In a major victory for Indian agencies seeking Mehul Choksi's extradition, the bail plea of fugitive diamantaire was rejected by an Antwerp court of appeal on Tuesday (Apr 22). He was arrested by the Belgium authorities on April 12 after an extradition request was made by India, in connection with the $138.5 billion Punjab National Bank (PNB) loan fraud case.

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The court said that fears about him fleeing from the clutches of Belgian authorities are “legitimate”, according to officials, who termed the development seeking to get him extradited. The court of three judges presided over the proceedings, which took place in Dutch language. Choksi’s Indian lawyer, Vijay Aggarwal and his legal team argued that he is not a flight risk and is undergoing cancer treatment, thus he should be released.

Mehul Choksi's arrest brings back memory of PNB scam: How he and Nirav Modi pulled off one of India's biggest scams

Is extradition possible?

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The rejection of bail plea is a diplomatic victory for India but the road to extradition may still be a tedious process. Choksi got citizenship in Antigua and Barbados after fleeing India. He surfaced in Dominica in 2021, where he was detained for illegal entry. CBI officials unsuccessfully attempted to bring back Choksi but the move failed as he was allowed by the Dominica High Court in July 2021 to travel back to Antigua to seek medical help. He was then found in for treatment of cancer. Indian authorities handed over all required documents to Belgian authorities for his extradition and major breakthrough came when he was arrested this April. 

India and Belgium had a treaty on mutual extradition of fugitive criminals dating back to October 1901, when the former was under British rule. The two countries signed the Mutual Legal Assistance Treaty in 2020 for better cooperation on fugitives. However, the dual criminality clause can be a major roadblock in his extradition. This means all the charges on Choksi by the Indian authorities should also be punishable under Belgian laws for them to extradite him.

Earlier, when he was arrested, former diplomat KP Fabian said extradition proceedings would take time. “Well, I'll put it this way: India wants him extradited, and Belgium has to take the decision. Now, even the Belgium Internal affairs and the foreign affairs, take that decision. Choksi has the option of going to court in Belgium. And then there can be arguments, pros and cons,” he said.

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He added, “We can’t jump to the conclusion that tomorrow or day after Belgium is going to extradite him because there is a legal process, even if the Belgian government decides, he can go to court. So, whether eventually he'll be extradited or not at this moment we can't say, but obviously we should try hard, as hard as necessary to get him.”

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How the PNB scam unfolded?

In January 2018, the Punjab National Bank announced that it had detected a massive fraud of worth 13,850 crore ($138.5 billion) in one of its branches in Mumbai. The scam named celebrity jeweller Nirav Modi and his uncle Mehul Choksi, the managing director of Gitanjali Gems as prime accused.

hoksi and Nirav Modi siphoned off the money from PNB's Brady House branch. They bypassed the legal processes via inflated Foreign Letters of Credit (FLCs) and obtained fraudulent Letters of Undertaking (LoUs) from the bank. An LoU is a guarantee issued by Indian banks to help companies obtain short-term credit from overseas branches of Indian lenders. The transaction reportedly was not recorded as the duo allegedly bribed bank officials, including former Deputy General Manager Gokulnath Shetty. They exploited the SWIFT system (Society for Worldwide Interbank Financial Telecommunication) to route funds abroad without triggering alarms in the bank's core systems. Funds obtained through LoUs were funnelled into shell companies overseas, and the internal red flags were suppressed to hide the mounting debt.

Fugitive Mehul Choksi arrested in Belgium. How long can his extradition take?

Nirav Modi was arrested by uniformed Scotland Yard officers on an extradition warrant from a Metro Bank branch in central London on March 19, 2019 and has since been lodged in Wandsworth Prison. 

The CBI registered multiple cases against Nirav Modi, Mehul Choksi, their family members, employees, and PNB officials. The Enforcement Directorate (ED) also filed money laundering cases under the Prevention of Money Laundering Act (PMLA). Furthermore, the CBI has recently filed a supplementary chargesheet naming Modi's sister, Purvi Mehta, as an accused in the case. Nirav Modi and Mehul Choksi have been declared "fugitive economic offenders" under the Fugitive Economic Offenders Act, 2018, which allows Indian authorities to confiscate their assets. 

 'Had to happen': Former law minister Ravi Shankar Prasad on Mehul Choksi's arrest