PNB Rs.14,000 crore Scam Update: Special Court Rejects CBI’s Plea for Arrest of Sunil Varma of Gitanjali in PNB Scam
A special anti-money laundering court granted temporary bail to Sunil Varma, a former top executive of Gitanjali Group, on Thursday. Varma, accused in the ₹13,850 crore Punjab National Bank scam, appeared in court for the first time after being on the run for over six years. On Friday, a special court rejected the Central Bureau of Investigation’s (CBI) plea to arrest Sunil Varma, the former top executive of the Gitanjali Group, in connection with the multi-million dollar Punjab National Bank (PNB) scam.
Varma, a former international business head of diamantaire Mehul Choksi’s Gitanjali Group, had been absconding since the scam came to light in 2018.
Background
Sunil Varma, who served as the international business head for Mehul Choksi’s Gitanjali Group, appeared before the court last week. This appearance came nearly seven years after the registration of the PNB fraud case. Following his appearance, the CBI sought his custody. However, the request was denied by Special CBI Court Judge S. M. Menjoge.
On February 15, 2018, the CBI filed an FIR against Choksi, his Gitanjali group of companies, and several others, including Punjab National Bank officials. The investigation revealed they caused a loss of around ₹7,080.86 crore (USD 952.75 million) to the bank through 165 unauthorized or fraudulent Letters of Undertakings (LoUs) and unauthorized or fraudulent amendments in 58 Foreign Letters of Credit (FLC), leading to the discounting of 311 bills from January 2017 to May 2017.
Besides, the entities controlled by Choksi have also duped a consortium of banks to the tune of ₹5,100 crore. According to the CBI, these entities enjoyed a credit exposure from the consortium of 32 banks, which have reported outstanding balances concerning those entities of around ₹5,100 crore as of December 31, 2017.
The Enforcement Directorate (ED) is investigating money laundering cases against Choksi and Modi. The ED claims that Varma, along with Choksi and others, played a key role in the bank scam and helped set up shell companies.
Court’s Ruling
The CBI subsequently filed a plea to arrest Varma. On Friday, the special court judge dismissed this application. The court reasoned that granting the arrest would involve reviewing the earlier order that had already rejected the custody request. The judge stated that the court cannot review its own previous order of rejection.
CBI’s Arguments and Defense
The CBI’s plea highlighted the need to interrogate Varma to investigate his involvement with Mehul Choksi in securing 142 buyers’ credits amounting to Rs 3,011 crore, which were disbursed against 165 unauthorized Letters of Undertaking (LOUs). In response, Varma’s lawyer argued that he was included as an accused in a supplementary chargesheet only in 2021. At the time Varma left India in May 2017, there was no chargesheet against him, thus he cannot be considered to have evaded criminal proceedings.
Background on the Case
Mehul Choksi has been residing in Antigua since 2018, having fled India just weeks before the scam came to light. Choksi, along with his nephew Nirav Modi, is accused of embezzling over Rs 13,000 crore from PNB using Letters of Undertaking (LOUs) and foreign letters of credit (FLCs), by bribing officials at the bank’s Brady House branch in Mumbai.
