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US Bankruptcy Court Issues Summons to Examine Nirav Modi, Others in PNB Fraud Case

The US court also recognised the claim of PNB on proceeds of any asset sold by US debtors of the Nirav Modi entities.


Updated:July 27, 2018, 7:14 PM IST

New Delhi: In a breakthrough for the ministry of corporate affairs (MCA) in the Punjab National Bank (PNB) fraud, the United States Bankruptcy court on Thursday ordered the issue of summons for examination of fugitive diamantaire Nirav Modi, Mihir Bhansali, and Rakhi Bhansali.

The US court also recognised the claim of PNB on proceeds of any asset sold by US debtors of the Nirav Modi entities. Mihir Bhansali was a senior official at Firestar International, while Rakhi is his wife.

The order also authorises gathering of documents from the individuals and others such as Ajay Gandhi and Kunal Patel — the senior financial officers of the Modi entities in the US — Moneycontrol reported.

The MCA had on February 26 filed a petition against bankruptcy proceedings of the businessman in the US court and sought that PNB be made party to the sale of any assets of his entities.

“The Bankruptcy court also has signed a stipulation recognising PNB’s agreement with the Chapter 11 Trustee that proceeds of any asset sales by the US debtors will be subject to PNB’s claims of constructive trust regarding the Modi entities,” the court said in its order. Moneycontrol has a copy of the court order.

“This stipulation is important because it means that trustee has recognised that PNB will have claims to assert and is acknowledging that these claims need to be addressed and sorted out before estate sale proceeds and distributed,” a source at the MCA told Moneycontrol.

The source added that the order gained importance as it would help reveal the whereabouts of Modi and ease the extradition process, if required.

It is the first time that the MCA has intervened in a foreign case pertaining to an Indian company. “This is the first time the ministry is intervening in foreign proceedings and we have got a major breakthrough. We have also ordered a Serious Fraud Investigation Office probe in the matter and investigations will be completed soon. The ministry of corporate affairs is also investigating 114 other entities of Modi and Mehul Choksi. The US court also feels this is a fraud involving hundreds of crores and PNB has a claim on foreign assets of Nirav Modi,” another source at the MCA told Moneycontrol.

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