A special court in Mumbai has delivered a significant setback to diamond merchant Mehul Choksi, rejecting his application seeking the dismissal of proceedings aimed at declaring him a fugitive economic offender. The court, which hears cases under the Prevention of Money Laundering Act (PMLA), passed the order on Tuesday, reinforcing the Enforcement Directorate's (ED) pursuit of Choksi in the multi-crore Punjab National Bank (PNB) fraud case.
Court Dismisses Choksi's Legal Challenges
The latest plea from Mehul Choksi argued that since he is already facing proceedings before the Serious Fraud Investigation Office (SFIO) under the Companies Act, the ED's parallel application to label him a fugitive should not proceed. However, the special court found no merit in this contention. Special Public Prosecutor for the ED, Kavita Patil, successfully argued that pending SFIO proceedings do not bar the agency from seeking a fugitive declaration under the specific Fugitive Economic Offenders (FEO) Act.
The court also noted that a similar argument had been rejected in the past. In a further blow, the court denied Choksi's request to add an official liquidator to represent Gitanjali Gems Ltd, the company at the heart of the allegations, citing that an identical application had been turned down back in 2019.
The Core of the Allegations and Choksi's Absence
Mehul Choksi, along with his nephew Nirav Modi, is accused of orchestrating a massive banking fraud by obtaining fraudulent Letters of Undertaking (LoUs) from the Punjab National Bank. Choksi is said to have left India on January 7, 2018, just as investigations into the alleged scam were intensifying. Both the Central Bureau of Investigation (CBI) and the ED have filed cases against him for allegedly making unlawful financial gains.
Following his departure, the ED moved an application in 2018 to have him declared a fugitive economic offender. This legal designation, under the FEO Act, empowers authorities to confiscate an offender's properties in India even before the conclusion of a trial. Choksi, who is currently embroiled in extradition proceedings in Belgium, has filed multiple petitions to challenge the ED's move.
The "Fugitive" Tag and the Path Forward
Last month, the special court had rejected another plea from Choksi where he claimed that being in custody in Belgium on India's request disqualified him from being termed a 'fugitive.' The ED countered this by stating that as long as he is contesting extradition to avoid facing Indian courts, the proceedings to declare him a fugitive are valid. The agency has consistently maintained a clear stance: if Mehul Choksi surrenders and returns to India, the process to declare him a fugitive will cease immediately.
The ED also drew the court's attention to the case of Nirav Modi, Choksi's nephew, who made a similar application in the United Kingdom. That plea was rejected, and Modi was formally declared a fugitive economic offender in 2020. The latest court order marks another step in the long legal battle, keeping the pressure on Choksi to return to the country and face the charges against him in a court of law.
