A bankruptcy court in New York has dismissed a petition of fugitive diamond merchant Nirav Modi and his associates, requesting the dismissal of fraud allegations against them, PTI reported on Tuesday.
Modi is accused of duping the Punjab National Bank of more than Rs 13,000 crore.
The allegations against Modi and his associates were levelled by Richard Levin, a court-appointed trustee of three United States-based companies – Firestar Diamond, Fantasy Inc and A Jaffe – previously owned by Modi.
In his petition, Levin said that Modi had made profits from fraudulent transactions involving letters of undertaking issued by the Punjab National Bank. Such letters give the bank’s guarantee for one of its customers to make payments to its offshore suppliers in foreign currency.
Levin also sought a minimum compensation of $15 million, or over Rs 112 crore, for “harm” suffered by the debtors of Modi and his associates Mihir Bhansali and Ajay Gandhi.
In the order issued on Friday, the New York court said that Modi and his associates had formed a “fake scheme to obtain loans, credits, or other funds under false pretences and without collateral from several banks, including the Punjab National Bank”.
Lawyer Ravi Batra, while explaining the order to PTI, said that Modi had invested the profits made from the fraudulent transactions back into his company as additional sales to falsely raise the stock price.
Modi was arrested on March 19, 2019, and has been lodged in London’s Wandsworth jail. On April 15, UK’s Home Minister Priti Patel approved his extradition to India.
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