On Tuesday the diamond trader Nirav Modi a key accused in the alleged PNB fraud case, which is now close to 2 billion faced more issues as the Enforcement Directorate (ED) asked the court for a non-bailable warrant and another court has issued summons to him in a tax evasion case.
As Nirav Modi’s international jewellery business filed a bankruptcy plea in the US, officials said the Central Bureau of Investigation (CBI) questioned the chief executive officer (CEO) and the managing director (MD) of Allahabad Bank, Usha Ananthasubramanian, in the PNB fraud case that allegedly involved him and his uncle Mehul Choksi.
In Mumbai, special PMLA court judge M.S. Azmi heard the arguments of Enforcement Directorate’s (ED) special counsel Hiten Venegoankar on the agency’s plea seeking issuance of the NBW against Nirav Modi who is believed to be in the US. Ananthasubramanian was the MD and the CEO of PNB since 14 August 2015 before being appointed in Allahabad Bank on 6 May 2017.
Venegoankar told the court, “The ED registered a case against Nirav Modi on 15 February and from that time issued three summonses to him to appear before the agency. He said the summonses were issued on 15 February, 17 February and 22 February, asking him to appear before the ED on 16 February, 22 February and 26 February, respectively.”
The bank had earlier put the defrauded amount at Rs11,394.02 crore ($1.77 billion). Adding another Rs1,323 crore would take this to Rs12,717 crore. The probe into account books of Choksi’s companies also showed loans worth over Rs5,280 by a consortium of 34 banks led by ICICI bank, officials said.
Abhishek A Rastogi said, “As per the Income Tax Act, the revenue department has a right to recover its dues from the banks or any other person who is believed to receive the money from the defaulter. However, in this situation, the bank may first address its own dues from the assets recovered.”
The notice has warned the banks that if Choksi is allowed to withdraw money from accounts, officials will be held responsible for it. It also adds that if the banks don’t pay up, the tax authorities will try and recover the money from them.
The notice read, “If you fail to make payment in pursuance of this notice you shall be deemed to be an assessee in default in respect of the amount specified. To protect the interest of revenue (department) it is necessary to provisionally attach the following bank accounts of the above taxpayer for which approval of CIT (appeals) has been obtained. If the banks don’t respond to the notices in the next few days this could lead to a legal tussle between income tax officers and the banks.”
Rastogi said, “In such a situation, whether the tax authorities have the first charge over the assets of the defaulter will become a subject matter of dispute.”