The Bank of India filed a lawsuit against diamond merchant Nirav Modi in Hong Kong court on May 7 for recovery of debt to the tune of $6.25 million that he allegedly got on the basis of illegally secured Letters of Undertaking, Business Today reported. The writ filed by the state-owned bank names Modi and four of his companies, including Firestar Diamonds and Firestar Diamonds International.
Modi, who has been accused of defrauding the Punjab National Bank of Rs 13,700 crore, is suspected to be in Hong Kong, according to India Today. The billionaire allegedly used over 1,200 illegally secured LoUs since 2011, in what is called the biggest banking scam in India.
The Indian government submitted a request to the Hong Kong authorities to arrest Modi on March 23, Minister of State for External Affairs, Gen. (retd) VK Singh said in a statement in the Rajya Sabha in April.
The Punjab National Bank had moved the Hong Kong court before the Bank of India against Modi for recovery of dues worth over $5 million. The bank moved the court after law enforcement agencies confirmed that Modi had left for Hong Kong, according to Business Today.
The Bank of India filed the lawsuit after the central government gave it a go-ahead to explore all legal options to recover the dues and set an example by “pursuing the fraudster in any corner of the world,” top officials of the bank told the publication.
To avoid the possibility of economic offenders fleeing the country, the Indian government said in March that banks would have the power to collect passport details of customers who seek loans above Rs 50 crore. The banks also released a list of borrowers who are “willful defaulters,” and action to impound their passports has been initiated to ensure that they don’t flee the country.
Meanwhile, Indian American owned Parag Diamonds Inc won the bid for one of Nirav Modi’s companies, A Jaffe, in the auction that was held in New York City on May 3. The New York-based Parag Diamonds is headed by businessman Panna Jain, and the company also operates under the name Paramount Gems. The company has operations in the United States, Europe, and India.
A Jaffe is a century-old jewelry brand founded in 1892 by Abraham Jaffe. The firm was acquired by Nirav Modi through Synergies Corporation, which held 95 per cent stake in the brand.
The two other companies of Nirav Modi in the United States — Firestar Diamond and Fantasy Inc — are yet to face an auction, which has been delayed for an unspecified amount of time, India Today reported.