The Bombay High Court has granted bail to Gokulnath Shetty, the prime accused in the multi crore Nirav Modi-Mehul Choksi-Punjab National Bank (PNB) scam, observing the 65-year-old’s long incarceration and the fact that the trial is not likely to conclude soon, considering there are over a 100 witnesses. Shetty must submit a personal bond of Rs1 lakh for the bail.
Conditions of bail
The court has imposed stringent conditions on Shetty to allay the CBI’s fear of him tampering with the evidence. “It is made clear that if there is any attempt on the part of the applicant in tampering with the investigation, the same will be viewed seriously which may entail the consequence of cancellation of this bail,” the court said.
On request from the CBI, the court, meanwhile, stayed the bail order for six weeks to allow the central agency to approach the Supreme Court.
Case against the banker
Shetty was a deputy manager in PNB’s forex department at the relevant time and is allegedly the mastermind along with Nirav Modi, accused of having defrauded the bank to the tune of crores of rupees in complete contravention of the Reserve Bank of India’s (RBI) guidelines and without following the procedure laid down towards that end.
“The applicant was arrested on March 6, 2018 and has been in custody for almost six years. The charges haven’t been framed so far. There are nearly 100 witnesses to be examined. The trial is not likely to conclude anytime soon,” noted Justice MS Karnik on February 15.
Though the court said that "the allegations are serious, having impacted the economy of the country", Shetty’s advocate Sandeep Karnik argued that Shetty has been in jail without the charges being framed or the trial commencing in a case with 18 accused in total.
Nirav Modi & Mehul Choksi
Nirav Modi and Mehul Choksi are accused of cheating the bank of Rs14,000 crore by fraudulently obtaining credit facilities. Modi was declared a fugitive economic offender in December 2019 and is incarcerated in the UK, while Choksi is free in Antigua. The Indian Government is working to bring both back to India for trial.
The CBI registered a case against Shetty on February 15, 2018 under the provisions of the Indian Penal Code and the Prevention of Corruption Act.
According to the agency, Shetty conspired with other accused and abused his official position and defrauded the bank by issuing Letters of Undertaking (LOUs)/Foreign Letters of Credit through three companies namely Gitanjali Gems Ltd, M/s Gili India Ltd, M/s Nakshatra Brand Ltd to the tune of Rs7,080.86 crore.
The court noted that the LOUs/Foreign Letters of Credit were issued without sufficient collaterals and guarantees and Shetty did not carry out the requisite verification.
CBI advocate Hiten Venegavkar submitted material indicating that Shetty is a beneficiary to the tune of Rs1,02,53,664, all deposited in the bank account of his friends and relatives.
A scam of such magnitude would never have seen the light of the day but for the active involvement of the applicant, argued Venegavkar. Shetty made every possible attempt to circumvent the well established procedure, safeguards and norms prescribed while sanctioning such LOUs/Foreign Letters of Credit. The court, however, noted that granting bail to Sgetty due to long incarceration “is not going to prejudice the investigation”.
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