Sessions court stays magisterial court proceedings against Choksi, others

MUMBAI: The sessions court on Wednesday stayed the proceedings issued against Mehul Choksi, fugitive diamond trader, Vipul Chitalia, former vice-president of Gitanjali Group, and others in connection with a case registered by the Central Bureau of Investigation (CBI) following a complaint lodged by the Industrial Finance Corporation of India (IFCI)

MUMBAI: The sessions court on Wednesday stayed the proceedings issued against Mehul Choksi, fugitive diamond trader, Vipul Chitalia, former vice-president of Gitanjali Group, and others in connection with a case registered by the Central Bureau of Investigation (CBI) following a complaint lodged by the Industrial Finance Corporation of India (IFCI).

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The magistrate court had on March 2, 2023, issued process against eight accused — Choksi’s Gitanjali Gems Ltd (GGL), Choksi, Chitalia, Narendra Jhaveri, Pradip Shah, Shrenik Shah, Keyur Mehta and Aniyath Nair.

Chitaliya had approached the sessions court through his lawyers, Vijay Agarwal and Rahul Agarwal, challenging the order passed by the magistrate court claiming that the court had failed to take into consideration that the chargesheet filed by the CBI was incomplete and was not accompanied by necessary documents.

He further contended that the magistrate court “acted with undue haste and has passed the order without appreciating the fact that the alleged offence was not made out against” Chitalia. His lawyers contended that the documents attached to the chargesheet were all photocopies and were not original documents, which cannot be considered as evidence.

The sessions court stayed the proceedings before the magistrate court observing that “prima facie the impugned order does not reflect that any opinion was formed by the trial court on the basis of the material contents of the chargesheet.”

The CBI had on April 30, 2022, registered a case against Gitanjali Gems and others based on a complaint filed by the IFCI. The IFCI alleged that Gitanjali Gems had in March 2016 approached them seeking financial assistance for meeting their long-term working capital requirements and induced the IFCI to sanction Corporate Loan of ₹25 crore.

The IFCI disbursed the entire loan amount of ₹25 crore after the fraud-hit firm pledged some shares, gold, diamond, and gold-studded jewellery valued around twice the loan amount.

After Gitanjali Gems had started committing defaults in repayment of the loan instalments, to recover the instalments, the IFCI invoked the pledge and out of 20,60,064 shares, the IFCI could only sell 6,48,822 shares amounting to ₹4.07 crore, as the client ID of Choksi was suspended by the National Stock Depository Limited.

Besides, it was alleged that Choksi, with dishonest and fraudulent intention, colluded with the valuers and got the valuation of the pledged jewels done with exorbitant and inflated value and that the diamonds pledged with the IFCI were of low quality. When the IFCI checked the quality of the jewels, it found that the jewels were grossly over-valued and in June 2018, declared Gitanjali Gems’ account a non-performing asset.

Choksi, a prime accused in ₹13,850 crore fraud at Punjab National Bank, has allegedly defrauded the public sector bank of ₹7,080.86 crore. Besides, the entities controlled by him also enjoyed credit exposure from a consortium of 32 banks and these banks have reported outstanding balance with respect to those entities to the tune of ₹5,099.74 crore as on December 31, 2017.

The CBI has claimed that its investigation has revealed that Choksi and his nephew Nirav Modi have collectively defrauded Indian banks of ₹20,600 crore.