ICICI Bank takes Gitanjali Gems to insolvency court over Rs 6.08-bn dues

The National Company Law Tribunal's (NCLT's) Mumbai Bench has admitted Gitanjali Gems under the Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code, a sequel to ICICI Bank's petition in this regard. 

The bank is the lead lender to the jewellery company and is seeking to recover Rs 6.08 billion through the CIRP. Gitanjali has borrowed a total of Rs 59.8 billion from various banks in the form of working capital loans and External Commercial Borrowing.      

Gitanjali and its promoter, Mehul Choksi, have been accused of a criminal conspiracy, cheating and money laundering, in collusion with a branch manager and other employees of Punjab National Bank (PNB), in what has come to be known as the Letters of Understanding scam.     

The amount in question is pegged at Rs 140 billion. Choksi is evading summons and is said to be 'hiding' in the Antigua & Barbuda group of islands. 

Choksi's nephew, Nirav Modi, promoter of Nirav Modi Global Diamond Jewellery House and Firestar Diamond International, is the main accused in the PNB scam. He is reportedly residing in London and also not responding to summons from authorities here. Interpol, the global police network, has issued a 'red corner notice' (RCN, the term for a formal request to locate and provisionally arrest an individual, pending extradition) against Nirav Modi and his kin. They are yet to issue an RCN against Choksi; the Enforcement Directorate (ED) of the Government of India had sent it an application to do so in June. A reminder went last month.  
 

On Wednesday, the NCLT Bench said: "We are of the view that the company is fit and proper to be referred to CIRP. The investigation agencies, including Serious Fraud Investigation Office and others, can work with the Resolution Professional."

The ED and Central Bureau of Investigation, agencies probing the PNB scam, have seized assets worth Rs 6.37 billion belonging to Modi and his companies, including jewellery worth Rs 220 million and bank accounts totalling Rs 3.22 billion. Property that has been seized include two apartments in New York City's central park area and an apartment in central London. 

Further, the authorities seized 41 properties worth a combined Rs 12.1 billion belonging to Choksi and his companies. These include a 170-acre park in Hyderabad, a farmhouse in Alibaug (near Mumbai), a mall in Kolkata and 231 acres in Maharashtra and Tamil Nadu. 

In July, the ED filed a chargesheet against Choksi with a court in Mumbai, under the Prevention of Money Laundering Act (PMLA).
 

Choksi, in an interview with news agency ANI, said his passport was suspended without provocation or explanation, and that the ED had attached his properties "without any basis". He said the charges against him were "false and baseless".

Properties attached by the ED in the PMLA case will be brought under the aegis of the NCLT to ascertain the distribution of assets, the tribunal said on Wednesday.   

Turn of events

 

• Mehul Choksi and Nirav Modi are accused in a Rs 140-billion PNB scam
• Gitanjali Gems has borrowed Rs 59.8 billion from multiple banks
• ED and CBI have attached properties belonging to Choksi worth Rs 12.1 billion
• ED and CBI have attached properties belonging to Nirav Modi worth Rs 6.37 billion
• ICICI Bank moved the NCLT and is seeking to recover Rs 6.08 billion through IBC process
• ED and CBI to work with Resolution Professional and lenders to recover the latter’s dues
• Choksi is in Antigua on a separate passport, but could be extradited back to India