In a blow to Gitanjali Gems promoter Mehul Choksi, the Delhi High Court today withdrew the interim protection from arrest and other coercive action granted to him in a cheating case while the Enforcement Directorate justified the seizure of his company's jewellery stock in a money laundering case saying it was part of the proceeds of crime.
In separate proceedings before two benches of the high court, both the Delhi Police and ED said that Choksi, the uncle of billionaire Nirav Modi, had not joined investigation in their respective cases against him.
Taking note of the submission by Delhi Police, Justice Mukta Gupta withdrew the interim protection granted to Choksi on April 26 last year and listed the matter for further hearing on November 26.
In the money laundering case heard by a bench of Justices S Muralidhar and I S Mehta, the ED filed an affidavit contending that the proceeds of crime generated through criminal activities arising out of offences under the Prevention of Money Laundering Act (PMLA) were "layered and integrated in the veil of huge bullion/jewellery business of in order to project the same as untainted property, which includes the business of Gitanjali Gems".
The bench listed the money laundering matter for further hearing on July 31, by when the firm's counsel Vijay Aggarwal has to file a rejoinder to the ED affidavit.
Both Choksi and Modi had left the country in January this year.
The affidavit was filed by ED counsel Amit Mahajan and Nitesh Rana in a plea by Choksi's firm challenging the alleged illegal seizure of documents and articles in a money laundering case in connection with the over Rs 11,000 crore Punjab National Bank (PNB) fraud case.
In its affidavit, the ED said, "The jewellery stock of the petitioner (Gitanjali Gems) has been seized with the reason to believe, recorded in writing on the basis of information/ documents in possession, that the petitioner company, being under the direct control of prime accused Mehul Choksi, is very much involved in the process of money laundering."
Billionaire Nirav Modi, his uncle Choksi and others are being investigated by multiple probe agencies after the scam came to light in January following a complaint by the PNB that they had allegedly cheated the nationalised bank to the tune of Rs 11,400 crore, with the purported involvement of a few employees of the bank.
The ED has registered the money laundering case against Modi, his firms and others on the basis of a CBI FIR.
In its affidavit, the ED has also said,"The present investigation into the offence of money laundering stems out of a huge fraud having been committed against a public sector bank, involving humongous amount of public money, almost to the tune of Rs 4831.53 crores by M/s Gitanjali Gems, M/s Gili India and M/s Nakashatra, which are owned and controlled by Mehul Chinubhai Choksi.
"Prima facie the case involves a circuitous web of transactions and has international ramifications on the face of record."
It said the investigation was in its infancy and efforts were being made to recover the proceeds of crime "obfuscated by the suspected persons" and to collect the evidence for prosecution against the offenders under the PMLA.
The agency accused Gitanjali Gems of "very cleverly" concealing its profile and supressing facts pertaining to its constitution and registration. It said the firm has cleverly veiled any reference to Choksi, who left India in the twilight of the scam coming to the notice of the law enforcing agencies and has been evading the law.
When ED summoned him to join the probe and explain the issues, he preferred to completely sidestep the legal system of the country and has decamped to foreign shores, refusing to join the investigation. The plea in which "Choksi has indirectly approached the court through M/s Gitanjali Gems Ltd needs to be dismissed."
The agency said the investigating officer has reasons to believe that Gitanjali Gems, under the control and chairmanship of Choski, has committed acts which constitute the offence of money laundering and was in possession of proceeds of crime.
It said moveable properties -- jewellery articles and bullions -- of the firm were seized from its Ghatkopar premises under the reasonable belief that non-seizure of those items may frustrate the proceedings under the Act.
The cheating case against the diamond merchant was lodged on July 12, 2016 on a June 2, 2016 order of a metropolitan magistrate in Saket court here after a complaint was lodged by one Vaibhav Khuraniya alleging that his company RM Green Solutions had purchased a retail franchise of Gitanjali Jewellers from Choksi on an assurance of high returns.
Choksi, in his plea seeking quashing of the FIR, had claimed in the high court that the franchisee work was not done properly by the complainant and alleged that instead of jewellery, liquor was being vended from the same premises leading to a loss to Khuraniya.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)