Mumbai court approves monetisation of ₹2,565.9 crore in properties in Choksi fraud case

The court's decision followed an application from the victim banks, Punjab National Bank and ICICI Bank, backed by the ED to strengthen the plea

Mumbai: A special court in Mumbai on Tuesday permitted the monetisation of properties worth ₹2,565.9 crore that were attached or seized by the Enforcement Directorate (ED) since 2018 as part of its money laundering investigation against fugitive diamantaire Mehul Choksi in the alleged Punjab National Bank fraud.

Mehul Choksi (HT photo)

The court's decision followed an application from the victim banks, Punjab National Bank and ICICI Bank, backed by the ED to strengthen the plea. Following the order, the handover of assets has begun, with properties exceeding ₹125 crore, including Mumbai flats and two factories/godowns in SEEPZ, Andheri (east), being transferred to the liquidator of Choksi's Gitanjali Gems Ltd. The restitution of remaining properties is underway, according to ED sources.

Choksi is believed to be residing in Antigua and Barbuda after departing India in January 2018, shortly before the scam was discovered and the Central Bureau of Investigation (CBI) registered FIRs. India has sought Choksi's extradition from Antigua and Barbuda, which he has contested in local courts.

The application aimed to expedite property restitution to the victim banks. The ED and banks adopted a unified position, approaching the Special PMLA (Prevention of Money Laundering Act) court in Mumbai with a "Joint Application."

Tuesday's court order on the Joint Application directed the ED to assist banks and liquidators of various Gitanjali Group companies in valuing and auctioning the attached or seized properties. The proceeds would be deposited as fixed deposits with PNB and ICICI Bank, according to agency sources.

This development continues the ED's efforts to restore properties to rightful owners and victims of money laundering, whilst enabling financial institutions to monetise assets secured by the ED. The agency collaborated closely with PNB and ICICI Bank to file the restitution application in the Choksi case.

Thus far, six properties have been restored to the Gitanjali Gems Ltd liquidator: flats in Kheni Tower, Santacruz, collectively worth approximately ₹27 crore, and two properties comprising land and buildings at plots 61 and 16 in SEEPZ, Andheri east, jointly valued at ₹98.03 crore. The remaining assets are being transferred to the liquidator/banks as per the PMLA court's directive.

ED's investigation revealed that Choksi allegedly conspired with associates and PNB officials between 2014 and 2017 to fraudulently obtain Letters of Undertaking and Foreign Letters of Credit, subsequently defaulting and causing a loss of ₹6,097.63 crores to the public-sector bank. Choksi had also allegedly defaulted on a loan from ICICI Bank.

The ED initiated its money-laundering investigation in 2018 following a CBI case registration. Their investigation included searches at over 136 locations across India, seizing valuables and jewellery worth ₹597.75 crores from Choksi's Gitanjali Group firms. The agency also attached immovable/movable assets worth ₹1,968.15 crores, including properties in India and overseas, vehicles, bank accounts, factory, shares, and jewellery.

In total, the ED attached or seized assets worth ₹2,565.90 crores and filed three chargesheets in Mumbai court against various accused parties, including Choksi.

Choksi's nephew, fugitive diamond merchant Nirav Modi, a principal co-accused in the PNB scam, also departed India in January 2018 before the scam's discovery. Based on ED intelligence, Modi was apprehended in London in March 2019, where extradition proceedings are ongoing.