Home > industry > banking > PNB fraud: NCLT reserves order on plea of Nirav Modi independent directors

Mumbai: The Mumbai bench of the National Company Law Tribunal (NCLT) has reserved its order on the applications of former independent directors on the boards of companies owned by Nirav Modi and his uncle Mehul Choksi, seeking to have their names removed from an earlier order of the tribunal.

An order, passed on 23 February by a division bench of NCLT, allowed the government to attach 64 properties belonging to individuals as well as companies that are part of groups headed by Nirav Modi and Mehul Choksi and who find mention in the complaint lodged by state-run Punjab National Bank (PNB).

The list also comprised former independent directors and company secretaries of the companies controlled by Modi and Choksi.

Several former independent directors of Firestar International Ltd, promoted by Nirav Modi, and Gitanjali Gems Ltd, promoted by Choksi, including Sanjay Rishi, president of American Express for South Asia and network partners; Gautham Mukkavilli, a former PepsiCo executive; and former Wipro CFO Suresh Senapaty have appealed against the order of the court.

“The independent directors have limited role and the investigation agencies have so far no evidence on the basis of which they have sought the tribunal order to freeze the accounts of the independent directors," argued senior counsel Iqbal Chagla, who is representing Mukkavilli in the case.

“If you make independent directors liable for things which were never even part of board meetings or under the purview of such directors then it will be very difficult for any company to get good independent directors," Chagla added.

The counsel, who is also representing Rishi and Senapathy, argued that both have 36 and 37 years of experience respectively. He added that investigating agencies have no evidence against any of them for any wrongdoing.

“This is a fraud with such a huge magnitude. The Serious Fraud Investigation Office (SFIO) is investigating the matter and we need more time to come up with a final or even an interim report," argued Sanjay Shorey, joint legal director, ministry of corporate affairs, arguing for the ministry.

“It is the function of an independent director to scrutinize the affairs of the company including financials and we are still investigating the role of everyone in the matter," Shorey added.

On Monday, the division bench of B.S.V. Prakash Kumar and Ravi Kumar Duraisamy reserved its order.

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