Order freezing ex-PNB chief's assets set aside

NEW DELHI: The Supreme Court has set aside a tribunal order freezing the assets of former Punjab National Bank chief Usha Ananthasubramanian, in connection with the alleged fraud committed by diamond merchants Nirav Modi and Mehul Choksi on the bank.

A top court bench led by Justice RF Nariman ruled that the order of the National Company Law Tribunal (NCLT) and the appellate tribunal’s decision to uphold it were beyond their jurisdiction. The February 12 order will likely have a wider ramification as the assets of several individuals, trusts and companies, besides those of Nirav Modi and his uncle Choksi, are under freeze even as the government seeks to recover the public money lost in the alleged scam.

Ananthasubramanian challenged the appellate tribunal’s decision upholding the freeze order, which had put a cap of Rs 1 lakh on her monthly withdrawals, as violative of the economic freedom guaranteed to her under the Constitution.

Her lawyer, CS Vaidyanathan, argued that there was no allegation of her receiving any pecuniary benefit or having any other direct involvement in the transactions under scrutiny. Even in a charge sheet filed by the CBI, no specific allegations were made against her, he claimed, adding that at the most, the case against her was that she failed to take preemptive steps to prevent the fraud and thereby committed misconduct.

The senior advocate said the powers under sections of the Companies Act that the NCLT invoked to freeze the assets could be used in context of a company being mismanaged, but could not be extended to another entity, such as a bank in this case.

“…it is clear that powers under these sections cannot possibly be utilised in order that a person who may be the head of some other organisation be roped in, and his or her assets be attached. This being the case, we set aside the impugned order passed by the NCLAT as well as the NCLT. The appeal is allowed,” said the top court bench, also comprising Justices S Ravindra Bhatt and V Ramasubramanian.

Vaidyanathan was assisted in the case by Vikrant Singh Negi, a partner at DSK Legal in Mumbai. Advocate on record Anirudh Sharma filed her petition in the top court.