PNB fraud: Court allows auction of several Gitanjali Group properties

The properties include seven residential flats in Kheni Tower in Santacruz, a commercial unit in Bharat Diamond Bourse in the Bandra Kurla Complex, and 15 office units and one shop in Surat’s Diamond Park

MUMBAI: A court on Thursday allowed the auction of several residential and commercial premises owned by the Gitanjali Group, the now defunct jewellery company promoted by fugitive diamond trader Mehul Choksi, who is one of the prime accused in the ₹13,850-crore Punjab National Bank (PNB) fraud.

Mumbai, India - Feb. 13, 2025: A view of the Kheni Tower at Santacruze in Mumbai, India, on Thursday, February 13, 2025. (Photo by Satish Bate/ Hindustan Times) (Hindustan Times)

The properties include seven residential flats in Kheni Tower in Santacruz, a commercial unit in Bharat Diamond Bourse in the Bandra Kurla Complex, and 15 office units and one shop in Surat’s Diamond Park.

The special court for cases under the Prevention of Money Laundering Act (PMLA) directed the Enforcement Directorate (ED) to facilitate the auctioning of the unsecured properties after they are properly valuated. Unsecured properties are those assets that aren’t pledged as collateral to creditors.

The special court had allowed the valuation of secured properties held by Choksi in September 2024. Several assets of the Gitanjali Group, including properties worth ₹125 crore, have already been handed over to the liquidator for auction.

The liquidator had recently sought the valuation of the company’s unsecured properties. The ED had then clarified that it had no objection to the valuation and auctioning of the unsecured assets.

Observing that the value of a property would reduce if it was kept idle and without maintenance, the court allowed the liquidator’s plea. “The sale proceeds shall be deposited as FDs (fixed deposits) after deducting all associated costs and expenses incurred for the purpose of carrying out valuation/auction,” the court said.

The ED is investigating the Gitanjali Group, Choksi and several others for money laundering based on an FIR registered by the Central Bureau of Investigation (CBI) on February 15, 2018. Choksi allegedly conspired with his associates and PNB officials to fraudulently obtain Letters of Undertaking and Foreign Letters of Credit between 2014 and 2017, and subsequently defaulted, causing a loss of ₹7,080.86 crore to the public-sector bank.

The entities controlled by Choksi also allegedly enjoyed a credit exposure from a consortium of 32 banks. As of December 31, 2017, the outstanding amount was worth ₹5,099.74 crore.

Choksi’s nephew, fugitive diamond merchant Nirav Modi, who’s also a principal co-accused in the PNB fraud, allegedly defrauded the public sector bank to the tune of ₹6,805.24 crore.