ALSO READPNB fraud: Justice I deserve is far off, says Mehul Choksi to jobless staff After PNB scam, Mehul Choksi defaulted on Rs 1.21 billion to J&K Bank Rs 114-bn PNB scam: Mehul Choksi, the uncle who mentored Nirav Modi PNB scam: Govt moves NCLT to freeze assets of Nirav Modi, Choksi firms Nirav Modi scam at PNB: CBI arrests 3 more, ED to question five banks
ICICI Bank has filed an intervention application in the Union of India (Ministry of Corporate Affairs, or MCA) versus Gitanjali Gems (and others) case, currently being heard at the National Company Law Tribunal (NCLT) in Mumbai.
The MCA has filed a case against Gitanjali Gems under Sections 221,222, 241, 242, and 246 of the Companies Act of 2013.
The special division Bench was hearing applications moved by various respondents in the case, when the counsel for ICICI Bank approached the Bench and informed them of the lender’s wish to see that their security interests, which are laid out in formal contracts, are protected whenever the Bench pronounces an order in the matter.
The counsel informed the Bench that ICICI Bank, along with 23 other lenders of Gitanjali Gems, was planning to move the debt recovery tribunal (DRT), in a joint proceeding, for recovering their respective dues from the company. It was the counsel’s contention that by virtue of being a lender to the company, it had extended loans against which certain securities and interests were created under certified documents.
Given that banks will move to recover their dues under the DRT, there could be a risk that the while proceedings against the company will continue with the NCLT in Mumbai, the Bench may take a decision which might impinge on the lenders’ security interests.
The NCLT Mumbai Bench adjourned hearing this application till May 3, along with the other applications made in the case with respect to Sections 221 and 222.
On April 2, the Mumbai Bench of the NCLT had granted the independent directors of Firestar International (one of the primary respondents in the case) relief in accessing their financial resources, alongside granting liberty to applicants who were having financial difficulties.
The April 2 order has been challenged by the MCA at the National Company Law Appellate Tribunal in New Delhi, which will hear the appeal filed on April 23.
The two diamond companies Firestar International, owned and managed by Nirav Modi, and Gitanjali Gems, owned and managed by Nirav's uncle Mehul Choksi, are embroiled in a cross-border financing scam, which came to light when Punjab National Bank (PNB) informed the bourses about a Rs 130-billion letters of undertaking (LoUs) scam on February 14.
PNB said the LoUs were issued and provided to the foreign branches of various Indian banks without the knowledge of senior executives.
Investigators have frozen Nirav and Choksi's domestic accounts, and seized real-estate and other financial properties. Last week, PNB decided to honour Rs 65 billion of the fraudulent LoUs issued on behalf of Nirav to seven lenders.