A special PMLA (Prevention of Money Laundering Act) court on Monday issued an order confiscating assets of around Rs 1,400 crore belonging to fugitive diamond jeweller Nirav Modi.
This is the first ever order on the confiscation of property of offenders under the newly created Fugitive Economic Offenders (FEO) Act of 2018.
Modi is presently in custody at Wandsworth prison in the UK awaiting extradition trial scheduled for September.
Monday’s order allows for the confiscation of Modi's fixed properties hypothecated or mortgaged or given under corporate or personal guarantee to be liquidated and appropriated to lenders. Anything outside that purview such as apartments and homes that Modi owned in Dubai will be realised by the government.
PMLA court judge V C Barde declared Nirav Modi a fugitive economic offender after hearing arguments of lawyers representing the diamantaire, lenders and the Enforcement Directorate (ED). Modi had earlier urged the court here to set aside the ED's plea to declare him an FEO.
Modi was declared a fugitive on December 5, 2019, and is the second businessman after liquor tycoon Vijay Mallya to be declared a fugitive economic offender under provisions of the FEO Act which came into existence in August last year.
Under the new Act all properties can be confiscated by the government but there is a provision that says interested parties can claim exemption to the law and skip to the front of the queue.
Nitesh Jain, Partner, Shardul Amarchand Mangaldas, who represented PNB and the consortium said "This is a landmark victory for the public sector banks whose rights and interest have been recognised by the court pursuant to the provision provided under the Fugitive Act. The judgment will go a long way."
The ED Counsel agreed on its impact.
“In a first order of its kind, the ED has got permission to confiscate properties of fugitive Nirav Modi. Properties worth several crores can be liquidated by the central government to recover the lost economy of our country, which is of tremendous value to the Indian economy during this pandemic-related economic slowdown,” said ED counsel Hiten Venegaonkar.
“With this, banks can now appoint an administrator/liquidator to monetise assets to recover their monies," he added.
The Rs 1,400 crore confiscation includes around Rs 55 crore of cash in banks, domestic property valued at around Rs 600 crore, offshore properties and cash of Rs 100 crore, art worth Rs 100 crore, and jewellery and valuables worth Rs 490 crore that were seized during searches.
It's likely that the court would soon come up with a second order for remaining attached assets. So far, the ED has made an attachment of over Rs 2,500 crore in the case.
Modi will have a month to appeal the order.