Bombay HC Raps PNB For Inaction In The Nirav Modi Scam Involving Public Money

The Bombay High Court recently chastised the Punjab National Bank (PNB) for its lack of action in the loan fraud case involving fugitive diamond merchant Nirav Modi.

The bench comprising Justice Revati Mohite Dere and Justice Gauri Godse expressed concern about the significant amount of public money involved in the case.

“Huge amount of money involved, and no steps taken by the bank. After all, this is public money. When a common man has to take loan then….,” the bench remarked.

The counsel representing the Punjab National Bank (PNB) promptly responded by stating that the bank had no knowledge of the transactions in question or that the loans were unauthorized.

The Court has granted a period of two weeks for both the PNB and the Enforcement Directorate (ED) to file their replies and scheduled the next hearing after three weeks.

The division bench was addressing petitions submitted by the ED and the PNB, which presented conflicting claims regarding properties worth over ₹500 crores that were attached to Nirav Modi.

These appeals were filed in response to an October 2022 ruling by the special Prevention of Money Laundering Act (PMLA) court, which allowed the ED to seize 12 properties worth over ₹500 crores out of a total of 21 properties.

The PNB lodged an appeal asserting its entitlement to the 12 properties as a creditor of the case. Conversely, the ED filed an appeal arguing for its rights over the remaining 9 properties, highlighting its position as the investigating agency.

Among the total of 48 properties, the ED was granted permission to attach 12 properties, while the PNB was authorized to take possession of the remaining assets with the aim of recovering the outstanding dues.

According to the ED’s appeal, the bank’s claim to unsecured assets was invalid as the agency held priority rights over freehold assets.

In response, the PNB argued that it should have the first right to the properties since it was the lender of the loan.

The bank further emphasized the adverse impact it faced due to the non-repayment of the loan.

Additionally, the PNB cited an order from the Debt Recovery Tribunal (DRT) which had awarded specific assets of Nirav Modi’s firm to the bank.