First scam-hit company of Nirav Modi ordered to be liquidated

Virtually spelling doom for various Indian public sector banks, the National Company Law Tribunal (NCLT), Mumbai has ordered the liquidation of absconding diamantaire Nirav Modis group company, Firestar Diamond International Pvt. Ltd. (FDIPL).

Modi, along with his uncle Mehul Choksi and others are accused of masterminding one of the biggest banking frauds amounting to around Rs. 14,000 crore, which was first admitted by Punjab National Bank (PNB) in February 2018, followed by other public sector banks.

This is said to be the first-ever liquidation order for any company embroiled in the fraud schemed by the Modi-Choksi duo before they fled the country, according to experts and officials.

The ruling to liquidate Modi’s scam-scarred company FDIPL was delivered last week by a Mumbai NCLT bench comprising (Mrs) Suchitra Kanuparthi (Member-Judicial) and V. Nallasenapathy (Member-Technical).

The bench also approved the appointment of the official liquidator Santanu T. Ray since there are no business prospects possible from the company, there is no point in pursuing legal suits and recovery cases, and very remote chances of any recovery of the bad money.

Besides, the beleaguered company had insufficient assets to repay the amounts due to the creditors and no resolution plan was possible which could enable the company to clear all its debts, according to the NCLT Mumbai order.

FDIPL is a major subsidiary owned by Firestar International, owned by Modi -- currently lodged in London’s Wandsworth jail after his arrest in March 2019.

It has a manufacturing unit -- along with another group company Radashir Jewellery Company -- in the Surat Special Economic Zone (SURSEZ), which have been the subject matter of probes by various investigation agencies including the Customs Department.

The Firestar International, FDIPL and other group companies shot into the limelight in February 2018 when the Punjab National Bank (PNB) admitted to a massive scam of around Rs. 14,000-crore architected by Modi and his uncle Mehul Choksi.

In a huge boost for Indian investigating agencies, a Special PMLA Court in Mumbai proclaimed Modi as a ‘fugitive economic offender’ -- the only second accused under the Fugitive Economic Offenders Act (FEOA) to be declared so after the absconder liquor baron, Vijay Mallya was also labelled thus in January 2019.

Choksi, who has acquired the citizenship of Antigua & Barbuda in the West Indies, had challenged the proceedings to declare him as a “fugitive economic offender”, but his plea was rejected by the Bombay High Court in December 2019.

Even as India has launched a multi-pronged effort to get the ‘Mama-Bhanja’ duo extradited and face the Indian laws, simultaneous probes are underway into their murky dealings by the Enforcement Directorate, Central Bureau of Investigation, Serious Fraud Investigation Office, Department of Revenue Intelligence and the Income Tax Department.

A consortium of banks including PNB, Oriental Bank of Commerce, Bank of India, Bank of Baroda, Bank of Maharashtra, UCO Bank, Corporation Bank, United Bank of India have been frantically trying to recover their dues from the duo in different cases.