MUMBAI: A special court Wednesday permitted the Central Bureau of Investigation (CBI) to incorporate into the first case of the more than Rs 13,000-crore banking fraud stringent penal charges that attract potential life terms for the accused, including absconding diamond merchant Nirav Modi.
Section 409 of the Indian Penal Code, which makes an accused liable to the maximum sentence of life imprisonment, will now apply to the first case involving absconding diamond merchant Nirav Modi and companies controlled by him, and accused staffers at the Brady House branch of the Punjab National Bank (PNB).
Section 409 deals with criminal breach of trust by a public servant, merchant, banker or agent, carries a maximum sentence of life imprisonment.
On Tuesday, the court had allowed the CBI to invoke the same section in the second case registered against the Mehul Choksi group of companies for defrauding PNB of about Rs 7,081crore.
The CBI lodged the first case on January 31. It names Nirav Modi, his wife Ami, brother Neeshal, uncle Mehul Choksi, Gokulnath Shetty (PNB’s former deputy manager), Manoj Kharat (PNB’s singlewindow operator), and unknown others as accused.
The CBI states that partnership firms controlled by Nirav Modi — Stellar Diamond, Solar Exports and Diamonds R US — in connivance with Shetty and others caused a loss of Rs 6,498.2 crore to PNB.
The loss was through fraudulent issuance of 150 letters of undertaking (LoUs) by Shetty in connivance with those named in the FIR. The LoUs enabled Modi’s firms to access cheap buyer’s credit from overseas branches of Indian banks for import of rough diamonds and pearls.
However, CBI says the monies raised were not utilised for such imports in many cases. Shetty exploited a technical loophole to send the LoUs.
Source: Economic Times