Indian banks join forces against fugitive diamond merchant Jatin Mehta

Jatin Mehta and his family members, who are subject to a Worldwide Freezing Order (WFO) worth US$932.5 million by the high court in London, now face further challenge in the form of Indian banks who have come forward to submit proof of debt

Mumbai: Jatin Mehta and his family members, who are subject to a Worldwide Freezing Order (WFO) worth US$932.5 million by the high court in London, now face further challenge in the form of Indian banks who have come forward to submit proof of debt.

Indian banks join forces against fugitive diamond merchant Jatin Mehta

Mehta, his wife Sonia, and sons Vishal and Suraj, face allegations of misappropriating $1 billion obtained by way of bullion loan facilities going back to 2013.

Nearly a decade after Winsome Diamonds and Forever Precious Diamonds, companies owned by the Mehtas, defaulted on repayments to banks in India, the family is now feeling the heat in London.

In UK legal parlance, proof of debt is a document through which a creditor submits details of its claim against a debtor in order to be entitled to receive any money realised from the judgment debtor. Out of the total 15 consortium of Indian banks - Punjab National Bank, Bank of Baroda, Central Bank of India and at least three other banks have provided written confirmation to liquidators from Grant Thornton (who has been pursuing the case in the high court) that they would be sharing documents that would further strengthen the case against the Mehtas.

According to documents submitted to the high court in London, which have been seen by HT, Punjab National Bank - the largest creditor with a claim of $178.5 million - has indicated that it will submit a proof of debt. Bank of Baroda which has a $25 million claim has said that it is “actively considering” doing so, and Central Bank of India which is the second largest creditor after PNB has committed to submitting proofs of debt in due course. Although names have not been disclosed, HT has learnt that four of the consortium banks have submitted proof of debt. The high court has described the reluctance of Indian banks to participate in the claims in the UK “to legal and business factors peculiar to the Indian banking system”.

So far, only Standard Chartered Bank and Grant Thornton had pressed claims against Jatin Mehta and his family, who had said that 14 Indian consortium banks had not brought any claims against them in the UK. This had led to submissions from the Mehtas that the quantum of the claim should be restricted to only £50 million as only Standard Chartered had submitted proof of debt. However, the court had not agreed with that line of argument and even before submission of any documents from the other Indian banks had passed the WFO to the tune of $932.5 million, which represents the total debt due to all consortium banks. Now that more banks have come forward, they will make attempts to recover their debt to the maximum.

Jatin Mehta and his family were living in London in style and luxury even though they faced serious charges of fraud and money laundering. But after Grant Thornton and Standard Chartered Bank went to court they were subjected to significant spending restrictions due to the successful grant of the WFO. On November 23, the high court in London had declined the application from the Mehta family to discharge them from the WFO as the judge made the assessment that a good arguable case has been made out against them of a “major international fraud”.

Next week a jurisdiction challenge hearing will be heard in the high court where the Mehtas will argue that the UK court does not have jurisdiction over the case.