PNB fraud: NCLT restrains Nirav Modi, Mehul Choksi and 62 others from selling their assets
Order passed after a petition was filed in the National Company Law Tribunal by ministry of corporate affairsUpdated: Mar 05, 2018 17:11 IST
The National Company Law Tribunal (NCLT) has restrained Nirav Modi, Mehul Choksi and 62 others associated with the two diamond dealers from removing, transferring or disposing funds, assets and properties of entities and individuals, amid investigations into the Rs12,600 crore Punjab National Bank (PNB) fraud.
The ex-parte order was passed by the Mumbai NCLT bench of BSV Prakash Kumar and V Nallasenapathy after the Union corporate affairs ministry moved a petition seeking an order for Modi and Choksi, the two main perpetrators of the fraud, and their associates to disclose their moveable and immovable assets, including bank accounts, in India and elsewhere.
The bench noted that though trusts and individuals are not covered under section 221 of Companies Act, 2013, or section 43 of Limited Liability Partnership (LLP) Act, 2008, an ex-parte restraining order was necessary as the ministry had categorically stated that funds had been routed to individuals and trusts through various companies. “To make investigations meaningful to crack this fraud, a restraining order is necessary against the assets lying with individuals and trusts, in addition to the companies and LLPs,” the tribunal said.
The ministry also asked that the accused be restrained from mortgaging, creating charge or lien or third-party interest or alienating any of the assets so that the government can recover funds.
It also sought directions from the tribunal to restrain the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) and the Securities and Exchange Board of India (SEBI) from trading Modi’s securities.
Additionally, it requested that the Central Depository Service Limited and National Securities Depository Limited be directed to freeze the securities of Modi, Choksi and their associates.
In its petition, the government alleged that Nirav Modi, Nihal Modi, Ami Modi and Mehul Choksi, through various companies and LLPs maintained by them, committed fraud by conniving with some PNB officers and routing the bank’s money through letter of undertakings, entries of which were not made in the bank’s Core Banking Service (CBS) system to avoid detection. The funds received from overseas banks under buyer’s credit were credited to PNB’s Nostro account and subsequently utilised as per the directions of the bank officers involved to repay imports used by the firms.
The bank officer issued fraudulent Letter of Credits by entering a small amount in the trade module of the CBS system to generate a reference number, and a SWIFT message was sent for the amounts. Later, the officer would modify the SWIFT message to the beneficiary bank with an enhanced amount.