Court allows partial confiscation of Nirav Modi's properties

MUMBAI: In a first order of confiscation under the Fugitive Economic Offenders (FEO) Act, a special court Judge V C Barde on Monday directed that properties of Nirav Modi -- declared FEO last December -- be attached by the Enforcement Directorate (ED). However, it significantly exempted from the list, properties secured to Punjab National Bank (PNB) and a consortium of banks either through mortgage, hypothecation or personal guarantee.
Under the FEO Act, once an accused is declared as an FEO, his or her properties can be confiscated directly to the Central government. The ED had in 2018 sought confiscation of the properties of Nirav Modi, accused in the PNB scam case.
The Central Bureau of Investigation (CBI) had charged the fugitive diamantaire Nirav for alleged fraud on Punjab National Bank (PNB) in obtaining letters of undertaking (LoUs) of over Rs 7,000 crore, in a criminal conspiracy with several Bank officials. Nirav left India in January 2018 and is currently in a UK jail. The extradition hearing began on May 11 and now stands adjourned to September.
For the PNB and consortium of bank represented by Nitesh Jain partner at the law firm, SAM pleaded that all such properties belonging to Nivav Modi which were secured to these bank cannot be confiscated because these were for the benefit of bank and involves taxpayers money. The banks’ case was also that the under the FEO such exemption is permitted.
Special Judge Barde on June 8 thus, "partly allowed" the ED application, argued by its counsel Hiten Venegaonkar. He said that properties of Nirav Modi as mentioned by ED "excluding the properties claimed by interested parties -- PNB and other banks which are only secured by mortgage, hypothecation and guarantee and to the extent of valuable painting seized by the Income Tax department, shall be attached within a month from today."
The order said “After the attachment the properties shall stand confiscated to the Central government under section 12(2) and (8) of the FEO Act, 2018.
The reasoned order will be issued later. The Judge declared the operative part of the order on Monday.
The exemption and exclusion of the properties in favour of PNB and other banks "will only entitle them to proceed with their claim before the competent courts…"
Regarding Modi’s painting collection, seized by the IT department, the special Judge said that the ED was "at liberty to prosecute a remedy". So, ED now can apply for its attachment and it is also at liberty to seek confiscation of further properties of Nirav when identified.