Non-bailable warrant against Mehul Choksi in ₹55.27-crore bank fraud

MUMBAI: The Esplanade metropolitan magistrate court has issued a non-bailable warrant (NBW) against fugitive diamantaire Mehul Choksi in connection with a 2022 bank fraud case registered against him and others for allegedly defrauding a consortium of Canara Bank and Bank of Maharashtra to the tune of ₹55.27 crore.

The court issued the warrant pursuant to a specific request made by the Central Bureau of Investigation (CBI), which is investigating the purported fraud.

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The FIR was registered by the CBI in July 2022 based on a written complaint filed by the chief general manager of Canara Bank against Bezel Jewellery (India) Private Limited, its directors Choksi, Chetna Jayantilal Jhaveri, Dinesh Gopaldas Bhatia and Milind Anant Limaye along with unknown public servants. The company was accused of entering into fraudulent transactions and defaulting on payment obligations towards the banks by diverting and siphoning off the banks’ funds.

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The CBI court, on April 17, transferred the matter to the magistrate court after it found that the CBI had not implicated any public servant in the chargesheet, and therefore the charges under the Prevention of Corruption Act were not sustainable against the private persons. Subsequently, on April 19, the additional chief judicial magistrate issued the non-bailable warrant against Choksi, as sought by the CBI, two days after the fugitive diamond trader was apprehended in Belgium.

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As per the CBI, Canara Bank and the Bank of Maharashtra under a consortium arrangement had sanctioned working capital limits of ₹30 crore and ₹25 crore respectively to Choksi’s Bezel Jewellery. The credit facility, which was sanctioned for the manufacture and sale of gold and diamond-studded jewellery, was allegedly diverted and used by the company to repay its long-term borrowings. According to the chargesheet, the company diverted the entire foreign remittance received against the export of jewellery to reduce the overdrawing in the cash credit account of Gitanjali Gems Pvt Ltd, another firm of Choksi.

In the initial period, the company repaid its long-term borrowing of ₹18 crore to its parent company and thereby diverted the entire limit of ₹10 crore of Canara Bank to the said parent company on the very date of availing of the loan. The company did not route any of the business transactions through the account opened with Canara Bank, even though the loan was granted for the manufacture and sale of gold and diamond jewellery, as per the chargesheet.