2019 (1) TMI 1801 - Tri - Companies Law

Tribunal permits new respondents in PNB financial fraud case, orders Union of India to respond by 4.2.2019

Union of India, MCA Versus Gitanjali Gems Ltd & Ors.

The Tribunal allowed the impleadment of additional respondents (R-70 to R-88) and extended previous orders to support the ongoing investigation into ... Impleadment of petitioner - financial scam - HELD THAT:- On perusal of the record of CP 277/2018 and charge sheet ,which has been filed by CBI against the proposed Respondents, in connection with the case relating to Mr. Nirav Modi and Mr. Mehul Chokshi, it appears that proposed respondents are necessary and proper parties to the original Company petition and as such, it is essential they be arrayed as R70 to R88 in Company petition No.277/2018 - the Petitioner are directed to implead the proposed respondents as R70 to R88 with immediate effect. It is pertinent to mention that when at the initial stage when the stay was granted only FIR was registered but now the position has changed after CBI has filed the charge sheet against the proposed R70 to R88, in connection with the case relating to Mr Nirav Modi and Mr Mehul Choksi financial scams - It is to be clarified that the stay order has already been passed against R1 to R67 which has been further modified to a certain extent by order of Hon’ble NCLAT which is effective today. Therefore, an extension of the order dated 23.2.2018 passed by this Tribunal further modified by Hon’ble NCLAT is essential to R70 to R88. Application disposed off. Issues Involved:1. Impleadment of Additional Respondents2. Extension of Previous Orders to Newly Added Respondents3. Investigation and Legal Proceedings Related to Financial FraudIssue-wise Detailed Analysis:1. Impleadment of Additional Respondents:The Union of India, through the Ministry of Corporate Affairs (MCA), filed MA 407/2019 seeking the impleadment of additional respondents in CP 277/2018. The application was based on the FIRs filed by Punjab National Bank (PNB) against known and unknown accused involved in a significant financial scam. The petitioner sought to include 19 additional persons (R-70 to R-88) as respondents, arguing that the investigation by the Central Bureau of Investigation (CBI) revealed their dishonest and fraudulent actions. The Tribunal allowed the application, directing the petitioner to implead the proposed respondents and issue notices through various means, including post, publication in newspapers, email, and WhatsApp messaging, to ensure due service to all respondents, both in India and overseas.2. Extension of Previous Orders to Newly Added Respondents:The Union of India also filed MA 406/2019 to extend the order dated 23.2.2018, as modified by the Hon’ble NCLAT on 12.7.2018, to the newly added respondents (R-70 to R-88). The petitioner contended that the newly added respondents were involved in the financial fraud against PNB, making it imperative to extend the existing orders to support the ongoing investigation effectively. The Tribunal noted that the initial stay was granted when only FIRs were registered, but the situation had changed with the filing of charge sheets by the CBI against the proposed respondents. Consequently, the Tribunal extended the order dated 23.2.2018, as modified by the Hon’ble NCLAT, to R-70 to R-88 and clarified that objections by the newly added respondents could be filed by the next hearing date.3. Investigation and Legal Proceedings Related to Financial Fraud:The petitioner highlighted that the financial fraud involving unauthorized and fraudulent Letters of Undertakings (LoUs) and Foreign Letters of Credits (FLCs) defrauded PNB of approximately USD 754.92 million (Rs. 4886.72 crores). The accused included companies and individuals associated with the Nirav Modi group and the Gitanjali Group. The petitioner, in coordination with enforcement agencies like CBI, Enforcement Directorate (ED), and Serious Fraud Investigation Office (SFIO), sought to include additional respondents based on the charge sheets filed by the CBI. The Tribunal acknowledged the necessity of including these respondents to aid the investigation and ensure comprehensive legal proceedings.Conclusion:The Tribunal allowed the impleadment of additional respondents (R-70 to R-88) and extended the previous orders to these newly added respondents to support the ongoing investigation into the financial fraud against PNB. The Union of India was directed to file a reply to all pending miscellaneous applications by 4.2.2019, with the next hearing scheduled for the same date.