Mumbai: To a plea made by the Punjab National Bank (PNB) seeking that bank accounts, office, home properties and vehicles, among other seized assets of fugitive diamantaire Nirav Modi be released to the bank, the Enforcement Directorate has said that they the bank will have to make the plea as proceedings under the Prevention of Money Laundering Act (PMLA) and not under the Fugitive Economic Offenders (FEO) Act.
This could prove a setback in the banks attempts at immediate liquidation of the attached assets, with the ED indicating it will contest the bank’s claim,
“Whether third party has a bona fide claim over properties, which are subject matter of the FEO Act, can be dealt with only under PMLA and not under FEO,” the agency has said in its reply to the bank.
Special Public Prosecutor for the ED Hiten Venegaonkar said that proving that the bank is a bona fide owner of the assets under the PMLA proceedings will not be easy, as the properties were attached by the PMLA court before the banks got a decree of the Debt Recovery Tribunal in their favour.
They were attached by the court after being declared proceeds of crime. “Even if they make the claim, it will be contested by us,” Venegaonkar told FPJ.
The bank had made the application in the proceedings under the Fugitive Economic Offenders (FEO) Act, under which confiscation and then liquidation of the assets of a person declared a fugitive economic offender is possible.
Under the PMLA, too, following an amendment recently, restoration of assets during trial is possible, which was not possible earlier. While the properties would be attached, they could be earlier liquidated only after conclusion of trial.
PNB had made the plea seeking that the properties be released to it as it had taken the properties as collateral in good faith without knowledge of the fraud and that they were proceeds of crime. It said the assets will be liquidated and utilised to repay their outstanding debts.
Modi, who is fighting India’s extradition attempt and his uncle Mehul Choksi are accused of defrauding the bank of over 13,000 crores by getting fraudulent Letters of Undertaking (LoUs) issued by the PNB bank employees in collusion with employees of his firms.
Shell companies were used by them to transfer the funds. The fugitive diamantaire is currently lodged in a prison in UK after his bail application was rejected.