India: Court dismisses Mehul Choksi’s pleas against ED’s move to declare him ‘fugitive’

An Indian court on Thursday (Sept 21) dismissed pleas filed by economic offender Mehul Choksi aimed at challenging efforts of India’s top economic intelligence agency, the Enforcement Directorate (ED), to declare him a Fugitive Economic Offender (FEO).

Choksi is an accused in the PNB bank scam case, along with billionaire jeweller Nirav Modi, who is the promoter of Gitanjali Gems. Choksi and Modi have been accused of getting letters of undertaking (LoU) and foreign letters of credit (FLC) of Rs 12,636 crore issued in favour of foreign branches of Indian banks based on fraudulent claims.

It is to be noted that Modi was declared an FEO in December 2019, and now the ED is seeking to pursue a similar case against Choksi as well.

Choksi alleges procedural lapses in ED’s proceedings

Justice Sarang V Kotwal of the Bombay High Court concluded a hearing on September 11 in Choksi's pleas and reserved the order. In his pleas, Choksi alleged procedural lapses in the proceedings before the special court designated under the Prevention of Money Laundering Act (PMLA).

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In January 2020, the HC initially provided temporary relief to Choksi by preventing the special court from issuing a final order on the Enforcement Directorate's (ED) application to label Choksi as a Fugitive Economic Offender (FEO). This injunction was repeatedly extended until Friday.

In 2019, the ED submitted an application to the PMLA Court, seeking to declare Choksi as an FEO under the Fugitive Economic Offenders Act, 2018, and seize his assets.

Who can be declared as FEO?

According to Indian laws, a person can be declared an FEO if a warrant is issued against them for an offence involving Rs 100 crore or more and if they have left the country and refused to return.

Choksi had subsequently approached the HC to challenge the ED's application, filing two petitions: one seeking the dismissal of the central agency's application and the other seeking permission to cross-examine the investigating officers and individuals whose statements the investigative agency relied upon to declare Choksi as an FEO.

ED’s argument

Last month, the agency also approached the HC to review the stay on proceedings to declare Choksi an FEO.

The agency argued that Choksi is accused under the PMLA Act, and prosecution against him is pending due to the HC's stay. It urged Justice Kotwal to make a final decision on the petitions promptly.

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