Court allows ₹33-crore Mehul Choksi rental income to be put in fixed deposit

The order, passed on Tuesday by Special Judge S K Karhale, concerns ₹33.02 crore lying in a Kotak Mahindra Bank account

A special PMLA (Prevention of Money Laundering Act) court has allowed ICICI Bank to transfer ₹33.02 crore in rental and other receipts from a lessee of Kolkata’s Axis Mall into a fixed deposit held in favour of the court in the money-laundering case arising from the Punjab National Bank (PNB) fraud. The mall is linked to fugitive businessman Mehul Choksi’s Gitanjali Group, and Choksi is a key accused in the alleged ₹13,000-crore fraud.

The ED attached a portion of Axis Mall in 2018 along with other properties linked to Choksi and companies controlled by him as part of its investigation into the PNB fraud. (FILE)

The order, passed on Tuesday by Special Judge S K Karhale, concerns ₹33.02 crore lying in a Kotak Mahindra Bank account. The amount comprises rent and amenities charges received from Lifestyle International Pvt Ltd, along with future rentals and other charges accruing until the property, a portion of which has been attached by the ED, is auctioned.

The Enforcement Directorate (ED) opposed ICICI Bank’s application, arguing that the money should not be transferred “for any purpose” until the final disposal of the matter. The court, however, said the funds should be moved into a fixed deposit because keeping such a large amount idle would result in a loss of interest to the beneficiary.

“Considering all the facts and circumstances, it would be appropriate to release/restore the said amount for fixed deposit on some conditions,” the court said, directing the ED to allow the ₹33.02 crore, along with future rent, amenities charges and licence fees, to be transferred to an FD. The money will remain subject to the final outcome of the pending proceedings in the case.

The court made it clear that the arrangement did not amount to a final determination of ownership or entitlement to the money, stating that the FD could not be used as security or adjusted against any dues claimed by ICICI Bank. Neither the principal nor the interest can be withdrawn, encashed, pledged or transferred without prior permission from the court, and the deposit will automatically be renewed on maturity.

The order also preserves the ED’s objections concerning “the nature of the property”, ICICI Bank’s claimed charge over the rental receivables and the bank’s priority or entitlement to the money.

The ED attached a portion of Axis Mall in 2018 along with other properties linked to Choksi and companies controlled by him as part of its investigation into the PNB fraud. The mall was among 41 properties valued at about ₹1,217 crore that the agency attached at the time. Lifestyle and Home Centre, operated by the Landmark Group, occupied space at the mall under a lease from Choksi’s Gitanjali Gems.

The PNB fraud case involves allegations that Choksi, his nephew Nirav Modi, and several PNB officials conspired to defraud the bank by issuing fraudulent letters of undertaking to raise credit from overseas branches of Indian banks. Choksi and Modi, the key accused among them, have been facing proceedings in India while separately contesting extradition—Modi in the United Kingdom and Choksi in Belgium.