PNB Scam: Ex-VP of Mehul Choksi's Gitanjali Group gets bail

Former vice-president of Gitanjali Group of Companies Vipul Chitalia, who was accused in the multi-crore Punjab National Bank (PNB) fraud in 2018, has been granted bail by the Bombay High Court. Chitalia allegedly left India along with Choksi in the first week of January 2018 before the Rs 12,636-crore fraud came to light. When he returned to India, he was detained and arrested by the Central Bureau of Investigation (CBI) on March 6, 2018.  
According to CBI sources, Chitalia was the alleged mastermind of the whole scam and reported directly to Choksi. He was also instrumental in arranging applications for clearing the fraudulent transactions of the LoUs (Letters of Undertaking) and FLCs (Foreign Letters of Credit). 
An LoU is a bank guarantee under which a bank can allow its customer to raise money from another bank, perhaps an overseas bank.
Chitalia was booked under various provisions stipulating punishment for cheating, fraud, and criminal conspiracy among others of the Indian Penal Code (IPC) and Prevention of Corruption Act.

The case so far
The case first came under the spotlight after Punjab National Bank lodged an FIR with CBI on 29 January 2018, claiming fraudulent LoUs worth Rs 280.7 crore were issued. PNB had named three diamond firms, Diamonds R Us, Solar Exports, and Stellar Diamonds in the case.
Both Nirav Modi and Choksi were the key accused in the case, along with their relatives and some bank employees. According to the sources, bankers in PNB used fake LoUs at PNB's Brady House branch in Mumbai, which were issued in favour of branches of Indian banks to import jewellery for a period of one year. However, the Reserve Bank of India guideline in this regard specifically gives 90 days for the transaction from the date of shipment.
This guideline was ignored by the overseas branches as they failed to share documents with PNB, which are mandatory at the time of applying for further credit.
As per reports, Modi got 1,212 more such guarantees in the 74 months. The first one was issued from PNB on March 10, 2011. 
Later, the Enforcement Directorate (ED) recovered bank token devices of the dummy companies overseas, which were used by Modi to transfer the fraudulent funds.

Chitalia’s bail argument
On Thursday, advocates Vijay Aggarwal and Rahul Agarwal, who appeared for Chitalia, highlighted his prolonged custody of over four-and-a-half years and noted that the agency is yet to finish its investigation and file charges in the case. 
Opposing his bail, Special Public Prosecutor Hiten Venegavkar said Chitalia’s role in the fraud cannot be ignored as he was the "mastermind" for putting through fraudulent transactions, and knew about the fraud since the very beginning. He was one of the two authorised signatories, who had his name on the applications for LoUs.
Listening to both the sides, the single-judge bench of Justice Bharati H Dangre allowed the bail application of Chitalia. 
In its chargesheet, CBI has alleged that former deputy manager of PNB's Brady House branch Gokulnath Shetty allegedly got a bribe of Rs 1.02 crore from Choksi's companies to clear 58 fake foreign FLCs and 142 fake LoUs. Shetty is one of the prime accused. 

(With inputs from Vidya)