Fugitive Mehul Choksi's bail plea rejected by Belgian court of appeal

The bail plea of fugitive diamonds trader Mehul Choksi, wanted in India in connection with over Rs 6300-crore fraud in the Punjab National Bank (PNB), has again been turned down by a court of appeal in Belgium, just ahead of his extradition hearing before a court in that country, officials said.

The court rejected the appeal on strong reasons conveyed by the CBI to the Belgian prosecution that Choksi had escaped from many jurisdictions earlier as well to evade legal proceedings and may flee to another country if let out on bail, they said.

Choksi was arrested in Belgium in April on the basis of an extradition request sent by the CBI, they said.

His earlier bail application, heard by the Court of Cassation in Belgium, was also rejected, they said  Choksi filed another bail application on August 22 and offered to be under house arrest -- under surveillance at home -- but the court of appeal rejected it earlier this week, they said.

The arguments in the extradition case of 66-year-old Choksi, the owner of Gitanjali Group, will be taken up in a court in Belgium in mid-September, they said.

The CBI will assist the Belgian prosecution in putting forth a strong case to send him back to India to face trial in cases against him.

Choksi and his nephew Nirav Modi are wanted in the Rs 13000 crore fraud in Punjab National Bank that they allegedly orchestrated through fraudulent Letters of Undertaking in connivance with some bank officials at the Brady House branch in Mumbai, they said.

Modi, declared a fugitive economic offender, has been lodged in a London jail since he was held by the authorities there in 2019 on the basis of a legal request made by the ED and the CBI in this case. He is contesting extradition to India.

The CBI had sent a team of officials to Brussels who provided details of the case, evidence and documents to the Belgian prosecution, who will be presenting the case. The CBI will also hire a European law firm to assist in the case, they said.

Choksi is facing cases under the Indian Penal Code (IPC) sections related to criminal conspiracy, cheating and falsification of accounts, besides provisions of Prevention of Corruption which all constitute crimes in Belgium as well. This helps to invoke the dual criminality clause of the extradition treaty while seeking his extradition.

The CBI has also invoked the United Nations Convention against Transnational Organized Crime (UNTOC) and the United Nations Convention against Corruption (UNCAC) in its extradition request.

At least two open-ended arrest warrants, issued by a special court in Mumbai in 2018 and 2021, have been shared by the Indian agencies with their Belgian counterparts as part of the extradition request, the sources said.

According to the investigating agencies, officials at PNB's Brady House branch in Mumbai issued 165 LoUs and 58 FLCs during March-April 2017, against which 311 bills were discounted.

These LoUs and FLCs were allegedly issued to Choksi's firms without any sanctioned limit or cash margin and without making entries in PNB's central banking system to evade any scrutiny in case of a default.

LoUs are a guarantee given by a bank on behalf of its client to a foreign bank. If the client does not repay the foreign bank, the liability falls on the guarantor bank.

Based on these LoUs by PNB, money was lent by SBI, Mauritius; Allahabad Bank, Hong Kong; Axis Bank, Hong Kong; Bank of India, Antwerp; Canara Bank, Manama; and State Bank of India, Frankfurt.

"Since the accused companies did not repay the amount availed against the said fraudulent LoUs and FLCs, PNB made the payment of Rs 6,344.97 crore (USD 965.18 million), including the overdue interest, to the overseas banks, which had advanced buyer's credit and discounted the bills against the fraudulent LoUs and FLCs issued by the PNB," the CBI's supplementary charge sheet in the PNB bank fraud case had alleged.