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NCLAT sets aside order against former PNB official in Nirav Modi case


The National Company Law Appellate Tribunal (NCLAT) has set aside an order to implead a former Executive Director of the Punjab National Bank in a matter related to Rs 14,000 crore scam involving diamond merchant Nirav Modi.

In January 2019, the National Company Law Tribunal (NCLT) directed impleading 19 people, including the bank’s former Executive Director K V Brahmaji Rao, in the case. There was also a direction to freeze their assets. The tribunal’s ruling had come on a petition filed by the corporate affairs ministry.

An appeal was filed by Rao against the ruling by the Mumbai bench of the NCLT.

In its six-page order, dated August 17, the appellate tribunal observed that the Supreme Court had already in February this year set aside an NCLT order freezing the assets of Usha Ananthasubramanian and cited the same to give relief to Rao.

Usha Ananthasubramanian had served as Managing Director and CEO of the Punjab National Bank (PNB).

A three-member NCLAT bench noted that the Supreme Court in Usha Ananthasubramanian case had held that “the person who may be the head of some other organisations cannot be roped and his or her assets cannot be attached in exercising the powers under Sections 337 & 339 of the Act”.

“Admittedly, the appellant (Rao) was the Executive Director of PNB, Head Office, New Delhi i.e. employee of other organisation. Therefore, he cannot be impleaded as respondent in the company petition… which is against the Nirav Modi Group and Gitanjali Group of Companies,” NCLAT said.

The appellate tribunal said the case of the appellant is on the same footing as of Usha Ananthasubramanian. “Thus, the impugned order is set aside with the terms as indicated in the aforesaid Judgment of the Supreme Court. The appeal is allowed,” it noted.

Section 337 of the Companies Act, 2013 refers to penalty for frauds by an officer of the company in which mismanagement has taken place. Section 339 pertains to any business of the company which has been carried on with intent to defraud creditors of that company.

The government had moved NCLT to freeze the assets of 19 people after CBI filed a charge sheet in Nirav Modi’s case and Gitanjali Group cases. In the charge sheet, it was also mentioned that they had acted dishonestly and fraudulently with other persons.


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