ED searches jewellers in Rs 645 crore Haryana government funds diversion probe

The Enforcement Action

The Directorate of Enforcement (ED), Chandigarh Zonal Office-II, has searched 14 premises across Chandigarh, Mohali and Panchkula in its money laundering investigation into the alleged embezzlement of Rs. 645 crore of public funds held by the Government of Haryana, the Chandigarh Municipal Corporation and other government accounts. The action is set out in an ED press release dated 2 October 2026.

According to the release, the searches covered several jewellers and associated entities - Malik Jewellers, KLG Jewels and its associate entities, M.B. Gold Traders, Sham Jewellers and Sunder Jewellers - and a person the ED says "allegedly acted as a middleman" in routing the funds. The ED states that it recovered and seized cash of Rs. 4.30 crore, froze bank balances of about Rs. 22 crore held by the jewellers and associated entities, and seized documents and digital evidence.

The underlying matter concerns government money held in accounts at IDFC First Bank and AU Small Finance Bank. The ED's investigation began from an FIR registered in February 2026 over discrepancies in the balances of accounts of Haryana's Development and Panchayat Department. The ED states that, so far in the case, it has arrested four people, attached, seized or frozen assets worth about Rs. 211 crore, and filed a prosecution complaint against 14 accused before the Special Court (PMLA), Panchkula.

A search is an investigative step. Being searched is not a finding of wrongdoing, and no court has yet ruled on the allegations. No public response from the entities searched is recorded in the ED's releases.

How the Scheme Worked

The ED has described its case across six releases between March and October 2026. Everything below is the agency's account at the investigation stage.

The diversion. According to the ED's release of 13 March 2026, government funds were meant to be kept as fixed deposits with the bank, but "the accused persons diverted these government funds without authorisation". The release of 31 July 2026 alleges that forged fixed deposit receipts, forged RTGS/NEFT request letters, forged debit notes, forged account statements and manipulated banking records were used to move money from the government's accounts at IDFC First Bank to a set of entities the ED describes as shell entities: Capco Fintech Services, Swastik Desh Projects, RS Traders, SRR Planning Gurus Pvt Ltd and Maa Vaibhav Laxmi Interiors.

The people the ED has named. The ED arrested Ribhav Rishi and Abhay Kumar, whom it describes as former employees of IDFC First Bank, on 11 May 2026. Per the July release, Abhay Kumar served as a Relationship Manager at the bank, and the ED alleges he facilitated unauthorised transactions and the processing of forged documents. The ED alleges that Ribhav Rishi controlled several of the shell entities. It arrested Vikram Wadhwa, a Chandigarh-based real estate developer, on 29 May 2026, alleging he received more than Rs. 70 crore in his personal account. It arrested Naresh Kumar, a superintendent in Haryana's Development and Panchayat Department, on 10 June 2026, alleging he received Rs. 1.20 crore and acted as a middleman for certain public servants.

The jewellery layer. This is the focus of the October searches. According to the ED, "hundreds of crores" moved from the shell entities to jewellers, who allegedly handed back cash against those bank transfers, creating "an illusion of gold purchase through bogus billing", per the March release. The October release alleges that Malik Jewellers, the KLG group, M.B. Gold Traders, Sham Jewellers and Sunder Jewellers received about Rs. 58 crore, Rs. 26 crore, Rs. 5 crore, Rs. 3.66 crore and Rs. 3.15 crore respectively. The ED alleges the cash ultimately reached government servants, and notes that the CBI has filed a third chargesheet before the Special Court in Panchkula naming six Haryana-cadre IAS officers and other government servants in the related bank fraud case.

Procedural history. The sequence, per the releases: an FIR in February 2026; ED searches at 19 premises on 12 March 2026, with more than 90 bank accounts frozen; arrests in May and June 2026; a prosecution complaint and a provisional attachment of Rs. 200.84 crore announced on 31 July 2026; and the October searches.

The Law Invoked

The ED's releases in this matter cite the following provisions of the Prevention of Money Laundering Act (PMLA), 2002:

• Section 19 - the power of an authorised ED officer to arrest a person where there is reason to believe, based on material in hand, that the person is guilty of money laundering. The four arrests in this case were made under this section.
• Section 5(1) - the power to provisionally attach property believed to be proceeds of crime, so it cannot be transferred while proceedings continue. The ED used this to attach Rs. 200.84 crore of assets, per its July release.

The ED's case rests on underlying FIRs registered by the Anti-Corruption Bureau, Haryana, the Economic Offences Wing of Chandigarh Police and the CBI, according to the July release. The releases do not quote the specific penal sections in those FIRs, so this report does not list them. Under the PMLA, the ED investigates what happened to alleged proceeds of a predicate crime - how the money was moved, disguised and used - while the predicate offences are investigated and tried separately.

What Happens Next

The ED's prosecution complaint against 14 accused is before the Special Court (PMLA), Panchkula. The court decides whether to take cognizance, after which charges are framed and trial follows. The CBI's chargesheets in the related bank fraud case proceed separately before the Special Court in Panchkula.

The provisional attachment must be confirmed by the Adjudicating Authority under the PMLA. Its orders can be challenged before the Appellate Tribunal and then the High Court. Bank balances frozen during searches can likewise be contested by the account holders. The ED says further investigation is in progress, so additional searches, attachments or supplementary complaints are possible.

Throughout, the matter remains at the allegation stage. A chargesheet, FIR or provisional attachment contains allegations, not findings of guilt; the accused are presumed innocent until proven guilty, and due process continues.

What It Means

The case, as the ED describes it, turns on forged fixed deposit receipts and forged transfer instructions. The money was supposed to sit in fixed deposits; the documents that said it did were allegedly not genuine. That risk is not limited to government departments. Any depositor who relies on paper FD receipts or a single relationship manager, rather than checking the bank's own records, is exposed to the same type of manipulation.

The practical safeguard is independent verification. Check every fixed deposit through the bank's internet banking or app, or with a branch officer other than the person who booked it. Reconcile account statements regularly, and treat any mismatch between your records and the bank's as urgent. Never sign blank transfer forms, and make sure transfer instructions require more than one signatory where the account allows it. If something does not add up, raise a complaint with the bank in writing and, if unresolved, with the RBI's Integrated Ombudsman Scheme.

The jewellery angle reflects a documented pattern in laundering cases: converting bank money into cash through apparent gold purchases backed by inflated or bogus invoices. For ordinary buyers, the takeaway is simple - insist on a proper GST invoice and hallmarked gold, and avoid arrangements that mix bank transfers with cash adjustments.

FAQ

Does the ED's action mean the people it named are guilty?

No. A chargesheet (or FIR / provisional attachment) contains allegations, not findings of guilt; the accused are presumed innocent until proven guilty, and due process continues. The ED's figures and descriptions are its own allegations at the investigation stage. Being searched is not an accusation of an offence. Only the Special Court can decide guilt, after a trial.

What exactly did the ED do on this occasion?

Per its release dated 2 October 2026, the ED's Chandigarh Zonal Office-II searched 14 premises in Chandigarh, Mohali and Panchkula, covering several jewellers and associated entities. It says it seized Rs. 4.30 crore in cash, froze about Rs. 22 crore in bank balances and seized documents and digital evidence.

Is IDFC First Bank accused in the ED case?

The ED's releases name two former employees of the bank among the accused, and describe government accounts held with IDFC First Bank and AU Small Finance Bank. The releases do not list either bank as an accused. The 14 accused in the prosecution complaint are individuals and entities named in the ED's release of 31 July 2026.

How can I protect my own fixed deposits?

Confirm each deposit directly through the bank's app, internet banking or a separate branch officer, rather than relying only on a paper receipt. Reconcile statements regularly, avoid signing blank instructions, and complain in writing if records do not match. Unresolved complaints can go to the RBI's Integrated Ombudsman Scheme.

Can the ED's actions be challenged?

Yes. Provisional attachments must be confirmed by the Adjudicating Authority, with appeals to the Appellate Tribunal and the High Court. The accused can contest the prosecution complaint at trial and seek bail before the courts. Holders of frozen accounts can also challenge the freezing.

This report is based on the official ED press release dated 2 October 2026, read with the ED's earlier releases of 31 July 2026, 13 March 2026 and 12 May 2026. It was surfaced via coverage in Inventiva.