Bar & Bench ( ) · PDF fileWealth Scam, Coal scam, 2G Scam, Fodder Scam etc. It is surprising...

SYNOPSIS AND LIST OF DATES

The scam of 11,300 crore in the Punjab National Bank

has come to light. It is a very shocking the way the swindlers

have succeeded in siphoning of public money from the Punjab

National Bank in connivance with the top management of the

Bank. This is the biggest scam in the history of banking

system in India.

It appears that the country has become the country of

scams. There was Bofors scam, Telecom scam, Common

Wealth Scam, Coal scam, 2G Scam, Fodder Scam etc. It is

surprising that scam after scams are taking place and the

administration of the Government is not doing substantial part

to control such frauds in the country. In the process the

economy of the country has totally been affected. The general

public is suffering.

Scam of Rs.11,300 Crores in Punjab National Bank

branch of Mumbai is the biggest scam of in the history of

banking system in India. This scam started in 2011 and

continued for 6 years under the nose of all the Authorities of

the Bank.

After doing fraud the swindlers- all of them have gone to

foreign countries. Nirav Modi is stated to be is the kingpin.

Nirav Modi is shown in the Photo sessions at Macau with the

Hon‟ble the Prime Minister Narendra Modi. How such

fraudsters manage to come in the near Group of the Hon‟ble

the Prime Minister. Whether there is any system for permitting

such fraudulent persons to malign the image of the Prime

Minister.

Now they are calling it the fraud and not the scam. Are

they feeling shy calling this a big scam? It is respectfully

Bar & Bench (www.barandbench.com)

stated that the bank authorities allow the siphoning of the

bank money when it is a case of big person. In the case of the

poor of the country the Recovery System of the bank is very

hard. One farmer Gyan Chand in Village of U.P. had taken

Tractor Loan of Rs. 90,000/-. This poor farmer was crushed

by the bank recovery authorities under the same tractor as

this poor farmer did not return the loan amount in time.

Similarly a farmer in Village Siwon jumped to death in a

canal alongwith his minor son of 5 years as the bank

authorities pressurized him to return the loan amount and the

poor farmer was not in position to return it.

A borrower of small amount of loan from the bank

cannot run away from the country then how 11,300 crores

scamster could run away. The letters of undertaking were

magnanimously issued by the Punjab National Bank. But it

has not been stated as to the date of issue of letters of

undertaking. Such a big scam cannot be possible without the

help of very big persons in the Government. There seems to

be involvement of highly placed persons of this country.

In such like scams where more than 11,300 Crores of

PNB has been swindled and taken away, the accused

persons seem to be very close to the power corridor. There

has been a common factor in swindling away the money of

the banks. It could be the case of Lalit Modi, Vijay Mallya and

now Nirav Modi. The news of their nearness to the powerful

persons in the politics have been published in the

newspapers. They have been exercising their influence in the

political groups. Vijay Mallya had reached Rajyasabha with

the help of BJP whereas in the Party of Nirav Modi Rahul

Gandhi of the Congress has been taking part. In Dabos the

accused Nirav Modi is shown in a photo sessions with the


Hon‟ble the Prime Minister Narendra Modi. Because of the

nearness of these persons to the powerful persons in the

Politics they do not care for the laws of the country. They are

also able to make use of the system in their favour due to

their closeness with the high flown politicians of the country.

In the investigation of the case registered against them there

is always soft paddling and the cases for recovery do not

reach at the conclusion for so many years.

Banking in India in the modern sense, originated in the

last decades of the 18th century. Among the first banks were

the Bank of Hindustan, which was established in 1770 and

liquidated in 1829–32; and the General Bank of India,

established in 1786 but failed in 1791.

The largest bank, and the oldest still in existence, is

the State Bank of India (S.B.I). It originated as the Bank of

Calcutta in June 1806. In 1809, it was renamed as the Bank

of Bengal. This was one of the three banks funded by

a presidency government, the other two were the Bank of

Bombay in 1840 and the Bank of Madras in 1843. The three

banks were merged in 1921 to form the Imperial Bank of

India, which upon India's independence, became the State

Bank of India in 1955. For many years the presidency banks

had acted as quasi-central banks, as did their successors,

until the Reserve Bank of India was established in 1935,

under the Reserve Bank of India Act, 1934.

In 1960, the State Banks of India was given control of

eight state-associated banks under the State Bank of India

(Subsidiary Banks) Act, 1959. These are now called

its associate banks. In 1969 the Indian

government nationalised 14 major private banks, one of the


https://en.wikipedia.org/wiki/State_Bank_of_India

https://en.wikipedia.org/wiki/Bank_of_Calcutta



https://en.wikipedia.org/wiki/Bank_of_Bengal



https://en.wikipedia.org/wiki/Presidencies_and_provinces_of_British_India

https://en.wikipedia.org/wiki/Bank_of_Bombay



https://en.wikipedia.org/wiki/Bank_of_Madras

https://en.wikipedia.org/wiki/Imperial_Bank_of_India






https://en.wikipedia.org/wiki/Reserve_Bank_of_India

https://en.wikipedia.org/wiki/Reserve_Bank_of_India_Act,_1934

https://en.wikipedia.org/wiki/State_Bank_of_India#Associate_banks

https://en.wikipedia.org/wiki/Government_of_India



https://en.wikipedia.org/wiki/Nationalised

big bank was Bank of India. In 1980, 6 more private banks

were nationalised.

These nationalised banks are the majority of lenders in

the Indian economy. They dominate the banking sector

because of their large size and widespread networks.

The Indian banking sector is broadly classified

into scheduled and non-scheduled banks. The scheduled

banks are those included under the 2nd Schedule of the

Reserve Bank of India Act, 1934. The scheduled banks are

further classified into: nationalised banks; State Bank of

India and its associates; Regional Rural Banks (RRBs);

foreign banks; and other Indian private sector banks. The

term commercial banks refers to both scheduled and non-

scheduled commercial banks regulated under the Banking

Regulation Act, 1949.

Generally banking in India is fairly mature in terms of

supply, product range and reach-even though reach in rural

India and to the poor still remains a challenge. The

government has developed initiatives to address this through

the State Bank of India expanding its branch network and

through the National Bank for Agriculture and Rural

Development (NABARD) with facilities like microfinance.

The banking system in India has been functioning since

the timing of 18th Century. From the beginning of banking

system in India till today a lot of progress has been made in

streamlining the banking system. Rules and regulations have

been provided for obtaining the loans from the banks. While

granting the loan the concerned banks is very meticulous with

regard to the returning capacity of the person to whom the

loan is granted. The security for the release of loan is of

paramount importance. The security in the form of documents


https://en.wikipedia.org/wiki/Bank_of_India

https://en.wikipedia.org/wiki/Indian_economy

https://en.wikipedia.org/wiki/Scheduled




https://en.wikipedia.org/wiki/Regional_Rural_Bank

https://en.wikipedia.org/wiki/Banking_Regulation_Act,_1949



https://en.wikipedia.org/wiki/National_Bank_for_Agriculture_and_Rural_Development



https://en.wikipedia.org/wiki/Microfinance

of the property are mortgaged with the bank. In addition to this

before granting the loan the income tax return of the loanee is

an important document. Based thus the loan is sanctioned

ensuring the same will be returned to the banks with

stipulated amount of interest per annum. Prior to all this a lot

of exercise by the bank authority is undertaken to see the

immovable property of the loanee. When all this is done the

sound surety is also taken on behalf of the loanee before the

sanction of loan. Basically these are the requirements of the

release of loan to private persons, companies etc.

But the problem arises when the bank employees, in

connivance with the loanee, do not get the proper fulfilment of

the formalities on behalf of the loanee. Due to extraneous

considerations the loans are sanctioned to the persons and

companies without looking into the sound economic

conditions of such companies and persons to whom the bank

sanctioned the loan.

In such events there are defaulters in the payment of

loan. It is because against even no security the loans are

granted by the banks and in the event of non-payment of loan

the banks are powerless to get the recovery of such loans

sanctioned without sound securities.

It is also respectfully stated that the big and influential

persons are also supported by the Government Authorities

also including the responsible Ministers for sanctioning the

loan to such big persons. It is a matter of record that the

Prime Minister of the country at that time had recommended

the huge amount of loan to defaulter Vijay Mallya. It was

inspite of the fact that earlier loan was sanctioned to Vijay

Mallya had not been returned. Similar are the cases which are

unaccountable. Therefore, there is huge defaulting in the


payment of loans. Later on such several loans are declared

as bad debt. Such bad debts are never recoverable.

Therefore, in these circumstances the economy of the nation

suffers a big jolt.

That with the invention of computer the latest system

has been devised. In the present case of Punjab National

Bank fraud came to light on 14.02.2018 the tampering in the

computer system has been done.

It appeared in the papers livemint dated 15.02.2018 that

there is a scam of Rs.11,400 Crore in the Punjab National

Bank. The Punjab National Bank is the 2nd biggest public

sector Bank. The Bank had discovered a fraudulent

transactions about Rs.11,400 Crore at a single branch at

Mumbai.

On 29.01.2018 Punjab National Bank official from

Mumbai filed a Criminal Complaint with India‟s Federal

Investigative Agency against three companies and four

people. A big name who has been described as a billionaire

jeweller named Nirav Modi also came to light. It was found out

that this Nirav Modi alongwith his uncle Mehul Chowksi have

swindled the Punjab National Bank.

It is also respectfully stated that the Bank alleged in the

First Information Report that the two junior employees at the

Mumbai Branch of the Bank had helped the companies of

Nirav Modi and his uncle Mehul Chowksi. It is also the case of

the Punjab National Bank that letters of undertaking from it

were taken without having a sanctioned credit limit or

maintaining funds. These LoUs were used to obtain short

term credit from overseas branches of the other Indian Bank,

P.N. Bank.


On 14.02.2018 the Punjab National Bank said in

regulatory filing that it had discovered fraudulent and

unauthorized transactions totalling Rs.11,400 Cr. at the

Mumbai Branch. The investigators have said the latest

disclosure was related to the earlier case filed. Punjab

National Bank says that on 16.02.2018 the accused firms

presented a set of import documents to the Mumbai Branch

and requested buyers‟ credit to pay overseas suppliers. Since

they had no pre-arranged credit limit, the branch official asked

the companies to put down the full amount as collateral so

that the bank could issue the LoUs to authorize the credit.

When the firms argued that they had used such facilities

in the past without keeping any money on margin. At that the

Punjab National Bank scanned through records and found no

trace of any transactions, according to the bank‟s account.

It then found that two junior employees had issued LoUs

on the SWIFT interbank messaging system without entering

the transactions on the bank‟s own system. Such transactions

went on for years without detection.

Banking sources have said in some banks the SWIFT

system, which is used for International transactions, and the

core banking system work independently of each other. In the

Punjab National Bank case, it said the outstanding LoUs were

not available on its core banking system run on Infosys‟

Finacle Software. Thus, the LoUs issued went undetected.

In this case the Punjab National Bank has accused

three companies. These companies are Solar Exports, Stellar

Diamonds and Diamond RUS- These companies belong to

Nirav Modi. Nirav Modi is high end jeweller who runs his

eponymous Nirav Modi stores that spread from New York to


Hong Kong. It is stated that the said Nirav Modi is worth $1.73

billion according to Forbes rankings.

It is further stated that Modi‟s Company colluded with

the bank staff of Punjab National Bank even in the branches

of Foreign Countries. The Punjab National Bank has also

accused Gitanjali Gems, Gili India and Nakshatra. These

companies promoted by another jeweller, Mehul Chowksi who

is stated to be Nirav Modi‟s uncle.

That the news appeared in moneylife.in on 15.02.2018

it is with the title “ Rs.11,300 Crore fraud at PNB: Many

unanswered Questions about Government Banks”. The fraud

of Rs.11,300 Crore at the Punjab National Bank is a

monumental fraud. It shows complete break-down of

accountability, cheques and balances and proper system.

Media report say that rogue employees from Punjab National

Bank issued fake Letter of Undertaking (LoUs) in favour of

three companies. These companies were run by Nirav Modi.

The names of these companies are Solar Exports, Steller

Diamonds and Diamond R Us. These companies were

availing buyer‟s credit. The rouge employees misused SWIFT

(Society for Worldwide Interbank Financial

Telecommunication) network to send messages to other

banks bypassing the core banking system (CBS), which in

this case was FINACLE of Infosys and keeping the

management in the dark. On these LoUs, overseas branches

of Allahabad Bank and Axis Bank among others credited

PNB‟s Nostro Account (from where funds were moved to

certain overseas parties).

This raises a set of serious issues. By its very name,

CBS ought to cover every single banking transactions. Has

anybody certified the robustness of CBS Systems that are


being used by all banks? Howe many of them have provision

for manual entry of key parameters allowing employees to

make unsupervised decisions? This system is leaving scope

for human error. There have been cases of miscalculation of

interest of banks despite a CBS. But all these are ignored.

The PNB scam shows that the rouge employees can

easily manipulate system as there are no corroborations or

checks and balances. A senior Central Banker says, “The

menace of uncorroborated LOU (Letters of Undertaking) with

no follow up documentation and checks is widespread and

must be stopped or replaced by bank guarantees”.

That the news appeared in Business Today on

16.02.2018. The news was with a Title “PNB fraud LIVE

UPDATES: Had warned against Mehul Choksi but no one

listened, says ex-Allahabad Bank director Dinesh Dubey”.

The Ministry of External Affairs on Friday suspended the

passports of diamantaire Nirav Modina and his uncle Mehul

Choksi after the advice of Enforcement Directorate. The

passports have been suspended for a period of four weeks.

The duohave been asked to respond within a week as to why

their passports should not be impounded under the Passport

Act, 1967.

Now the fraud is out in the open. The Punjab National

Bank has fired its 18 employees and the Government has

promised not to spare anyone.

That the news appeared in First Post news online dated

17.02.2018. This news is titled “Punjab National Bank Fraud:

Nirav Modi‟s escape from Indian indicates malaise runs deep

in the system.” Just two employees of a single branch of a

bank could orchestrate a swindle that cost the PNB ten times


its annual profit. The fraud went undetected for almost 6 years

inspite of mandatory checks and balances. The perpetrator of

the fraud and his family were able to escape weeks before the

scam could be investigated. All these factors which were

interconnected, underline the systemic failure of various

agencies at the highest level of the financial and

administrative pyramids in India.

It is difficult to understand as to how banks in India and

abroad could be cheated for years when every transaction

has to be accounted for daily at the end of business hours

and the RBI also did not do its job properly. There are auditing

of every bank account. This task could have been difficult in

the days of manual book keeping but in the era of computers

and centralized servers, this lapse is almost unimaginable.

Two employees of the PNB were able to bankroll a

fraud for several years. It has now come to light that the bank

had an inbuilt mechanism that could be exploited. But how

could this go on for 6 years. Why did the PNB Management

did not take a notice of this fraud.

It is also respectfully stated that the Indian bank

authorities have not learnt lessons from the earlier such

cases. The fraud was done by Vijay Mallya and swindled the

bank of several crore rupees. Harshad Mehta, Ketan Parekh

etc. have the same way of swindling the banks but how it

could happen this time when earlier the abovenamed persons

had also cheated the banks and did not return the money.

Instead they have got settled in the foreign countries.

That the news appeared in livemint dated 17.02.2018

with the title “PNB Fraud Govt. Identifies 150 shell companies

linked to Nirav Modi”. One Senior officer of the Government

on Friday said that in parallel with the actions ofthe


lastenforcement agencies and income tax authorities, the

ministry has identified 150 shell companies for investigation.

The Punjab National Bank has disclosed fraud of Rs.11,400

Crore perpetrated by way of fraudulently procured letters of

undertaking (LoUs) of the lender.

There are details of Nirav Modi ventures which are

spread throughout the world. Just about a week ago diamond

Jeweller Nirav Modi opened a new store in Macau. Barely

three months ago, he had opened a second store in DLF

Emporio‟s Chanakya Mall in New Delhi, with plans for another

one, in Bengaluru, later this year. Modi has been relentless in

building his brand regardless of banks having aproblem of

fraudulent and unauthorized transactions with his companies.

His website is running Valentine‟s Day promotions beside

pictures of Hollywood celebrities wearing his jewellery and

details of the fashion shows he sponsored recently. Modi‟s

ambition was to expand to 100 stores by 2020, not unusual

for a brand that is trying to grow. He has boutiques in New

York, Las Vegas, Honolulu, Singapore and Beijing. There is

one store in London, three stores in Macau and four stores in

Hong Kong. It is also the fact that Modi‟s sister Purvi Mehta is

also with Nirav Modi and runs the company‟s design division.

The rest of his business details and how he grew to

become a Business Tycoon in the field of Diamond Jewellery

has also been narrated in this publication dated 17.02.2018.

That a news appeared on 17.2.2018 in Scroll.in online

news. This news is with the Title “Nirav Modi missing: Finding

Nimo jokes flood Twitter; Mallya, Lalit Modi become collateral

damage”. It is soon after billionaire jeweller Nirav Modi came

under investigator‟s radar this week for what is likely one of

the biggest scams to hit Indian banking. Social Media was


flooded with “finding Nimo” jokes. The wordplay got further

currency on Friday morning as two major English newspapers

built their lead headlines around the “NiMo” acronym for Nirav

Modi. Congress has called Nirav Modi as Chhota Modi.

The rest of the details of the Petition are given

hereunder in seriatim :

LIST OF DATES

14.02.2018 That on 14.02.2018 the Punjab National

Bank said in regulatory filing that it had

discovered fraudulent and unauthorized

transactions totalling Rs.11,400 Cr. at the

Mumbai Branch. The investigators have said

the latest disclosure was related to the

earlier case filed. Punjab National Bank says

that on 16.02.2018 the accused firms

presented a set of import documents to the

Mumbai Branch and requested buyers‟

credit to pay overseas suppliers. Since they

had no pre-arranged credit limit, the branch

official asked the companies to put down the

full amount as collateral so that the bank

could issue the LoUs to authorize the credit.

When the firms argued that they had

used such facilities in the past without

keeping any money on margin. At that the

Punjab National Bank scanned through

records and found no trace of any

transactions, according to the bank‟s

account.


It then found that two junior employees

had issued LoUs on the SWIFT interbank

messaging system without entering the

transactions on the bank‟s own system.

Such transactions went on for years without

detection.

Banking sources have said in some

banks the SWIFT system, which is used for

International transactions, and the core

banking system work independently of each

other in Punjab National Bank case. It said

the outstanding LoUs were not available on

its core banking system run on Infosys‟

Finacle Software. Thus, the LoUs issued

went undetected.

In this case the Punjab National Bank

has accused three companies. These

companies are Solar Exports, Stellar

Diamonds and Diamond RUS- These

companies belong to Nirav Modi. Nirav Modi

is high end jeweller who runs his

eponymous Nirav Modi stores that spread

from New York to Hong Kong. It is stated

that the said Nirav Modi is worth $1.73

billion according to Forbes rankings.

15.02.2018 Punjab National Bank fraud came to light on

14.02.2018. It appeared in the papers

livemint dated 15.02.2018 that there is a

scam of Rs.11,400 Crore in the Punjab

National Bank. The Punjab National Bank is

the 2nd biggest public sector Bank. The Bank


had discovered a fraudulent transactions

about Rs.11,400 Crore at a single branch at

Mumbai.

It is also respectfully stated that the Bank

alleged in the First Information Report that

the two junior employees at the Mumbai

Branch of the Bank had helped the

companies of Nirav Modi and his uncle

Mehul Chowksi. It is also the case of the

Punjab National Bank that letters of

undertaking from it were taken without

having a sanctioned credit limit or

maintaining funds. These LoUs were used to

obtain short term credit from overseas

branches of the other Indian Bank, P.N.

Bank. It is further stated that Modi‟s

Company colluded with the bank staff of

Punjab National Bank even in the branches

of Foreign Countries. The Punjab National

Bank has also accused Gitanjali Gems, Gili

India and Nakshatra. These companies

promoted by another jeweller, Mehul

Chowksi who is stated to be Nirav Modi‟s

uncle.

15.02.2018 That the news appeared in moneylife.in on

15.02.2018 it is with the title “ Rs.11,300

Crore fraud at PNB: Many unanswered

Questions about Government Banks”. The

fraud of Rs.11,300 Crore at the Punjab

National Bank is a monumental fraud. It

shows complete break-down of


accountability, checks and balances and

proper system. Media report say that rogue

employees from Punjab National Bank

issued fake Letter of Undertaking (LoUs) in

favour of three companies. These

companies were run by Nirav Modi. The

names of these companies are Solar

Exports, Steller Diamonds and Diamond R

Us. These companies were availing buyer‟s

credit. The rouge employees misused

SWIFT (Society for Worldwide Interbank

Financial Telecommunication) network to

send messages to other banks bypassing

the core banking system (CBS), which in

this case was FINACLE of Infosys and

keeping the management in the dark. On

these LoUs, overseas branches of

Allahabad Bank and Axis Bank among

others credited PNB‟s Nostro Account (from

where funds were moved to certain

overseas parties).

This raises a set of serious issues. By its

very name, CBS ought to cover every single

banking transactions. Has anybody certified

the robustness of CBS Systems that are

being used by all banks? Howe many of

them have provision for manual entry of key

parameters allowing employees to make

unsupervised decisions? This system is

leaving scope for human error. There have

been cases of miscalculation of interest of


banks despite a CBS. But all these are

ignored.

The PNB scam shows that the rouge

employees can easily manipulate system as

there are no corroborations or checks and

balances. A senior Central Banker says,

“The menace of uncorroborated LOU

(Letters of Undertaking) with no follow up

documentation and checks is widespread

and must be stopped or replaced by bank

guarantees”.

16.2.2018 That the news appeared in Business Today

on 16.02.2018. The news was with a Title

“PNB fraud LIVE UPDATES: Had warned

against Mehul Choksi but no one listened,

says ex-Allahabad Bank director Dinesh

Dubey”.

The Ministry of External Affairs on

Friday suspended the passports of

diamantaire Nirav Modina and his uncle

Mehul Choksi after the advice of

Enforcement Directorate. The passports

have been suspended for a period of four

weeks. The duohave been asked to respond

within a week as to why their passports

should not be impounded under the

Passport Act, 1967.

Now the fraud is out in the open. The Punjab

National Bank has fired its 18 employees

and the Government has promised not to

spare anyone.


17.02.2018 That the news appeared in First Post news

online dated 17.02.2018. This news is titled

“Punjab National Bank Fraud: Nirav Modi‟s

escape from Indian indicates malaise runs

deep in the system.” Just two employees of

a single branch of a bank could orchestrate

a swindle that cost the PNB ten times its

annual profit. The fraud went undetected for

almost 6 years inspite of mandatory checks

and balances. The perpetrator of the fraud

and his family were able to escape weeks

before the scam could be investigated. All

these factors which were interconnected,

underline the system‟s failure of various

agencies at the highest level of the financial

and administrative pyramids in India.

It is difficult to understand as to how

banks in India and abroad could be cheated

for years when every transaction has to be

accounted for daily at the end of business

hours and the RBI also did not do its job

properly. There are auditing of every bank

account. This task could have been difficult

in the days of manual book keeping but in

the era of computers and centralized

servers, this lapse is almost unimaginable.

Two employees of the PNB were able to

bankroll a fraud for several years. It has now

come to light that the bank had an inbuilt

mechanism that could be exploited. But how

could this go on for 6 years. Why did the


PNB Management did not take a notice of

this fraud.

It is also respectfully stated that the Indian

bank authorities have not learnt lessons

from the earlier such cases. The fraud was

done by Vijay Mallya and swindled the bank

of several crore rupees. Harshad Mehta,

Ketan Parekh etc. have the same way of

swindling the banks but how it could happen

this time when earlier the abovenamed

persons had also cheated the banks and did

not return the money. Instead they have got

settled in the foreign countries.

17.02.2018 That the news appeared in livemint dated

17.02.2018 with the title “PNB Fraud Govt.

Identifies 150 shell companies linked to

Nirav Modi”. One Senior Government Officer

on Friday said that in parallel with the

actions of the last enforcement agencies

and income tax authorities, the ministry has

identified 150 shell companies for

investigation. The Punjab National Bank has

disclosed fraud of Rs.11,400 Crore

perpetrated by way of fraudulently procured

letters of undertaking (LoUs) of the lender.

There are details of Nirav Modi ventures

which are spread throughout the world. Just

about a week ago diamond Jeweller Nirav

Modi opened a new store in Macau. Barely

three months ago, he had opened a second

store in DLF Emporio‟s Chanakya Mall in


New Delhi, with plans for another one, in

Bengaluru, later this year. Modi has been

relentless in building his brand regardless of

banks having aproblem of fraudulent and

unauthorized transactions with his

companies. His website is running

Valentine‟s Day promotions beside pictures

of Hollywood celebrities wearing his

jewellery and details of the fashion shows he

sponsored recently. Modi‟s ambition was to

expand to 100 stores by 2020, not unusual

for a brand that is trying to grow. He has

boutiques in New York, Las Vegas,

Honolulu, Singapore and Beijing. There is

one store in London, three stores in Macau

and four stores in Hong Kong. It is also the

fact that Modi‟s sister Purvi Mehta is with

Nirav Modi and runs the company‟s design

division.

The rest of his business details and how he

grew to become a Business Tycoon in the

field of Diamond Jewellery has also been

narrated in this publication dated

17.02.2018.

That a news appeared on 17.2.2018 in

Scroll.in online news. This news is with the

Title “Nirav Modi missing: Finding Nimo

jokes flood Twitter; Mallya, Lalit Modi

become collateral damage”. It is soon after

billionaire jeweller Nirav Modi came under

investigator‟s radar this week for what is


likely one of the biggest scams to hit Indian

banking. Social Media was flooded with

“finding Nimo” jokes. The wordplay got

further currency on Friday morning as two

major English newspapers built their lead

headlines around the “NiMo” acronym for

Nirav Modi.

Congress has called Nirav Modi as Chhota

Modi.

18.02.2018 That on 18.2.2018 a news appeared in

News18.com with the Title” Another PNB-

Like Scam? Rotomac Pens Owner „Flees‟

After taking Rs.800 Crores from Govt. Run

banks.

In view of the above it is respectfully

submitted that due to the non-returning bank

loan the economy of the country is made to

suffer. The magnanimous loan are granted

to the influential persons on the

recommendations of even Ministers of the

States and the Country. After

recommendations from such high-ups even

the eligibility of the grant of loan is not

properly taken into consideration. Such

loans are not returned in due time or in

many cases not returned at all. The

employees of the bank are invariably found

in connivance with the borrowers. Even

without looking to the eligibility of the

borrowers the loans are granted.


Such persons do not return the

loan. At worst they even leave the

country to settle abroad. All this happens

under the nose of the Authorities of the

Nation. No serious actions are initiated

against such defaulters. Many others are

also encouraged to deceive and swindle

the bank in raising the loans and not

returning thereafter. In this regard the

country has suffered a lot. This way 1%

of the population of the country are

having 75% of the money. The rest of the

country men lead a life of want and

struggle.

The petitioner is a lawyer in the

Supreme Court of India. He has totally

been aghast and flabbergasted after

reading the news in the paper that in the

Punjab National Bank Rs.11,400 crore

have been swindled by the Diamond and

Jewellery Merchants in connivance with

two employees of Punjab National Bank

Branch at Bombay.

Therefore, the petitioner is filing the

instant Writ Petition for direction of the

probe of this case under the supervision

of this Hon‟ble Court. The Petitioner has

inter alia made a prayer to seek

immediate deportation of the swindlers


and also to auction their properties for

realizing the fraudulent amount from

them. The prayer is also for setting

downs the guidelines for granting loans

by the Banks in India.

Hence the present Writ Petition.


IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (C) NO. ____ OF 2018

IN THE MATTER OF:

Vineet Dhanda

S/o Dr. J.P. Dhanda

Flat No.0102, Tower No.9

Supreme Court Bar Association

Multi-State Group Housing Society

Sector 99, Noida, Goutam Budh Nagar,

Noida, Uttar Pradesh 201303.

...Petitioner

VERSUS

1. Union of India

Through the Secretary

Ministry of Finance

3rd floor JeevanDeep Building,

Sansad Marg,

New Delhi, Delhi 110001

2. Ministry of Law & Justice

Through the Secretary

4th Floor, A-Wing, Shastri

Bhawan, New Delhi, Delhi 110001


3. Reserve Bank of India

Through its Governor

6, Sansad Marg, New Delhi,

Delhi 110001

4. Punjab National Bank

Through the Managing Director

Sansad Marg, Pandit Pant Marg Area,

Sansad Marg Area, New Delhi,

Delhi 110001

...RESPONDENTS

AND IN THE MATTER OF:-

PETITION UNDER ARTICLE 32 OF THE CONSTITUTION OF INDIA FOR

ISSUANCE OF APPROPRIATE WRIT ORDER OR DIRECTIONS TO THE

RESPONDENTS.

TO

THE HON‟BLE CHIEF JUSTICE OF INDIA AND

HIS HON‟BLE COMPANION JUSTICES OF THE

HON”BLE SUPREME COURT OF INDIA AT

NEW DELHI

THE HUMBLE PETITION OF THE

PETITIONER ABOVE NAMED.

MOST RESPECTFULLY SHOWETH:-

1. That the petitioner is a practising Advocate in the

Hon‟ble Supreme Court of India. The present

public interest litigation is brought before this

Hon‟ble Court not for the purpose of enforcing


the right of one individual against another but it

is intended to promote and vindicate public

interest.

2. The present petition covers the issue of

the national importance.

3. That the petitioner has not approached

any Authority or tribunal for the same

relief. The petitioner is a practicing lawyer

in Supreme Court of India. Annual

Income: 1 Crore. His PAN No. is

AHVPD7813N. His Mobile No. is +91-

9811013810. The e-mail address of the

Petitioner is [email protected]

there is no personal gain, private motive

or oblique reason for filing the PIL. The

public interest litigation is the only mode

and a proper way to ensure the protection

of human being as well as


mailto:[email protected]

the prime duty of government and

administration.

4. That through the Public Interest Litigation

Citizens seek judicial intervention in a number of

matters having the interest of public at large.

Through this new jurisdiction, the judiciary has

under taken responsibility as critics and monitors

of the Govt. and its various agencies and to give

socio-economic justice to the underprivileged

masses without actually interfering with political

administrative field or in the legislative sphere.

S.P. Gupta Vs. Union of India AIR 1982 SC 49.

5. That through the public interest litigation,

citizens seek judicial intervention in a number of

matters having the interest of public at large.

6. That there are several such landmark judgments

given by this Hon‟ble Court in the public interest

litigation. These judgments are for the

betterment of suffering people.

In Fertilizer Corporation Kamgar Union

Vs. Union of India 1981 (1) SCC 568


The Hon‟ble Supreme Court has stated that

Article 32 of the Constitution of India is an

integral part of the basic structure of the

Constitution.

7. That on 14.02.2018 the Punjab National Bank

said in regulatory filing that it had discovered

fraudulent and unauthorized transactions

totalling Rs.11,400 Cr. at the Mumbai Branch.

The investigators have said the latest disclosure

was related to the earlier case filed. Punjab

National Bank says that on 16.02.2018 the

accused firms presented a set of import

documents to the Mumbai Branch and requested

buyers‟ credit to pay overseas suppliers. Since

they had no pre-arranged credit limit, the branch

official asked the companies to put down the full

amount as collateral so that the bank could issue

the LoUs to authorize the credit.

When the firms argued that they had used

such facilities in the past without keeping any

money on margin. At that the Punjab National

Bank scanned through records and found no


trace of any transactions, according to the

bank‟s account.

It then found that two junior employees had

issued LoUs on the SWIFT interbank messaging

system without entering the transactions on the

bank‟s own system. Such transactions went on

for years without detection.

Banking sources have said in some banks

the SWIFT system, which is used for

International transactions, and the core banking

system work independently of each other in

Punjab National Bank case. It said the

outstanding LoUs were not available on its core

banking system run on Infosys‟ Finacle Software.

Thus, the LoUs issued went undetected.

In this case the Punjab National Bank has

accused three companies. These companies are

Solar Exports, Stellar Diamonds and Diamond

RUS- These companies belong to Nirav Modi.

Nirav Modi is high end jeweller who runs his

eponymous Nirav Modi stores that spread from

New York to Hong Kong. It is stated that the said


Nirav Modi is worth $1.73 billion according to

Forbes rankings.

9. That Punjab National Bank fraud came to light on

14.02.2018. It appeared in the papers livemint

dated 15.02.2018 that there is a scam of

Rs.11,400 Crore in the Punjab National Bank.

The Punjab National Bank is the 2nd biggest

public sector Bank. The Bank had discovered a

fraudulent transactions about Rs.11,400 Crore at

a single branch at Mumbai.

It is also respectfully stated that the Bank

alleged in the First Information Report that the

two junior employees at the Mumbai Branch of

the Bank had helped the companies of Nirav

Modi and his uncle Mehul Chowksi. It is also the

case of the Punjab National Bank that letters of

undertaking from it were taken without having a

sanctioned credit limit or maintaining funds.

These LoUs were used to obtain short term credit

from overseas branches of the other Indian

Bank, P.N. Bank.


It is further stated that Modi‟s Company

colluded with the bank staff of Punjab National

Bank even in the branches of Foreign Countries.

The Punjab National Bank has also accused

Gitanjali Gems, Gili India and Nakshatra. These

companies promoted by another jeweller, Mehul

Chowksi who is stated to be Nirav Modi‟s uncle.

A copy of the news appeared in livemint dated

15.02.2018 is annexed as Annexure P-1.

10. That the news appeared in moneylife.in on

15.02.2018 it is with the title “ Rs.11,300 Crore

fraud at PNB: Many unanswered Questions about

Government Banks”. The fraud of Rs.11,300

Crore at the Punjab National Bank is a

monumental fraud. It shows complete break-

down of accountability, checks and balances and

proper system. Media report say that rogue

employees from Punjab National Bank issued

fake Letter of Undertaking (LoUs) in favour of

three companies. These companies were run by

Nirav Modi. The names of these companies are

Solar Exports, Steller Diamonds and Diamond R

Us. These companies were availing buyer‟s


credit. The rouge employees misused SWIFT

(Society for Worldwide Interbank Financial

Telecommunication) network to send messages

to other banks bypassing the core banking

system (CBS), which in this case was FINACLE of

Infosys and keeping the management in the

dark. On these LoUs, overseas branches of

Allahabad Bank and Axis Bank among others

credited PNB‟s Nostro Account (from where funds

were moved to certain overseas parties).

This raises a set of serious issues. By its

very name, CBS ought to cover every single

banking transactions. Has anybody certified the

robustness of CBS Systems that are being used

by all banks? Howe many of them have

provision for manual entry of key parameters

allowing employees to make unsupervised

decisions? This system is leaving scope for

human error. There have been cases of

miscalculation of interest of banks despite a CBS.

But all these are ignored.


11. That the PNB scam shows that the rouge

employees can easily manipulate system as

there are no corroborations or checks and

balances. A senior Central Banker says, “The

menace of uncorroborated LOU (Letters of

Undertaking) with no follow up documentation

and checks is widespread and must be stopped

or replaced by bank guarantees”. A copy of the

news dated 15.2.2018 appeared on moneylife.in

is annexed as Annexure P-2.

12. That the news appeared in Business Today on

16.02.2018. The news was with a Title “PNB

fraud LIVE UPDATES: Had warned against Mehul

Choksi but no one listened, says ex-Allahabad

Bank director Dinesh Dubey”.

The Ministry of External Affairs on Friday

suspended the passports of diamantaire Nirav

Modina and his uncle Mehul Choksi after the

advice of Enforcement Directorate. The passports

have been suspended for a period of four weeks.

The duo have been asked to respond within a


week as to why their passports should not be

impounded under the Passport Act, 1967.

Now the fraud is out in the open. The

Punjab National Bank has fired its 18 employees

and the Government has promised not to spare

anyone. The copy of the news dated 16.02.2018

published in Business Today is annexed as

Annexure P-3.

13. That the news appeared in First Post news online

dated 17.02.2018. This news is titled “Punjab

National Bank Fraud: Nirav Modi‟s escape from

Indian indicates malaise runs deep in the

system.” Just two employees of a single branch

of a bank could orchestrate a swindle that cost

the PNB ten times its annual profit. The fraud

went undetected for almost 6 years inspite of

mandatory checks and balances. The perpetrator

of the fraud and his family were able to escape

weeks before the scam could be investigated. All

these factors which were interconnected,

underline the system‟s failure of various agencies


at the highest level of the financial and

administrative pyramids in India.

It is difficult to understand as to how banks

in India and abroad could be cheated for years

when every transaction has to be accounted for

daily at the end of business hours and the RBI

also did not do its job properly. There are

auditing of every bank account. This task could

have been difficult in the days of manual book

keeping but in the era of computers and

centralized servers, this lapse is almost

unimaginable.

Two employees of the PNB were able to

bankroll a fraud for several years. It has now

come to light that the bank had an inbuilt

mechanism that could be exploited. But how

could this go on for 6 years. Why did the PNB

Management did not take a notice of this fraud.

It is also respectfully stated that the Indian

bank authorities have not learnt lessons from the

earlier such cases. The fraud was done by Vijay

Mallya and swindled the bank of several crore


rupees. Harshad Mehta, Ketan Parekh etc. have

the same way of swindling the banks but how it

could happen this time when earlier the

abovenamed persons had also cheated the banks

and did not return the money. Instead they have

got settled in the foreign countries. A copy of the

news published in First Post news online dated


14. That the news appeared in livemint dated

17.02.2018 with the title “PNB Fraud Govt.

Identifies 150 shell companies linked to Nirav

Modi”. One Senior Government Officer on Friday

said that in parallel with the actions of the last

enforcement agencies and income tax

authorities, the ministry has identified 150 shell

companies for investigation. The Punjab National

Bank has disclosed fraud of Rs.11,400 Crore

perpetrated by way of fraudulently procured

letters of undertaking (LoUs) of the lender. A

copy of the news dated 17.02.2018 published in

livemint online news is annexed as Annexure P-

5.


15. There are details of Nirav Modi ventures which

are spread throughout the world. Just about a

week ago diamond Jeweller Nirav Modi opened a

new store in Macau. Barely three months ago, he

had opened a second store in DLF Emporio‟s

Chanakya Mall in New Delhi, with plans for

another one, in Bengaluru, later this year. Modi

has been relentless in building his brand

regardless of banks having a problem of

fraudulent and unauthorized transactions with

his companies. His website is running Valentine‟s

Day promotions beside pictures of Hollywood

celebrities wearing his jewellery and details of

the fashion shows he sponsored recently. Modi‟s

ambition was to expand to 100 stores by 2020,

not unusual for a brand that is trying to grow. He

has boutiques in New York, Las Vegas, Honolulu,

Singapore and Beijing. There is one store in

London, three stores in Macau and four stores in

Hong Kong. It is also the fact that Modi‟s sister

Purvi Mehta is with Nirav Modi and runs the

company‟s design division.


The rest of his business details and how he

grew to become a Business Tycoon in the field of

Diamond Jewellery has also been narrated in

this publication dated 17.02.2018. A copy of the

news published in The Wire dated 17.02.2018 is

annexed as Annexure P-6.

16. That a news appeared on 17.2.2018 in Scroll.in

online news. This news is with the Title “Nirav

Modi missing: Finding Nimo jokes flood Twitter;

Mallya, Lalit Modi become collateral damage”. It

is soon after billionaire jeweller Nirav Modi came

under investigator‟s radar this week for what is

likely one of the biggest scams to hit Indian

banking. Social Media was flooded with “finding

Nimo” jokes. The wordplay got further currency

on Friday morning as two major English

newspapers built their lead headlines around the

“NiMo” acronym for Nirav Modi.

Congress has called Nirav Modi as Chhota

Modi. A copy of the news appeared on 17.2.2018

in Scroll.in online news is annexed as Annexure

P-7.


17. That on 18.2.2018 a news appeared in

News18.com with the Title” Another PNB-Like

Scam? Rotomac Pens Owner „Flees‟ After taking

Rs.800 Crores from Govt. Run banks. A copy of

the news appeared in News18.com dated


18. In view of the above it is respectfully submitted

that due to the non-returning bank loan the

economy of the country is made to suffer. The

magnanimous loan are granted to the influential

persons on the recommendations of even

Ministers of the States and the Country. After

recommendations from such high-ups even the

eligibility of the grant of loan is not properly

taken into consideration. Such loans are not

returned in due time or in many cases not

returned at all. The employees of the bank are

invariably found in connivance with the

borrowers. Even without looking to the eligibility

of the borrowers the loans are granted.

Such persons do not return the loan. At

worst they even leave the country to settle


abroad. All this happens under the nose of the

Authorities of the Nation. No serious actions are

initiated against such defaulters. Many others

are also encouraged to deceive and swindle the

bank in raising the loans and not returning

thereafter. In this regard the country has

suffered a lot. This way 1% of the population of

the country are having 75% of the money. The

rest of the country man lead a life of want and

struggle.

19. The petitioner is a lawyer in the Supreme Court

of India. He has totally been aghast after reading

the news in the paper that in the Punjab National

Bank Rs.11,400 crore have been swindled by the

Diamond and Jewellery Merchants in connivance

of two employees of Punjab National Bank

Branch at Bombay.

Therefore, the petitioner is filing the instant

Writ Petition for setting downs the guidelines for

granting loans by the Banks in India.


GROUNDS

A. Because the scam of 11,300 crore in the Punjab

National Bank has come to light. It is a very

shocking the way the swindlers have succeeded

in siphoning of public money from the Punjab

National Bank in connivance with the top

management of the Bank. This is the biggest

scam in the history of banking system in India.

B. Because the country has become the country of

scams. There was Bofors scam, Telecom scam,

Common Wealth Scam, Coal scam, 2G Scam,

Fodder Scam etc. It is surprising that scam after

scams are taking place and the administration of

the Government is not doing substantial part to

control such frauds in the country. In the process

the economy of the country has totally been

affected. The general public is suffering.

C. Because the Scam of Rs.11,300 Crores in Punjab

National Bank branch of Mumbai is the biggest

scam of in the history of banking system in

India. This scam started in 2011 and continued


for 6 years under the nose of all the Authorities

of the Bank.

D. Because after doing fraud the swindlers- all of

them have gone to foreign countries. Nirav Modi

is stated to be is the kingpin. Nirav Modi is

shown in the Photo sessions at Macau with the

Hon‟ble the Prime Minister Narendra Modi. How

such fraudsters manage to come in the near

Group of the Hon‟ble the Prime Minister. Whether

there is any system for permitting such

fraudulent persons to malign the image of the

Prime Minister.

E. Because now they are calling it the fraud and not

the scam. Are they feeling shy calling this a big

scam? It is respectfully stated that the bank

authorities allow the siphoning of the bank

money when it is a case of big person. In the

case of the poor of the country the Recovery

System of the bank is very hard. One farmer

Gyan Chand in Village of U.P. had taken Tractor

Loan of Rs. 90,000/-. This poor farmer was

crushed by the bank recovery authorities under


the same tractor as this poor farmer did not

return the loan amount in time.

F. Because similarly a farmer in Village Siwon of

Punjab jumped to death in a canal alongwith his

minor son of 5 years as the bank authorities

pressurized him to return the loan amount and

the poor farmer was not in position to return it.

G Because a borrower of small amount of loan

from the bank cannot run away from the country

then how 11,300 crores scamster could run

away. The letters of undertaking were

magnanimously issued by the Punjab National

Bank. But it has not been stated as to the date

of issue of letters of undertaking. Such a big

scam cannot be possible without the help of very

big persons in the Government. There seems to

be involvement of highly placed persons of this

country.

H. Because in such like scams where more than

11,300 Crores of PNB has been swindled and

taken away, the accused persons seem to be

very close to the power corridor. There has been


a common factor in swindling away the money of

the banks. It could be the case of Lalit Modi,

Vijay Mallya and now Nirav Modi. The news of

their nearness to the powerful persons in the

politics have been published in the newspapers.

They have been exercising their influence in the

political groups. Vijay Mallya had reached

Rajyasabha with the help of BJP whereas in the

Party of Nirav Modi Rahul Gandhi of the

Congress has been taking part. In Dabos the

accused Nirav Modi is shown in a photo sessions

with the Hon‟ble the Prime Minister Narendra

Modi. Because of the nearness of these persons

to the powerful persons in the Politics they do

not care for the laws of the country. They are

also able to make use of the system in their

favour due to their closeness with the high flown

politicians of the country. In the investigation of

the case registered against them there is always

soft paddling and the cases for recovery do not

reach at the conclusion for so many years.

I. Because PNB fraud of Rs.11,400 Crore is a big

scam. It has affected badly the Indian Economy.


Therefore, the guidelines are required to be

framed by the Respondents.

J. Because it is important to constitute a committee

of experts who will find the details of bad debts

cases in the country.

K. Because also necessary to make rules for the

recovery of loan from the defaulters within

stipulated period even resorting to attachment of

their properties and providing for auction in the

open market;

L. Because it is also the need of the hour to make

the officials/employees of the bank (who

sanctioned the loan on the deficient documents)

liable for the recovery of the loan by affecting

the recovery from their properties even after

their retirement.

M. Because unless the criminal cases against the

defaulters are registered and allowed to reach

such cases upto the final conclusion, such scams

will not be curbed.


N. Because it is also necessary to issue look out

notice against the defaulters of the bank loans

and immediately impound their passports so that

they may not run away to foreign countries.

O. Because to provide the list of the borrowers of

loan of more than Rs.500 Crores so that it

becomes clear as to the amount of loan still

recoverable from them and as to the steps the

bank authorities are taking to recover the loans

against such borrowers.

P. Because it is also very important and essential to

get the list of the defaulters of the more than the

loans of Rs.500 Crores and stringent actions by

the Respondents against them is also very

necessary so that the loans pending against

them may be recovered at the earliest.

Q. Because the serious steps of the recovery of loan

against the borrowers will boost the economy of

the country. In future the borrowers will take a

lesson that the loans so raised by them will have

to be returned in due time and failing this they

will have to face the consequences.


20. That all the annexures annexed to the writ

petition are true copies of their originals.

21. That the Petitioner has no personal interest in

the Public Interest Litigation but being citizen of

India he has full faith in the Institution.

22. That the present petition has no legal nexus with

any civil, criminal or revenue litigation. The

Petitioner has not filed any civil, criminal or

revenue matter on his behalf which may have

any nexus with the PIL.

23. That the petitioner has not filed any similar

petition before any High Court or this Hon‟ble

Court for the same relief except the present writ

petition.

24. That the present petition has been filed for the

good cause of the Public which are resulting into

infringement of Fundamental Rights under Article

21 of the Constitution of India.

25. That there is no alternative or equally efficacious

remedy left in the hands of the Petitioner under

the above mentioned compelling circumstances,

but to move before this Hon'ble Court.


PRAYER

In the facts and circumstances of the case it is therefore most respectfully prayed that this Hon‟ble Court may graciously be pleased to: -

a) Issue an appropriate writ, order or direction

directing the Investigating Agencies to

register the case and Investigate the role of

Top Management of PNB in the present

scam;

b) Issue an appropriate writ, order or direction

directing the initiation of the process of

deportation of Mr. Nirav Modi and other

related to the scam as soon as possible

preferably within a period 2 months.

c) Issue an appropriate writ, order or direction

directing the Finance Ministry to set

guidelines for the grant of higher amount of

loans and granting of higher amount of

loans and sanctioned thereof in the ambit

Finance Ministry;

d) Issue an appropriate writ, order or direction

directing the Finance Ministry and Reserve

Bank of India to frame guidelines in

granting of the loan of the 10 Crores and


above to ensure safety and recovery of such

loans;

e) Issue an appropriate writ, order or direction

directing the respondents to constitute a

committee of experts who will find the

details of bad debts cases in the country;

f) Issue an appropriate writ order or direction

directing the respondents to make rules for

the recovery of loan from the defaulters

within stipulated period even resorting to

attachment of their properties and providing

for auction in the open market;

g) Issue an appropriate writ order or direction

directing the respondents to make the

officials/employees of the bank (who

sanctioned the loan on the deficient

documents) liable for the recovery of the

loan by affecting the recovery from their

properties even after their retirement;

h) Issue an appropriate writ order or direction

to directing the Respondents for registration

of criminal cases against the defaulters and

the bank officials ;


i) Issue an appropriate writ order or direction

directing the respondents to issue look out

notice against the defaulters of the bank

loans and immediately impound their

passports so that they may not be able to

run away to foreign countries;

j) Issue an appropriate writ order or direction

directing the Respondents to provide the list

of the borrowers of loan of more than

Rs.500 Crores l

k) Issue an appropriate writ order or direction

directing the Respondents to supply the list

of the defaulters of the more than the loans

of Rs.500 Crores;

l) Pass such other further order or orders as

this Hon‟ble Court may deem fit and proper

in the circumstances of this case.

AND

FOR THIS ACT OF KINDNESS THE PETITIONER AS IN DUTY BOUND, SHALL EVER PRAY. Drawn by: Vineet Dhanda

Filed by Drawn on:

Filed on: (DR. J.P. Dhanda)

Advocate for the petitioner


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