PNB scam: Mumbai court upholds FEO proceedings against Mehul Choksi

A special court in Mumbai on Friday, 28 November refused to drop the Enforcement Directorate (ED) application declaring absconding diamantaire Mehul Choksi a fugitive economic offender (FEO) in the multi-crore Punjab National Bank (PNB) fraud case. The court’s decision marks a significant setback for Choksi, who has been fighting extradition proceedings in Belgium since his arrest there in April 2025.

Choksi (66) has sought to have the FEO proceedings dismissed, arguing that since he is in custody abroad facing extradition to India for pending criminal cases, the ED’s application to declare him an FEO should be withdrawn. However, the ED contended that Choksi is deliberately avoiding return by contesting the extradition, and the initiation of FEO proceedings is warranted until he voluntarily appears in India.

Under the Fugitive Economic Offender Act, individuals accused of economic offences involving over Rs 100 crore who flee India and refuse to return despite warrants can be declared FEOs. This empowers authorities to seize and confiscate their assets. The court reaffirmed that the designation remains in place unless the accused physically comes back to face trial.

The case relates to one of India’s largest banking frauds, in which Choksi, his nephew Nirav Modi, and others are accused of orchestrating a scam involving letters of undertaking (LoUs) and foreign letters of credit (FLCs) to siphon off more than Rs 13,000 crore from PNB’s Brady House branch in Mumbai. The scam involved bribing bank officials to bypass normal loan sanctions and approve unauthorised credits to fund overseas entities.

Though Choksi was apprehended in Belgium earlier this year following an Interpol red notice issued by India, he has challenged the extradition order upheld by a Belgian court on 17 October. Meanwhile, Modi remains in a London jail, also fighting extradition.

With PTI inputs