Fraud Case

1. FRAUD

2. DEFINITION UNDER LAW
SECTION 17
 ACCORDING TO SECTION 17 FRAUD MEANS AND INCLUDES
ANY OF THE FOLLOWING ACTS
 COMMITTED BY A PARTY TO A CONTRACT OR BY ANY ONE
WITH HIS CONNIVANCE OR BY HIS AGENT WITH INTENT TO
DECEIVE ANOTHER PARTY THERETO OR HIS AGENT OR TO
INDUCE HIM TO ENTER INTO CONTRACT:
(A) A SUGGESTION AS TO FACT OF THAT WHICH IS NOT TRUE
BY ONE WHO DOES NOT BELIEVE IT TO BE TRUE
(B) AN ACTIVE CONCEALMENT OF A FACT BY ONE HAVING
KNOWLEDGE OR BELIEF OF THE FACT.
(C) ANY OTHER ACT FITTED TO DECEIVE
(D) A PROMISE MADE WITHOUT ANY INTENTION OF
PERFORMING IT

3. PNB SCAME(29 JAN 2018)
• ON 29TH JAN,2018, PNB (PUNJAB NATIONAL BANK) FILED A
CRIMINAL COMPLAINT WITH INDIA`S FEDERAL INVESTIGATIVE
AGENCY AGAINST THREE COMPANIES AND FOUR PEOPLE,
INCLUDING BILLIONAIRE JEWELER NIRAV MODI AND HIS UNCLE
MEHUL CHOKSI, THE MANAGING DIRECTOR OF GITANJALI
GEMS, SAYING THEY HAD DEFRAUDED PNB AND CAUSED A
LOSS OF 2.8 BILLION RUPEES ($43 MILLION).
• IN A REGULATORY FILING ON FEB. 14, THE BANK UPDATED
THE SUM INVOLVED IN THE FRAUD TO 113.94 BILLION RUPEES
($1.77 BILLION), WHICH IT SAID WAS DETERMINED AFTER
FURTHER INVESTIGATION AT ITS MUMBAI'S BRADY BRANCH.
• THIS FRAUD IS DONE BY NIRAV MODI IN 2011 WHO
FRAUDENTLY RAISED FUNDS WORTH OF RS.12,636 CRORE
FROM VARIOUS PUBLIC & PRIVATE SECTOR BANKS BY
SHOWING LETTER OF UNDERTAKING (LOU) ISSUED BY PUNJAB

4. ABOUT NIRAV MODI
• NIRAV MODI IS A WANTED PERSON IN PNB LOAN SCAM AND
PRESENTLY HE IS ON THE RUN.
• CBI SEEKS THE HELP OF INTERPOL TO ARREST HIM.
• HE IS INTO DIAMOND TRADING BUSINESS .
• HE IS THE FOUNDER AND CREATIVE DIRECTOR OF THE NIRAV
MODI CHAIN OF DIAMOND JEWELRY RETAIL STORES, AND IS
THE CHAIRMAN OF FIRESTAR INTERNATIONAL, THE PARENT OF
THE NIRAV MODI CHAIN, WHICH HAS STORES IN KEY MARKETS
ACROSS THE GLOBE.
• HIS PROPERTY IN INDIA IS SIEGED BY GOVERNMENT AGENCIES
TO RECOVER THE AMOUNT OF FRAUD DONE BY HIM.
• NIRAV MODI IS IN ST KITTS RIGHT NOW, TRYING TO GET
CITIZENSHIP BY PURCHASING PROPERTY WITH THE MONEY HE
STOLE FROM THE PEOPLE OF INDIA.

5. HOW DID PNB SCAM OCCUR
• NIRAV MODI EXPORTED ROUGH STONE FORM FOREIGN COUNTRIES WORTH CRORES OF
RUPEES.
• THE EMPLOYEES AT PNB BRADY HOUSE BRANCH FRAUDENTLY ISSUED A LOU FOR 365
DAYS WITHOUT MAKING ANY PROVISIONS FOR COLLATERAL AND BYPASSING CORE
BANKING SYSTEM (CBS).
• THE NIRAV MODI’S THREE COMPANIES NAMED DIAMOND R US, SOLAR EXPORT AND
STELLAR DIAMOND ALLEGEDLY RAISED LOANS FROM AXIS BANK, UCO BANK AND
ALLAHABAD BANK BY SHOWING LOU.
• THE FIRM ALSO RAISED FUNDS FROM INDIAN BANK'S OVERSEAS BRANCH FOR PAYING TO
THE SUPPLIERS.
• NIRAV MODI’S FIRM AGAIN REQUESTED THE BANK TO ISSUE ANOTHER LOU BUT THE
OFFICIALS REFUSED ON GROUND THAT THE COMPANY HAS TO KEEP COLLATERAL WITH
BANK BUT MODI’S FIRM ARGUED THAT NO SUCH MONEY WAS KEPT ON MARGIN FOR THE

7. NOW WHAT NEXT
• LOU WAS ISSUED BY PNB BANK, HENCE IT IS RESPONSIBILITY TO PUNJAB NATIONAL BANK TO
PAYBACK ALL THE LOAN WITH ALL INTEREST TO OTHER BANK AND PARTY WHO GAVE CREDIT
TO NIRAV MODI.
• PUNJAB NATIONAL BANK CAN SELL PROPERTY OF NIRAV MODI, IF THEY ARE MORTGAGE WITH
BANK TO RECOVER LOSSES.
• GOVERNMENT OF INDIA CAN TAKE THE HELP INTERPOL TO ARREST NIRAB MODI FROM
FOREIGN LAND.
• BANK AND GOVERNMENT OF INDIA CAN TALK WITH NIRAV MODI TO REACH ANY DEAL SO HE
CAN PAY BACK THE LOAN AMOUNT IN SPECIFIC PERIOD OF TIME.
• BANK WILL INCREASE SERVICES CHARGES AND GOVERNMENT OF INDIA SOME TAXES TO
RECOVER LOSS FROM COMMON POOR PEOPLE WHO HAVE NOTHING TO DO WITH THIS SCAM.

8. EFFECTS OF PNB SAME
• PNB HAS SUSPENDED 10 OFFICERS OVER THE RS 11,400 CRORE SCAM AND
REFERRED THE MATTER TO CBI FOR INVESTIGATION.
• ACCORDING TO MEDIA REPORTS, NIRAV MODI LEFT THE COUNTRY ON JANUARY
1 WEEKS BEFORE THE CBI RECEIVED COMPLAINT FROM PNB ON JANUARY 29.
• HIS BROTHER NISHAL , A BELGIAN CITIZEN, ALSO LEFT THE COUNTRY ON
JANUARY 1, WHILE WIFE AMI, A US CITIZEN, AND BUSINESS PARTNER MEHUL
CHOKSI, THE INDIAN PROMOTER OF GITANJALI JEWELRY CHAIN, DEPARTED ON
JANUARY 6.

9. COURSE OF ACTION
• THE PUNJAB NATIONAL BANK IN A LETTER ON FEBRUARY 12 WARNED THE OTHER BANKS BY
REVEALING THE MODUS OPERANDI USED BY BANK OFFICIALS OF PNB'S BRADY HOUSE BRANCH.
• THE BANK ALSO CAUTIONED OF A SIMILAR MODUS OPERANDI USED BY THE SAME BRANCH
OFFICIAL IN COMPANIES BELONGING TO GITANJALI GEMS LTD, PROMOTED BY MEHUL CHOKSI
VIZ. GITANJALI GEMS, GILI INDIA AND NAKSHATRA WHILE ISSUING LETTER OF UNDERTAKINGS
(LOU).
• AMONG THOSE NAMED IS A DEPUTY MANAGER, GOKUL NATH SHETTY, WHO WAS POSTED AT
PNBS FOREIGN EXCHANGE DEPARTMENT IN MUMBAI SINCE MARCH 31, 2010. HE HAD
ALLEGEDLY ALONG WITH ANOTHER OFFICIAL MANOJ KHARAT FRAUDULENTLY ISSUED LOU TO
THESE FIRMS WITHOUT FOLLOWING PRESCRIBED PROCEDURE OR MAKING ENTRIES IN THE
BANKING SYSTEM, AVOIDING DETECTION OF TRANSACTIONS.

10. DETECTION
WHEN NIRAV MODI COMPANIES ASKED FOR LOU FOR RAISING BUYERS' CREDIT
AFTER THE RETIREMENT OF THE PNB EMPLOYEE INVOLVED IN THE SCAM, THE
PUNJAB NATIONAL BANK SOUGHT 100 PER CENT CASH MARGINS FOR ISSUING
LOU. THIS WAS CONTESTED BY THE NIRAV MODI FIRMS, SAYING THEY HAD
AVAILED OF THE FACILITY FROM AS EARLY AS 2010.

11. PRESENTED BY:-
SUPRIYA MONDAL
SOMASREE SAHA
N V ARSHITHA
SHWETA SINGH
NUKALA MANOJ
MONIS RAZA