In a fresh setback to fugitive diamantaire Nirav Modi, the High Court in London, on Wednesday, ordered his extradition to India to face the charges of fraud and money laundering in the nearly $2-billion Punjab National Bank (PNB) letters of undertaking (LoU) scam perpetrated by him and his firms over several years.
Modi, 51, who remains behind bars at Wandsworth prison in south-east London, had appealed before the High Court in London against being sent back to India to face trial in the massive fraud case.
He, however, lost the appeal with Lord Justice Jeremy Stuart-Smith and Justice Robert Jay, who heard the appeal earlier this year, delivering the verdict on Wednesday that allowed the fugitive businessman’s extradition to India.
The leave to appeal in the High Court in London was granted on two grounds — under Article 3 of the European Convention of Human Rights (ECHR) to hear arguments if it would be “unjust or oppressive” to extradite Modi due to his mental state — and Section 91 of the Extradition Act 2003, also related to mental ill health.
It maybe recalled that Modi had been granted permission to appeal against District Judge Sam Goozee’s Westminster Magistrates’ Court ruling in favour of extradition last February.
Legal experts said that Modi’s extradition to India — even after the latest High Court verdict — may not happen immediately as he still has an option to appeal before the Britain’s Supreme Court in the next 14 days. However, the appeal can happen only if the High Court agrees that his case involves a point of law of general public importance.
Even if the option of approaching Britain’s Supreme Court is spent, Modi is free to approach the European Commission of Human Rights, they said.
Modi, who was arrested in March 2019 and has remained in jail since then, is the subject of two sets of criminal proceedings, with the Central Bureau of Investigation (CBI) case relating to a large-scale fraud upon PNB through the fraudulent obtaining of letters of undertaking (LoUs) or loan agreements, and the Enforcement Directorate (ED) case relating to the laundering of the proceeds of that fraud.
He also faces two additional charges of “causing the disappearance of evidence” and intimidating witnesses or “criminal intimidation to cause death”, which were added to the CBI case. Modi was declared as Fugitive Economic Offender in December 2019.
In June 2020, in the first order of confiscation under the Fugitive Economic Offenders (FEO) Act, 2018, a special court in India had directed that Modi’s properties be attached by the ED. However, the court had exempted properties secured to PNB and a consortium of banks either through mortgage, hypothecation or personal guarantee.
The ₹13,000-crore scam had involved the issuance of unauthorised Letters of Undertaking (LoU) by a few PNB officials to Modi-controlled entities in India. A series of entities that posed as independent third parties were used in sham transactions to import gemstones and jewellery to obtain bank financing in the form of LoUs. PNB has already made provisions for 100 per cent of its exposure to the fraud.
An LoU is a bank guarantee under which a bank allows its customer to raise money from another Indian bank’s foreign branch in the form of short-term credit. The loan is used to make payment to the customer’s offshore suppliers in foreign currency. The overseas bank usually lends to the importer based on the LoU issued by the importer’s bank.