The action against the second “prime suspect” in this case, after Choksi’s nephew diamantaire Nirav Modi, was taken on Saturday based on an extradition request moved by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED).
At least two open-ended arrest warrants, issued by a special court in Mumbai in 2018 and 2021, have been shared by the Indian agencies with their Belgian counterparts as part of the extradition request, sources said.
Formal paperwork is being done following the arrest/detention. Choksi may seek bail on health grounds, they said.
Choksi’s lawyer Vijay Agarwal said his client was taken into custody by the Belgian Police on Saturday (April 12).
He said the “obvious” grounds for the appeal would be that Choksi is “not a flight risk, is extremely sick and undergoing treatment for cancer”.
He said their legal defence would be that this is a “political case and the human condition (in Indian prisons) is not good”.
Choksi, Modi, their family members and employees, bank officials and others were booked by the CBI and the ED in 2018 for perpetrating the alleged loan fraud at the Brady House branch of the Punjab National Bank (PNB) in Mumbai.
It was alleged that Choksi, his firm Gitanjali Gems and others “committed the offence of cheating against the PNB in connivance with certain bank officials by fraudulently getting the LOUs (letters of undertaking) issued and got the FLCs (foreign letter of credit) enhanced without following prescribed procedure and caused a wrongful loss to the bank”.
The CBI has filed at least two charge sheets against him in this case while the ED has filed three such prosecution complaints.
Modi, declared a fugitive economic offender, has been lodged in a London jail since he was held by the authorities there in 2019 on the basis of a legal request made by the ED and the CBI in this case. He is contesting extradition to India.
According to the investigating agencies, officials at PNB’s Brady House branch in Mumbai issued 165 LoUs and 58 FLCs during March-April 2017, against which 311 bills were discounted.
These LoUs and FLCs were allegedly issued to Choksi’s firms without any sanctioned limit or cash margin and without making entries in the PNB’s central banking system to evade any scrutiny in case of a default.
LoUs are a guarantee given by a bank on behalf of its client to a foreign bank. If the client does not repay the foreign bank, the liability falls on the guarantor bank.
Based on these LoUs by PNB, money was lent by SBI, Mauritius; Allahabad Bank, Hong Kong; Axis Bank, Hong Kong; Bank of India, Antwerp; Canara Bank, Manama; and State Bank of India, Frankfurt.
The ED has attached or seized assets worth Rs 2,565.9 crore in the case against Choksi and the court has allowed “monetisation” of all these properties.
