.56 crore rupees. That first attachment was confirmed by the Adjudicating Authority on 4 August 2026.
The second provisional attachment order covers 35 immovable properties and five movable properties. These include land parcels, the land and building of Joye Grand Hotel, two semi-submarine tourist vessels and bank balances held in three bank accounts. The Enforcement Directorate has stated that most of the attached properties were either purchased using diverted loan money or pledged to the bank at inflated values to obtain loans.
The agency has described the alleged mechanism of the fraud in detail. According to the Enforcement Directorate, the accused floated 23 shell companies that did not have genuine business operations. These companies allegedly used associates and other individuals as dummy directors. The purpose, the agency states, was to create borrowers through which substantial loans could be obtained from the bank.
The Enforcement Directorate has said that loans worth approximately 301.50 crore rupees were sanctioned to 21 of these 23 companies. Of this amount, loans of about 271 crore rupees across 18 companies later became non-performing assets. The agency has alleged that after the loans were sanctioned, the funds were withdrawn in cash, transferred through several bank accounts, used to purchase land and other assets, and placed in the names of family members and associates.
Apart from the 23 alleged shell companies, the Enforcement Directorate has also stated that large loans were illegally sanctioned to various other companies, including companies belonging to members of Kuldeep Rai Sharma’s family. According to the agency, these loans were also siphoned off and not repaid.
One of the allegations made by the Enforcement Directorate concerns the receipt of bribes by senior bank officials. The agency has stated that senior bank officials, including the Vice-Chairman and former Member of Parliament Kuldeep Rai Sharma and the Managing Director K. Murugan, took a bribe of about 5 per cent of the loan amount. The Enforcement Directorate has noted that K. Murugan has since died.
The second provisional attachment order also describes alleged manipulation of property valuations. According to the Enforcement Directorate, in several cases land purchased for approximately 1 crore rupees was shown as being worth 10 crore rupees or more in loan documents. The agency has stated that a bank-empanelled valuer assisted the accused persons in the fraudulent sanctioning of loans. The Enforcement Directorate has explained that properties were allegedly presented as collateral at values far higher than their actual purchase prices, enabling the bank to sanction loans exceeding the true value of the security.
Out of the 35 immovable properties attached under the second provisional attachment order, 15 were allegedly acquired through powers of attorney or sale agreements in the names of borrowers, accused persons and dummy directors. These properties were subsequently mortgaged to the bank to obtain loans that the Enforcement Directorate says were far above their actual value.
The Enforcement Directorate has specifically identified the land and building of Joye Grand Hotel among the assets attached. The agency has stated that most of the attached properties were either purchased using diverted loan money or pledged at inflated values.
The second provisional attachment order also covers two semi-submarine tourist vessels. According to the Enforcement Directorate, these vessels were imported from Croatia for approximately 2.11 crore rupees and registered in the name of Andaman Escapades Private Limited. The agency has alleged that the vessels were actually purchased for Kuldeep Rai Sharma using money from a fraudulent loan obtained in the name of Heyday Hospitality Services Private Limited.
The Enforcement Directorate has named several individuals in connection with the investigation. Kuldeep Rai Sharma, former Member of Parliament and former Vice-Chairman of the bank, is described as a central figure in the allegations. The agency has stated that he, along with bank officials and associates, facilitated the sanctioning of loans through shell companies in violation of banking rules and that he was among the senior officials who allegedly received approximately 5 per cent of the loan amount as bribes. The second provisional attachment order also links him to the alleged purchase of the two semi-submarine vessels.
K. Murugan, the former Managing Director of the bank, has been identified by the Enforcement Directorate as another senior official allegedly involved. The agency has stated that he and Kuldeep Rai Sharma allegedly received the bribes of about 5 per cent of the loan amount. The Enforcement Directorate has noted that Murugan has died.
K. Kalaivanan, a former loan officer of the bank, was arrested in the investigation. Sanjay Lal, a hotelier, was also arrested. The Enforcement Directorate has stated that these arrests formed part of its action in the money-laundering investigation arising from the bank fraud case.
The investigation has a longer history. On 15 May 2025 the Crime and Economic Offences Cell of the Andaman and Nicobar Police registered a first information report concerning alleged irregularities in bank lending. Between 31 July and 1 August 2025 the Enforcement Directorate conducted searches at 21 premises. On 17 September 2025 the agency announced the arrests of Kuldeep Rai Sharma, K. Murugan and K. Kalaivanan under the Prevention of Money Laundering Act. Sanjay Lal was arrested in November 2025.
On 14 November 2025 the Enforcement Directorate filed its first prosecution complaint before the Special Court under the Prevention of Money Laundering Act at Port Blair, naming 39 accused persons and entities. The first provisional attachment order followed on 10 February 2026. On 6 November 2026, a day after the second provisional attachment order, the Enforcement Directorate filed a supplementary prosecution complaint against Kuldeep Rai Sharma and 13 additional persons and entities. With the supplementary complaint the total number of accused persons and entities in the case has risen to 52.
The second provisional attachment order has been issued under the Prevention of Money Laundering Act, 2002. Provisional attachment is provided for under Section 5 of the Act. The Enforcement Directorate can provisionally attach property believed to be proceeds of crime or property involved in money laundering, subject to the conditions laid down in the statute. A provisional attachment is not a final confiscation of property. The matter proceeds to the Adjudicating Authority under Section 8 of the Act, where the persons concerned are given an opportunity to respond and the authority examines whether the property is involved in money laundering.
The Enforcement Directorate has stated that its investigation has identified more than 100 loan accounts involving various firms and shell companies, with fraud and non-performing asset exposure exceeding 500 crore rupees. In its earlier announcement in September 2025 the agency had also referred to approximately 230 crore rupees allegedly taken for the exclusive benefit of Kuldeep Rai Sharma and his associates, including the Managing Director and the loan officer. The later figures concerning the 23 shell companies provide a more specific breakdown of one part of the alleged network: 301.50 crore rupees sanctioned to 21 companies and 271 crore rupees turning into non-performing assets in 18 of them.
The Enforcement Directorate has described the alleged process as involving the creation of companies without genuine business activity, the sanctioning of substantial loans to those entities, the withdrawal and transfer of funds through multiple accounts, the purchase of properties in the names of associates and family members, and the presentation of some of those properties as collateral at inflated values. The agency has also alleged that senior bank officials received commissions linked to the loans.
The second provisional attachment order brings the total value of properties under attachment in the case to approximately 326.91 crore rupees. The first order covered 51 immovable properties valued at about 205.56 crore rupees and has been confirmed by the Adjudicating Authority. The second order covers 35 immovable properties and five movable properties valued at approximately 121.35 crore rupees and remains a provisional attachment at this stage.
The properties attached include ordinary land parcels as well as commercial assets such as the Joye Grand Hotel and the two semi-submarine tourist vessels. The Enforcement Directorate has stated that these assets are connected to the alleged diversion and utilisation of the loan proceeds. The vessels were imported from Croatia at a cost of about 2.11 crore rupees, registered in the name of one company and, according to the agency, financed through a loan taken in the name of another company for the benefit of Kuldeep Rai Sharma.
The investigation continues under the Prevention of Money Laundering Act. The Enforcement Directorate has filed both an original prosecution complaint and a supplementary complaint before the Special Court at Port Blair. The provisional attachments secure the properties pending further proceedings under the Act. The agency has identified the total proceeds of crime in the case as exceeding 500 crore rupees and has attached properties valued at approximately 326.91 crore rupees so far.
