IFCI cheating case: Mumbai court says valuer abetted Mehul Choksi in giving inflated value of jewellery

The CBI claimed that the pledged jewels and diamonds were of lab-grown, chemical vapour diamonds of very low and inferior quality, even though the valuation reports showed an inflated and false value, based on which the loan was given.

Pradip Shah, one of the valuers named as accused, had approached the special court against an order by the magistrate court passed last year, issuing summons to the accused on charges including forgery, cheating and criminal conspiracy.

In an order passed last month, the special court set aside the charges of forgery, while stating that the magistrate court’s order on issuing notice for the offences of cheating and criminal conspiracy are maintained.

Special Judge V P Desai said that there is material on record to show that Shah, prima facie abetted the crime. “Prima facie material collected by the investigating officer…is that on the basis of inflated value of jewels and ornaments, misleading representation was made by him (Shah) and accordingly he abetted the prime accused Mehul Choksi, who in turn induced IFCL to deliver huge loan amount, which they otherwise would not have done,” the court said.

Shah had submitted to the court that a case of forgery cannot be invoked as the valuation report could not have been said to be forged. He had also submitted that the offence of cheating also could not be made out as the jewels were products of Gitanjali Gems in 2016, and its evaluation was done when the company was a luxury brand having its brand value.

In 2018, when the IFCI conducted its valuation, the company was going through financial turmoil and insolvency proceedings were on. Hence, the value of a commodity in two different scenarios cannot be compared, he had submitted, stating that his valuation report clearly mentions that it is based on the current value of the products.

The court said that these aspects, including the brand value of Gitanjali Gems in 2016, and its comparison in 2018, can be decided at the time of the trial.

Apart from this case, Gitanjali Gems and Choksi and other companies linked with him, also face proceedings by the CBI and Enforcement Directorate (ED) related to alleged fraud committed on Punjab National Bank. Proceedings against Choksi to declare him a fugitive economic offender also are pending.