PNB Mehul Choksi Fraud: In a significant development, a special court in Mumbai has given permission to two banks to evaluate and sell some properties owned by fugitive economic offender Mehul Choksi. Choksi, a diamond merchant, is wanted in connection with the massive ₹13,000 crore Punjab National Bank (PNB) fraud. The money obtained from the sale of these properties will be held in fixed deposit accounts under the court’s name.
Why Are the Properties Being Sold?
The two banks, Punjab National Bank (PNB) and ICICI Bank, had approached the court, arguing that the delay in selling the properties was affecting their ability to recover public funds. They also pointed out that the properties are deteriorating over time due to general wear and tear, which is reducing their market value.
The banks had made a similar request to the court back in 2022 but were seeking fresh approval due to the ongoing delay. They emphasized that selling the properties as soon as possible would help prevent further depreciation and aid in recovering the public money lost in the fraud.
Court’s Decision
After considering the arguments, Special Judge SM Menjoge granted permission to the banks to conduct a valuation of Choksi’s properties and sell them. However, this applies only to properties held by entities other than Gitanjali Gems Ltd (GGL), Nakshatra Brands Limited (NBL), Nakshatra World Limited (NWL), and Gili India Limited—companies associated with Choksi’s business empire.
The judge stated that the money generated from the sale would be deposited in fixed deposit accounts in the names of the court in both PNB and ICICI Bank. The final distribution of these funds would depend on the outcome of ongoing cases under the Prevention of Money Laundering Act (PMLA).
Bank’s Argument and Agreement with Enforcement Directorate (ED)
The banks, represented by advocates Lalan Gupta, Anuj Loya, and Megh Maneshinde, informed the court that they had earlier met with the Enforcement Directorate (ED) in January. During this meeting, it was agreed that the banks could proceed with monetizing the properties while the legal proceedings continued.
The court order states that the valuation of the properties will be conducted as per applicable laws, and they will then be auctioned. The sale proceeds will be kept in fixed deposit accounts in the names of the court at ICICI Bank and PNB.
Understanding the Prevention of Money Laundering Act (PMLA)
Under the PMLA, if a trial cannot be conducted for some reason, a special court has the power to release or confiscate properties. The court may also restore confiscated properties to individuals or entities with a legitimate claim.
Background: The Mehul Choksi Case
Mehul Choksi, along with his nephew Nirav Modi, is accused of defrauding PNB of ₹13,000 crore through fraudulent letters of undertaking (LoUs). The scam came to light in 2018, after which an arrest warrant was issued for Choksi. However, he fled India and is currently a fugitive living abroad. His trial is yet to begin in India.
In 2018, the Enforcement Directorate (ED) attached 41 of Choksi’s properties, valued at over ₹1,217 crore. These properties include:
- Two luxury flats in Mumbai.
- A shopping mall in Kolkata.
- 27 acres of land on the Mumbai-Goa Highway.
- 101 acres of land in Tamil Nadu.
- Lands in Nashik, Nagpur, and Andhra Pradesh.
- Two bungalows in the upscale Alibaug area.
- Several offices in Surat.
The banks are now working to sell these properties to recover some of the money lost in the fraud.
What Happens Next?
As the banks proceed with the valuation and sale of Choksi’s properties, the funds collected from these sales will remain with the court until a final decision is made on how to distribute them. The case against Choksi continues under the PMLA, and it remains to be seen when the trial will begin.
This is a crucial step toward recovering public funds and holding economic offenders accountable, even if they are no longer in the country. The sale of these properties will help ensure that at least some of the lost money is returned to the public, and it highlights the ongoing efforts of Indian agencies to crack down on economic crimes
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