Bombay High Court Dismisses Plea to Add PNB as Accused in Major Fraud Case
The Bombay High Court has firmly rejected a petition that sought to make Punjab National Bank (PNB) an additional accused in the high-profile case involving alleged fraud by the Gitanjali group. In a significant ruling, the court emphasized that PNB is a victim in this matter and cannot be treated as a perpetrator.
Court's Clear Stance on PNB's Status
Justice Shivkumar Dige, presiding over the case, delivered a decisive order stating, "Admittedly, fraud is committed with PNB by the officials of PNB and Gitanjali Group of Companies. In fact, PNB is a victim, so PNB cannot be added as an accused." This statement underscores the court's position that the bank itself suffered from the fraudulent activities rather than participating in them.
The court also imposed costs of Rs 10,000 on Nitin Shahi, identified as accused number eight, who filed the petition back in 2020. The order was officially released on Monday, marking the conclusion of this legal challenge.
Background of the Fraud and Legal Proceedings
The Central Bureau of Investigation (CBI), represented by a special public prosecutor, informed the High Court on March 18 about the staggering financial impact of the fraud. According to the agency, PNB suffered losses exceeding Rs 7,000 crore solely from the dealings with Gitanjali Gems and its associated group companies. This revelation highlighted why the bank and the accused companies cannot be equated legally.
This petition follows a previous rejection by a special CBI trial court in 2020, which also declined Shahi's request to add PNB as an accused. The petitioner's legal team, led by lawyer Vritee Soni, argued that since the chargesheet alleges a conspiracy involving bank officials colluding with Gitanjali group staff, the bank itself should face accusations and not merely shift blame onto its employees.
Key Arguments and Petitioner's Claims
Shahi's case centered on the premise that while Gitanjali Gems Ltd and all its Key Managerial Persons (KMPs) are listed as accused, PNB remains excluded despite its officials being implicated for allegedly failing to report fraudulent Letters of Undertaking (LOUs) and Letters of Credit (LCs). The petitioner contended that this creates an inconsistency in the legal proceedings.
Representatives for the petitioner noted, "PNB's senior and junior employees have been chargesheeted because they had conspired and cheated PNB," and pointed out that senior management from the company are also facing trial. This argument aimed to draw a parallel between the actions of individual bank employees and the institution as a whole.
Origins and Scale of the Fraud Investigation
The CBI initiated this case on February 15, 2018, based on a complaint from Avneesh Nepalia, the Deputy General Manager of PNB in Mumbai. The initial complaint targeted Gokulnath Shetty, a Deputy Manager at PNB, along with 15 other individuals, accusing them of cheating, criminal conspiracy, and violations under the Prevention of Corruption Act.
The alleged fraud involved defrauding PNB of over $750 million, which translates to nearly Rs 5,000 crore. Subsequently, additional complaints were filed, revealing further fraudulent activities worth an extra Rs 1,250 crore and approximately Rs 950 crore, occurring between 2013 and 2017. The total financial impact underscores the magnitude of this case, which continues to await trial.
This ruling by the Bombay High Court reinforces the legal distinction between an organization victimized by fraud and those directly responsible for perpetrating it. As the trial remains pending, this decision sets a precedent for how similar cases might be handled in the future, emphasizing accountability while recognizing institutional victimhood.
