HC pulls up PNB for extending credit facilities to Nirav Modi

Mumbai: The Bombay high court on Tuesday rapped Punjab National Bank (PNB) for extending credit facilities to fugitive diamantaire Nirav Modi. The development came after the bank filed a plea seeking a right to deal with 12 of 48 properties of Nirav Modi which the Enforcement Directorate (ED) had attached. The ED claimed that since it was the investigating agency, it had control over all the properties of Nirav Modi.

The division bench of justice Revati Mohite Dere and justice Gauri Godse while hearing the cross petitions by PNB and ED noted, “Huge amount of money is involved, and no steps were taken by the bank. After all, this is public money. What happens when a common man has to seek a loan,” the judges said.

The counsel for PNB submitted that the bank was not aware of the transactions and the credit facilities were extended unauthorisedly. The bench was further informed that due to the loan fraud by Nirav Modi, the bank was facing a lot of financial problems and hence the HC should permit it to act on the order of the debt recovery tribunal (DRT) and the special court order. The DRT had permitted PNB to take over Modi’s properties worth ₹500 crore as they were creditors and recover its dues.

However, ED said that it was challenging the special court order as the properties were unsecured or freehold assets and it had the first right over the same as the central agency.

The agency further argued that though the special court had permitted it to take over all the properties of Nirav Modi in October last year, it had modified its order in November permitting PNB to get more properties.

After hearing the submissions, the bench directed the bank and the agency to file their affidavits in response to the petitions in two weeks and posted a hearing of the petitions after three weeks.