Breakthrough for MCA, PNB in Nirav Modi case: US Bankruptcy court orders issue of summons to examine Modi, others

In a breakthrough for the Ministry of Corporate Affairs (MCA) in the Nirav Modi scam, the United States Bankruptcy court has on Thursday ordered issue of summons for examination of Nirav Modi, Mihir Bhansali, and Rakhi Bhansali. The US court has also recognised the claim of Punjab National Bank on proceeds of any asset sold by the US debtors of the Nirav Modi entities.

Mihir Bhansali was a senior official at Firestar International and Rakhi is Mihir’s wife.

The order also authorises gathering of documents from these individuals and others such as Ajay Gandhi and Kunal Patel, the senior financial officers of the Nirav Modi entities in the US.

The MCA had on February 26 filed a petition against bankruptcy proceedings of Nirav Modi in the US court and sought that PNB be made party to the sale of any assets of his entities.

"The Bankruptcy court also has signed a stipulation recognizing PNB’s agreement with the Chapter 11 Trustee that proceeds of any asset sales by the US debtors will be subject to PNB’s claims of constructive trust regarding the Modi entities," the US court said in its order.

Moneycontrol has a copy of the US Bankruptcy court order.

"This stipulation is important because it means that Trustee has recognized that PNB will have claims to assert and is acknowledging that these claims need to be addressed and sorted out before estate sale proceeds and distributed," a source at the MCA told Moneycontrol.

The source added, this order gains importance as it will help reveal the whereabouts of Nirav Modi and ease extradition process, if required.

It is the first time that the MCA has intervened in any such foreign case pertaining to an Indian company.

"This is the first time when ministry is intervening in foreign proceeding and we have got major breakthrough. We have also ordered Serious Fraud Investigation Office investigation on the matter and investigations will be completed soon. The Ministry of Corporate Affairs is also in parallel investigating 114 other entities of Modi and Mehul Choksi. The US court also feels this is a fraud involving hundreds of crores and PNB has a claim on foreign assets of Nirav Modi," another source at the MCA told Moneycontrol.