The Directorate of Enforcement (ED) has provisionally attached 88.47 acres of land located in Alibaug, associated with Jai Corp Limited and others, amid an investigation into money laundering activities. The properties are currently valued at around Rs 336 crore, marking a significant move under the provisions set by the Prevention of Money Laundering Act (PMLA), 2002.

This action was prompted by an investigation initiated following a First Information Report (FIR) registered by the Economic Offences Branch of the Central Bureau of Investigation (CBI) in Mumbai. The FIR stems from a Bombay High Court directive issued on January 31, 2025, which calls attention to alleged financial irregularities and fund diversions involving Jai Corp Limited and affiliated entities.

The ED’s investigation suggests the financial operations in question may have involved Urban Infrastructure Venture Capital Limited and Urban Infrastructure Trustees Ltd, among others. The agency that Jai Corp initiated an Urban Infrastructure Venture Capital Fund (UIVCF) in the fiscal year 2006-07, collecting approximately Rs 2,434 crore from diverse investors, including public sector banks and various financial institutions.

Allegations of Undervalued Fund Assets

The investigation further disclosed alleged misconduct related to the valuation of fund assets. Reports indicate that the fund’s term was extended beyond the allowed duration without necessary approval from the Securities and Exchange Board of India (SEBI). Subsequently, SEBI mandated that the fund be dissolved and instructed an independent valuer to assess the assets held in the special purpose vehicles (SPVs).

The ED’s findings revealed severe undervaluation of the fund’s investments in the SPVs, which were listed at Rs 269.20 crore. Consequently, this led to investors exiting at a significantly diminished value compared to their original investments. Additionally, it has been reported that residual fund units were acquired at a loss by five entities connected to the promoters of Jai Corp Limited.

This entire scenario raises serious concerns regarding investor transparency and the management of the funds involved. According to estimates by the ED, the proceeds of crime from this case are approximately Rs 230 crore, attached to immovable properties of the said SPV as of October 31, 2022.

Links to Alibaug and Previous Actions

The investigation identified Neelkanth Township and Constructions Private Limited as one of the SPVs implicated, where the UIVCF invested Rs 51 crore for land acquisitions in Alibaug. Allegations indicate that the fair market value of the fund’s stake in this SPV was suppressed, resulting in the stake being sold at an undervalued price to the linked entities of Jai Corp’s promoters.

In an earlier phase of this ongoing investigation, the ED conducted search operations that led to discoveries of significant financial irregularities. Approximately Rs 1.86 crore in cash was seized during these operations, highlighting the magnitude of this case. Additionally, balances in demat accounts and mutual funds worth around Rs 99.47 crore have also been frozen.

As the investigation progresses, the ED has indicated its commitment to pursuing all leads related to the case. The attachment of properties and assets underscores the gravity with which the agency is addressing these allegations, focusing on restoring financial integrity and protecting investors.

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