UK court rules fraud case against Winsome’s Mehtas to be tried in the UK, not India

London: The high court in London on Wednesday ruled that the case against diamantaire Jatin Mehta and his family filed by Standard Chartered Bank (SCB) along with Grant Thornton can be pursued in England.

The Mehtas are alleged to have carried out a $1 billion fraud whereby proceeds of bullion advanced to two companies – Winsome Diamonds and Forever Precious – owned by them were misappropriated, laundered and concealed using shell companies around the world. Wednesday’s judgment by Justice Edwin Johnson brings the Mehtas a step closer to facing a full trial for the alleged fraud in the UK instead of India where the parent companies were based.

There are a whole host of applications filed by the Mehta family in the London high court seeking to challenge the action launched by accountancy firm Grant Thornton and SCB who alleged that England-registered companies were used to launder fraud proceeds. HT had reported in November 2022 how the high court in London refused to discharge the Mehtas from the Worldwide Freezing Order (WFO) for $932.5 million under which they face substantial restrictions.

The Mehtas, who are incidentally related to Gautam Adani by marriage, had claimed during the December 2022 hearing that this is an Indian dispute for which consortium banks have taken substantial steps in India. However, the London court took the view that this formulation was not correct as the claimants in the case were not India’s consortium banks but England-registered companies who were used as “conduits for the passing of the funds through layers of companies.” In essence, the claims that have arisen in the case are different to the claims (made by the banks) which are being pursued in India, because it involves two different sets of claimants. The court also took into consideration the fact that the defendants are all residing in England and have been away from India for several years. “In terms of current location, none of the claimants or the defendants are residents of India or are likely to become residents in India,” the judge noted dismissing the case.

However, he also remarked that the claimants are still “unable to identify precisely” how the alleged fraud occurred. Although the international nature of the case was mentioned regularly, the judge sought to characterise the case with some reservations saying that it is a complex litigation and that there are factors pointing to various jurisdictions.

The extraordinary breadth of the case means that there are several aspects to this alleged case of fraud. Now that the jurisdiction issue has been decided, the court will next consider the strike out application made by the Mehtas which could take another few months. The Mehtas are also resisting the insolvency proceedings which are being pursued by the voluntary liquidators of the English companies.

The Mehtas maintain that the allegations of wrongdoings are incorrect and this ruling by Justice Edwin Johnson does not make any findings on the allegations of fraud.