The Bombay High Court Wednesday refused to stay the auction proceedings of some rare paintings and other items seized by the Enforcement Directorate (ED) from the residence of fugitive diamantaire Nirav Modi, accused in the Punjab National Bank (PNB) scam. The auction of the 15 rare paintings, include those by MF Hussain and Amrita Sher-Gil, is scheduled for Thursday.
A division bench of acting Chief Justice B P Dharmadhikari and Justice N R Borkar was hearing a petition filed by the businessman’s son Rohin Modi, claiming that the paintings were owned by the Rohin Trust, of which he was a beneficiary and was not owned by Nirav Modi.
On Wednesday, the bench directed the ED to deposit the auction proceeds in a separate bank account and said the amount should not be appropriated for any other purpose until further orders. It has also directed the ED to submit a report — on the auction and monies received from the sale thereof — seven days after completion of the auction.
Senior counsel Amit Desai, appearing for petitioner Rohin Modi, submitted that paintings cannot be construed as proceeds of crime and did not belong to Nirav Modi, but a Trust. He also said that the owner of the painting did not receive any notice pertaining to attachment and auction.
In the plea, Rohin had also submitted that he was a minor when paintings were attached, and was unaware of the ED’s action of attachment of paintings and, therefore, approached had the high court late. He also sought a direction to the ED and the auction house, Saffron Art, to not carry out the auction.
Opposing Rohin’s plea, Additional Solicitor General Anil Singh and advocate Hiten Venegaonkar, appearing for ED, submitted that a due process was followed for attaching the paintings and the other items under the Prevention of Money Laundering Act (PMLA) and same was publicised.
The paintings were attached by the ED in March 2019 and an advertisement for the auction was issued in January 2020.
The ED has claimed that the movable properties are ‘perishable’ and prone to ‘natural decay’. Singh also submitted that auctioning was required as the cost of preserving paintings was excessive.
The ED has also said that Rohin was not the sole beneficiary of the Trust, and Nirav Modi and his wife Ami were also among its beneficiaries. The paintings were purchased with the money misappropriated by Nirav, and hence Rohin’s claim that his interest would be prejudiced, was not maintainable, the ED said.
After hearing the submissions, the bench said there is no material evidence to justify late approach by Rohin and that ED did not get enough time to respond to the plea, which was filed on March 2. The petitioner had approached the court at the “eleventh hour”, the court noted.
The bench also noted, “The Rohin Trust has not approached this court, neither have the other beneficiaries or members of the Trust (Nirav Modi and his wife) chosen to approach this court.”
Apart from the 15 paintings, several diamond watches, Hermes handbags and luxury cars, such as Rolls Royce Ghost and Porsche Panamera S, will be auctioned this week.
After registering money laundering case against Nirav Modi and his uncle Mehul Choksi, the paintings and other items, including watches, jewellery and coins worth over Rs 40 crore, were seized by the ED from Nirav’s residence, Samudra Mahal in Worli. The ED claimed that 173 paintings, seized by the Income Tax Department, were valued at over Rs 57 crore, of which 55 were sold through an auction.
Nirav was declared a fugitive economic offender under the Fugitive Economic Offenders Act on December 5 last year.
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