Mumbai court declares Nirav Modi 'fugitive economic offender'

A Mumbai court on Thursday declared diamond merchant Nirav Modi, key accused in the USD 2 billion Punjab National Bank (PNB) scam, a "fugitive economic offender" on a plea by the Enforcement Directorate (ED).

The declaration, made under the Fugitive Economic Offenders (FEO) Act, paves the way for confiscation of his properties.

Modi is the second high-profile businessman after liquor tycoon Vijay Mallya to be declared a fugitive economic offender under the FEO Act, which came into existence in August 2018.

Special judge for Prevention of Money Laundering Act (PMLA) cases V C Barde declared Nirav Modi an FEO after hearing extensive arguments.

Under the FEO Act, a person can be declared a fugitive offender if a warrant has been issued against him for an offence involving Rs 100 crore or more, and he has left the country and refuses to return.

The court said in the order that it appears that Nirav Modi knew of due dates of payment of his liabilities when he left the country (on January 1, 2018).

"The material on record leads to draw inference that the respondent has left the country under the circumstances rendering suspicions in behaviour in order to dodge forthcoming penal consequences of the acts he has done or committed while in India till the year 2017," it said.

After declaring him an FEO, the court will begin the proceedings for confiscation of his properties, as listed by the ED, as per the provisions of the FEO Act.

Notices be issued to all the parties, the court said on Thursday, and adjourned the hearing to January 10.

The investigating agency has provisionally attached Modi's properties worth Rs 1,396.07 crore for confiscation.

Nirav Modi and his uncle Mehul Choksi are the main accused in the alleged PNB scam. Both left India before the alleged scam came to light in January 2018.

Nirav Modi was arrested in London in March 2019, and extradition process against him is pending.

In July 2018, the ED filed an application under the newly-enacted FEO Act to declare him a fugitive offender.

His lawyers opposed the plea, stating that the ED was relying on evidence and statements recorded under the PMLA to seek a remedy under the FEO Act, which was not permissible.

As per the ED, Modi and Choksi, in connivance with some bank officials, duped the PNB of Rs 14,000 crore by obtaining Letters of Undertaking (LoUs) fraudulently.

The LoUs were issued by a Mumbai branch of the PNB to the group of companies belonging to Modi from March 2011 onwards. An LoU is a bank guarantee, under which a bank can allow its customer to raise money from another Indian bank's foreign branch.

On Wednesday, a CBI court here directed Modi and two others to appear before it by January 15. If they failed to appear, it will proceed to declare them 'proclaimed offenders' in the cases registered by the CBI in the PNB scam, the court said.