PNB and ICICI Bank to become part of Legal Case against Mehul Choksi

In the ₹13,000-crore Punjab National Bank (PNB) fraud case involving businessman Mehul Choksi, a Mumbai Special PMLA Court has allowed PNB and ICICI Bank to become part of the ongoing legal proceedings.

The ₹13,000-crore Punjab National Bank (PNB) fraud is one of India’s largest banking scams, allegedly orchestrated by jewellers Nirav Modi and his uncle Mehul Choksi through their companies Gitanjali Gems, Gili India, and Nakshatra Brands.

The case originally involved a petition by the Deputy Commissioner of State Tax, who is trying to recover pending GST dues from Choksi. PNB and ICICI Bank requested to be included because they too are seeking recovery of their losses from the fraud. Both banks had filed separate applications asking for the release or restoration of certain properties seized in the case, claiming those assets should be used to repay them.

The State Tax Department opposed this move, arguing that the banks had no direct claim against the tax department and therefore no right to join the case.

However, Special Judge A.V. Gujarathi ruled in favour of the banks, stating that both the tax department and the banks are claiming dues from Choksi — the tax department for GST arrears, and the banks for losses from the fraud. Since both parties are seeking recovery from the same accused person, the court said it was important to hear all sides.

The judge ordered that PNB and ICICI Bank be added as parties to the case, allowed them to file their responses, and gave them the right to participate in further hearings.

The Enforcement Directorate (ED) is investigating Choksi, his companies (Gitanjali Gems Ltd, Gili India Ltd, Nakshatra Brands Ltd), and certain PNB officials for allegedly misusing buyers’ credit (letters of undertaking) and foreign letters of credit between 2017 and 2018. These were allegedly used to pay overseas suppliers but were not recorded in PNB’s official books, involving transactions worth ₹4,831.18 crore.

Between 2011 and 2018, certain PNB employees at the bank’s Brady House branch in Mumbai fraudulently issued Letters of Undertaking (LoUs) to overseas banks without proper authorisation and without recording them in PNB’s core banking system.

These LoUs, sent via the SWIFT network, acted as guarantees enabling the accused to obtain short-term buyers’ credit from foreign banks, supposedly for importing gems and jewellery. In reality, investigators allege that the funds were diverted for other purposes and not repaid.

The scam, which caused losses exceeding ₹13,000 crore, came to light in January 2018 when PNB officials refused to issue fresh LoUs without collateral, triggering investigations. Following the exposure, Nirav Modi fled to the UK, where he is contesting extradition, while Mehul Choksi took refuge in Antigua and Barbuda after acquiring citizenship there.

The Enforcement Directorate (ED) and Central Bureau of Investigation (CBI) have since seized assets, filed chargesheets, and arrested several bank officials in connection with the fraud.