₹4,627.24 crore bank fraud: HC refuses to hear fugitive diamantaire Jatin R Mehta’s petition in his absence

Diamond trader Jatin R Mehta withdrew his petition against the Fugitive Economic Offenders Act after the Bombay High Court refused to hear it in his absence.

MUMBAI: Diamond trader Jatin R Mehta on Tuesday withdrew his petition challenging certain provisions of the Fugitive Economic Offenders (FEO) Act, 2018, after the Bombay High Court expressed disinclination to entertain the plea filed through a power of attorney holder while he remained out of the country.

₹4,627.24 crore bank fraud: HC refuses to hear fugitive diamantaire Jatin R Mehta’s petition in his absence

Mehta had moved the high court in 2022 through his power of attorney holder, Shreya Sinha. After Sinha’s death, his counsel sought to substitute her with another power of attorney holder. However, a division bench of justices Bharati Dangre and Manjusha Deshpande indicated it was not inclined to hear the petition in Mehta’s absence, particularly as the petitioner was outside India. Following the court’s observations, the plea was withdrawn.

The development comes a month after another division bench of the high court, in proceedings involving liquor baron Vijay Mallya, refused to hear his challenge to the constitutional validity of certain provisions of the FEO Act unless he appeared before the court. “Tell your client to appear in court first, and then we will hear the matter. Take instructions on when he will come,” the bench of chief justice Shree Chandrashekhar and justice Gautam Ankhad had told Mallya’s counsel.

Mehta and several others linked to his companies- M/s Winsome Diamonds and Jewellery Ltd (WDJL) and M/s Forever Precious Jewellery Diamond Ltd (FPJDL)- are accused of defrauding public sector banks to the tune of ₹4,627.24 crore.

Since March 2014, the Bank Securities and Frauds Cell of the Central Bureau of Investigation (CBI) has registered multiple FIRs against Mehta, his companies and several associated persons, including his wife Sonia and son Suraj.

According to a CBI chargesheet filed in June 2018 in a case registered in September 2016, Mehta allegedly floated several shell companies in the United Arab Emirates in collusion with a local resident and began an export-import business. The agency alleged that the firms imported raw gold from bullion banks and private entities to factories in Chennai and Cochin, converted it into coins and pendants, and sold them in the open market in India.

The CBI further alleged that the import-to-sale cycle took only five to six days, but the companies availed credit facilities of up to 270 days, enabling them to round-trip funds and project inflated turnover.

Based on the purported high turnover, the accused allegedly obtained enhanced working capital limits, induced banks to disburse funds, and siphoned off money by routing it as losses in derivative trading through overseas buyers, the agency said. The proceeds were allegedly routed through foreign companies and ultimately channelled into accounts of entities owned and controlled by Mehta’s wife and son.

The agency claimed the alleged fraud caused losses of ₹4,627.24 crore to eight public sector banks, including ₹1,658.08 crore to Punjab National Bank, around ₹955 crore to Central Bank of India, and around ₹746 crore to Canara Bank.