PNB fraud: NCLT bars over 60 entities from selling assets

Amid the ongoing multi-agency probe into the Rs 12,700 crore Punjab National Bank scam, the NCLT has restrained more than 60 entities, including Nirav Modi, Mehul Choksi, various individuals, companies and limited liability partnership firms, from selling their assets. The National Company Law Tribunal (NCLT) have passed the directions against Nirav Modi and Mehul Choksi, the alleged main perpetrators of the fraud, as well as their firms and relatives, among other entities, as per a public announcement by the corporate affairs ministry.

The ex-parte order was passed on a petition filed by the ministry under various sections of the Companies Act, 2013. The ministry moved the petition under various provisions such as section 221, which pertains to freezing of assets of company on inquiry and investigation, and section 222 that relates to imposition of restrictions upon securities.

It has been passed against 64 entities that includes Nirav Modi, Mehul Choksi, few individuals related to the Punjab National Bank, various companies and limited liability partnerships. Gitanjali Gems, Gilli India, Nakshatra Brands and Firestar Diamond are among the barred companies, while partnership firms include Solar Exports and Stellar Diamond.

According to the ministry, the petition came up for urgent hearing before the Mumbai bench of the NCLT on February 23 and that an ex-parte order was passed. There is an injunction against these entities from "removal, transfer or disposal of funds, assets and properties" till further order, according to the announcement.

The NCLT has posted the matter for further hearing on March 26 when the entities concerned have been asked to present before the tribunal. As per the public announcement, in case the entities fail to appear on that day, then the matter would be heard ex-parte.

Apart from the CBI and the Enforcement Directorate, the Serious Fraud Investigation Office (SFIO) under the ministry is also probing the matter. Last month, sources had said the ministry has ordered the SFIO to investigate around 110 companies, including some listed ones, and about 10 LLPs linked to Modi and Choksi.
The estimated Rs 12,700 crore fraud was perpetrated by way of fraudulent Letter of Undertakings (LoUs) in connivance with some bank employees.