US court may help recover dues from Nirav Modi, says union minister PP Choudhary

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Minister of state for corporate affairs, PP Choudhary said that US court may help recover dues from Nirav Modi as their law is very strict and operating for many years.

“We hope that substantial amount of money will be recovered once this resolution is over. I think Punjab National Bank (PNB) will be in a beneficial position,” Choudhary said.

He also said Serious Fraud Investigation Office (SFIO) is inspecting six companies, namely, NuPower Renewables, Supreme Energy, Videocon Industries, Pacific Capital Services, NuPower Wind Farms and Echanda Urja.

In an interview to CNBC-TV18, minister of state for corporate affairs, PP Choudhary, said that debt-ridden Jet Airways is also under the scanner.

Watch: Union minister PP Choudhary says SFIO probing 6 companies; Jet Airways also under scanner

According to Choudhary, time to time review is taken by the ministry with respect to working of National Company Law Tribunal (NCLT) and is trying to stick to the timeline prescribed under Insolvency and Bankruptcy Code (IBC).

A few days back, the ministry had ordered inspection of books and papers with regards to Jet Airways, Choudhary said.

Edited Excerpts:

Can you update us on the Nirav Modi PNB fraud case?

So far as the Nirav Modi case is concerned a petition was filed in the US under the US Insolvency and Bankruptcy Code. In that petition, the government of India moved an application for impleadment as a party and that application was allowed by the US Court and PNB is also being treated as a creditor.

The US law is very strict and is in operation for last so many years, so we hope that substantial amount of money will be recovered once this resolution is over. I think PNB will be in a beneficial position.

We hear that now Mehul Choksi has also applied for a Bankruptcy application in the US court. Again that is where PNB is again an aggrieved party in that case as well. Do you think India will now again move an application in that case?

I am of the view that because the same circumstances exist another case which you have referred to, in that case also the government of India will also move an application.

At the same time, I am also of the view that PNB will also move an application for treating them as a creditor so that they shall be in a position to recover those dues.

Allahabad High Court recently decided on the RBI February 12 circular. It is understood that now there will be further pressure on NLCT when it comes to the cases related to power companies etc. Today there is a high level committee meeting, how soon would you think NCLT would like to take over these cases and is it  strengthened enough to handle such a huge volume of the number of cases that are coming to it?

Time to time review is undertaken by our ministry with respect to the working of the NCLT – how many cases are being filed and how many cases are being disposed off. So, wherever there is the need of creating more benches, they are being created depending upon the workload.

Where there is the need to create more judges then we are also appointing those judges and everything is in pipeline. So, de-clogging the cases it is not possibly a reason being every time the cases are being filed and cases are being disposed off, it is a continuous process.

We can’t say that we can stop the cases, the NCLT is meant for that. So, that is why you can say that the time limit prescribed under the IBC to dispose of the cases that is required to be maintained and we are trying to maintain that.

Some more judges are being appointed and where more than one court is required at one particular place just like in Delhi and Mumbai, we have created more judges and more benches also.

A lot of SFIO reports are pending, SFIO right now is examining a lot of cases, Bhushan Steel, ICICI, Fortis, Religare, we are yet to see any substantial report coming in any of these cases. How soon can we see a report coming out because SFIO is the basic tool to prove that whether a serious fraud has happened or not, other investigative agencies are doing their bit, we get to hear time to time what are the movements on that but when it comes to SFIO we haven’t heard for past some time, what is it doing when it comes to these cases and how soon will it submit its report?

So, far as the working of the SFIO is concerned with respect to inspection of papers and documents in respect to all these companies is in process. Midway we cannot say that no report is submitted. The report is submitted to the government, so that is in progress. I think they are doing a good job and earliest possible the inspection and all the formalities will be completed by the SFIO.

Which are the cases which are currently under examination by SFIO?

Ministry has ordered inspection of books and papers of some of the companies under Section 206(5) of the Companies Act 2013. Some of the companies are NuPower Renewables, Supreme Energy, Pacific Capital Services, Videocon Industries, NuPower Wind Farms Limited and Echanda Urja Private Limited. Inspection with respect to all these companies are in progress.

This is specifically to the ICICI-Videocon and NuPower case?

Yes, all these inspections are in progress.

What about Jet Airways? Off late RoC has called for a formal inspection on Jet Airways, what is it meant to be?

For Jet Airways also ministry has already ordered inspection of books and papers and that is also in progress. Recently it has been done.

When was Jet Airways given to RoC?

I don’t know the exact date but it was a few days back.

When we talk of the recent report that was submitted to Minister of Corporate Affairs, Arun Jaitely, by the ministry on de-clogging and de-criminalisation of NCLT, the report has suggested and introduced a set of new norms for commencement of business.

What is your view and how will it help in curbing the menace of shell companies?

So many other recommendations are there but with respect to the compoundable and non-compoundable offences. As far as the compoundable offences are concerned, in house mechanism is being created which is technology based.

So, unnecessarily the cases will not go out and it will de-clog the NCLT. As far as the non-compoundable assets are there no change has been recommended by the committee.

So far as the commencement of business is concerned because it is very essential, we have seen a large number of shell companies created on account of the fact that there was no declaration require for a commencement of the business.

Once the company is created then they are required to declare the commencement of that business. So, all these recommendations by the committee is there, those recommendations have been made to the government and government is examining those recommendations and we will take the decision very soon.

After taking a decision and finalising on the report how would you now incorporate these suggestions in the Companies Act?

These recommendations are related to the amendment of the Companies Act, so the government has to take a decision whether we should come out with the ordinance or we should come out with the bill directly in the winter session of the parliament.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow