PNB Nirav Modi scam: No steps taken by bank in case involving public money, says Bombay High Court

The Bombay High Court on Tuesday admonished the Punjab National Bank (PNB) for its inaction in the loan fraud case in which fugitive diamond merchant Nirav Modi is an accused..A division bench of Justices Revati Mohite Dere and Gauri Godse raised concerns about the issue, given the large amount of public money was involved in the case.“Huge amount of money involved, and no steps taken by the bank. After all, this is public money. When a common man has to take loan then....” the bench quipped. The counsel for the PNB responded by submitting that the bank was not aware of the transactions in question or that the loans were unauthorised. .The Court has granted both PNB and the ED 2 weeks' time to file their replies and kept the matter for hearing after 3 weeks. .The Court was hearing pleas filed by the Enforcement Directorate (ED) and the PNB raising cross-claims over attached properties worth over ₹500 crores belonging to Nirav Modi. The appeals were filed against an October 2022 order of the special Prevention of Money Laundering Act (PMLA) court, which had allowed the ED to confiscate 12 properties worth over ₹500 crores, out of 21 properties. The PNB appealed against the order claiming it has a right over the 12 properties as the bank was a creditor. On the other hand, the ED appealed against the PMLA court order on the ground that it has a right over the remaining 9 properties as well since it was the investigating agency. Out of 48 properties, the ED was allowed to attach 12 properties, while the PNB was permitted to seize the remaining assets in order to dispose of the same for the recovery of dues. In its appeal, the ED claimed that the bank, as a creditor, was not entitled to unsecured assets as the agency had the first right over freehold assets. The PNB countered that it has the first right over the properties as it had granted the loan. Due to the non-repayment of this loan, the bank had been adversely affected, PNB added. The bank also relied on an order of the Debt Recovery Tribunal (DRT), to claim that the tribunal had awarded certain assets of Nirav Modi’s firm to the bank.