Court orders to deposit proceeds of Nirav Modi’s London flat to Centre

The earlier order provided only for confiscation of Modi’s properties but did not contain any specific directions about the proceeds from sale

MUMBAI: A special PMLA (Prevention of Money Laundering Act) court last week declared that the Central Government was entitled to proceeds from the sale of a London property belonging to fugitive diamond trader Nirav Modi and directed that the amount be deposited with the central government.

Court orders to deposit proceeds of Nirav Modi’s London flat to Centre

Nirav Modi was declared a fugitive economic offender in 2019, after he failed to surrender to the Indian prosecuting agencies investigating the ₹13,850 crore fraud at Punjab National Bank (PNB). Soon after, the court granted the Enforcement Directorate’s (ED) request to confiscate 68 properties worth ₹329.66 crores associated with Modi, including a flat 103 in Marathon House, 200 Marylebone Road, London.

Special judge SM Menjoge on March 30 issued a modification to the order clarifying that the amount received from sale or auction of the immovable property be deposited with the Government. “Amount received from sale, auction or in any form including winding up proceeding of said property be credited/paid to Central Govt. of India and Central Govt. of India shall be entitled to receive the same,” the clarificatory order stated.

The earlier order provided only for confiscation of Modi’s properties but did not contain any specific directions whereby the amount so received by disposal of the said property be credited or paid to Central government of India and therefore the ED sought the clarification / modification.

ED’s lawyer Arvind Aghav sought the clarification, pointing out that BVI Company illegally held the prime property in London through a trust which had filed an application before the UK High Court for winding up and disposal of its assets, including the London flat.

“London property is illegally held by BVI Co.,103, Marathon House Ltd. having its address at Trident Chambers Tortola, British Virgin Islands within Trust Structure. In January 2023, Deposit Trust filed an application before the UK High Court for winding up of Trust and to obtain order for disposal of assets held by Trust which includes London property also. Enforcement Directorate participated in the proceeding before the UK High Court for repatriation of confiscated assets into India by way of winding of ‘Deposit Trust’,” the agency submitted.

In June 2023, after the Trust obtained an order from the UK High Court to dispose of assets held by them, including the London property, the law firm representing Indian agency before UK court brought it to the agency’s notice the fact that the ‘confiscation order may become infructuous in the jurisdiction of English Court if the property ceases to be “recoverable property”,’ following which the agency prayed for modification in the 2020 order.

“I find that necessary clarification cum modification in order passed by this court is necessary in the interest of justice otherwise order of confiscation passed by this court would render un-executable/ infructuous,” the special judge said on March 30, clearing the hurdle that created barrier for the Indian agencies to get the funds credited to the Government of India.

CBI on January 31, 2018, registered a case against Nirav Modi, his Firestar Group, his brother Neeshal and several others, including some PNB officers for allegedly defrauding the public sector bank of crores of rupees.

Investigation by the CBI has revealed that between 2011 and 2017, in all 1214 Letters of Undertakings (LoUs) totaling to $ 3.7 billion (approximately ₹23,780 crore) were fraudulently issued by PNB to various overseas banks to finance imports by Modi’s firms.