Author: Apeksha Saraf and LLB Hons, University of Leeds; Incoming LLM, University of Law
To the Point
The Nirav Modi-Punjab National Bank (PNB) fraud case, which involved false Letters of Undertaking (LoUs) totalling ₹13,850 crores signed between 2014 and 2017, is one of the worst financial scandals in India. This historic case demonstrates serious flaws in international legal cooperation frameworks, related banking relationships, and banking supervisory procedures while also revealing the complexity of cross-border financial crimes. The case entails the exploitation of regulatory gaps between domestic and foreign banking activities, sophisticated manipulation of SWIFT messaging systems, and abuse of correspondent banking agreements. This case has significant ramifications for asset recovery procedures, extradition legislation, and the development of India’s Fugitive Economic Offenders Act, 2018 in addition to its financial significance. The difficulties in pursuing transnational financial crimes and establishing accountability across nations are exemplified by the lengthy proceedings for extradition in the United Kingdom. This case sets a significant precedent for comprehending how criminal law, banking law, and international collaboration intersect to address economic offences.
Abstract
As a landmark case in Indian banking and international criminal law, the Nirav Modi-PNB fraud case involves a carefully planned scheme that used fraudulent Letters of Undertaking to defraud Punjab National Bank out of ₹13,850 crores. This thorough analysis looks at the legal nuances of cross-border financial crimes, with a particular emphasis on how banking laws, criminal laws, and extradition processes interact. The case illustrates the shortcomings of related banking systems and the difficulties in enforcing domestic laws against international financial crimes. Through a thorough analysis of the charges under the Foreign Exchange Management Act, Prevention of Money Laundering Act, and Indian Penal Code, this article investigates how conventional criminal law ideas are modified to address complex financial frauds. The UK’s extradition procedures offer important insights into how human rights concerns and dual criminality concepts are applied in international legal cooperation. In addition, the case’s influence on the Fugitive Economic Offenders Act, 2018’s execution shows how India’s strategy for handling financial fugitives has changed over time. This article seeks to give readers a thorough grasp of how legal systems change to counteract more complex financial crimes in a globalised economy by examining pertinent case law and regulatory responses.
The Proof
Extensive documentary evidence covering several years of forged transactions is the evidentiary basis of the Nirav Modi case. Using faux Letters of Undertaking to obtain foreign credit for companies associated with Mehul Choksi and Nirav Modi, the scam was carried out between 2014 and 2017. On January 29, 2018, PNB filed a complaint with the CBI, claiming that the accused had cheated on PNB in coordination with two bank officials.
The main set of evidence is made up of modified SWIFT communications that were used to generate fictitious LoUs without matching entries in the bank’s main banking system. The hundreds of these mails show a consistent deception pattern over a number of years. Unquestionably, the unauthorised transactions and the transfer of funds to the accused’s controlled organisations are documented in banking records from both domestic and foreign correspondent banks.
The establishment of numerous shell corporations and the intricate network of activities intended to justify illegal proceeds are exposed by forensic accounting reports. The asset trail data demonstrates how the stolen money was utilised to buy jewellery, artwork, and lavish properties in several different nations. Digital data from mobile devices and computer systems sheds light on how the fraud campaign was planned and carried out.
The investigation found that Sections 120-B r/w 420 of the Indian Penal Code, 1860 (IPC) read with Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988, were used to file a formal complaint against the accused. Proceeds were laundered through a variety of financial instruments and real estate transactions, according to the Enforcement Directorate’s investigation conducted under the Prevention of Money Laundering Act.
Timeline of Key Events
2011-2017: Systematic issuance of fraudulent LoUs worth ₹13,850 crores
January 2018: PNB discovers unauthorized SWIFT transactions at Brady House branch, Mumbai
February 2018: Nirav Modi and Mehul Choksi flee India
March 2019: Nirav Modi arrested in London
December 2019: Declared Fugitive Economic Offender under FEO Act 2018
February 2021: Westminster Magistrates’ Court orders extradition
May 2025: UK High Court dismisses final appeal against extradition
The evidence for international collaboration includes asset recovery incidents in several countries, such as the US, UK, Belgium, and Hong Kong, as well as requests for shared legal aid and extradition treaties.
Case Laws
Indian Jurisprudence:
CBI v. Nirav Deepak Modi & Others – Delhi High Court
This important ruling set significant guidelines for bail laws pertaining to economic offences. The court ruled that Section 45 of the Prevention of Money Laundering Act’s presumption against bail must be severely enforced in situations involving significant financial frauds with global repercussions. The ruling made clear that such serious economic offences are a danger to the country’s economy and should be dealt with severely.
Enforcement Directorate v. Nirav Modi – PMLA Special Court
On June 8, 2020, a court under the Prevention of Money Laundering Act (PMLA) ordered that practically Rs 1,400 crores worth of his property be seized. Important precedents pertaining to asset confiscation processes and the requirement of evidence in laundering of money cases were set by this ruling. The court ruled that it was possible to temporarily seize illicit assets before the criminal proceedings were finished.
PNB v. Diamond R US & Others – NCLT Mumbai
By addressing the scheme’s corporate insolvency components, this decision set rules for creditor rights in corporate fraud cases. In addition to providing a framework for handling corporate entities involved in banking crimes, the National Company Law Tribunal’s ruling expedited the recovery process.
State Bank of India v. Nirav Modi – Bombay High Court
The civil components of asset recovery were addressed in this ruling, which also provided significant guidelines for piercing corporate veils in situations involving beneficial ownership arrangements intended to cheat creditors.
In Re: Fugitive Economic Offender – Nirav Modi – PMLA Special Court
One of the first well-known people to be designated a fugitive economic offender under the 2018 Act, which permits the confiscation of assets prior to conviction, was Nirav Modi. The processes for designating people as fugitive economic offenders and subsequently seizing their assets were established by this landmark ruling under the Fugitive Economic Offenders Act, 2018.
United Kingdom Jurisprudence
Government of India v. Nirav Deepak Modi – Westminster Magistrates’ Court
The Magistrates’ Court rendered its decision and authorised Nirav Modi’s extradition to India on February 25, 2021. Important precedents pertaining to the implementation of double criminality standards in extradition cases involving financial crimes were set by this ruling.
Nirav Modi v. Government of India – UK High Court
In its ruling on Nirav Modi’s appeal against the extradition order, the High Court addressed important questions of human rights considerations in extradition procedures, namely with regard to the right to a fair trial and jail circumstances.
R (Nirav Modi) v. Secretary of State for the Home Department – Administrative Court
In addition to addressing the administrative side of extradition procedures, this case set precedents for the Home Secretary’s discretionary authority in extradition cases.
Multiple Bail Applications – Nirav Modi – Various UK Courts
The CBI additionally said that this was his tenth bail application since his arrest in the UK and that the UK High Court had already granted his extradition in favour of the Indian government. Due to these repeated denials, the idea that significant flight risk and the seriousness of economic crimes warrant ongoing custody while extradition is being processed was created.
Comparative International Precedents
United States v. Raj Rajaratnam (2011) – US District Court SDNY
In addition to showing the value of international collaboration in financial crime cases, this case established important precedents for the prosecution of cross-border securities fraud.
SFO v. Vincent Tchenguiz (2014) – UK Crown Court
This case set significant guidelines for the prosecution of intricate financial scams involving global banking connections.
Government of India v. Vijay Mallya (2020) – UK Supreme Court
Many of the legal concerns that later surfaced in the Nirav Modi case were resolved in this case, which also established important precedents for the extradition of Indian economic offenders.
Conclusion
The Nirav Modi-PNB fraud case marks a turning point in the development of international legal cooperation and cross-border financial crime enforcement. This case has illustrated the weaknesses in international banking systems as well as the ability of legal systems to adjust to complex financial crimes. The fact that the complicated extradition process was successfully completed in spite of several legal obstacles shows how well India and the UK’s bilateral treaties and mutual legal aid procedures work.
The case has sparked important changes to Indian banking laws, especially in the areas of internal control systems, SWIFT message authentication, and supervisory oversight of correspondent banks. In addition to strengthening India’s arsenal against financial crimes, the Fugitive Economic Offenders Act, 2018, of which Nirav Modi was one of the first high-profile cases, has set significant precedents for handling economic fugitives.
This case serves as an example of the harmonisation of several legal systems in the pursuit of criminal justice from the standpoint of intercultural law. Cross-border legal frameworks are matured when dual criminality concepts are applied, human rights norms are taken into account, and domestic legal requirements and international cooperation commitments are balanced.
The case’s asset recovery elements, which included the seizure of properties valued at over ₹1,400 crores, demonstrate how successful contemporary asset forfeiture legislation and international collaboration are at recouping criminal proceeds. The case has also brought attention to the necessity of more robust corporate governance frameworks and the significance of beneficial ownership transparency.
In the future, the Nirav Modi case is probably going to be used as a model for prosecuting multinational financial crimes. As domestic courts and international legal cooperation institutions deal with increasingly complex financial scams, the precedents set by this case will serve as a guide. In an integrated global economy, the case emphasises how crucial it is that legal frameworks continue to evolve to keep up with the sophistication of financial crimes.
FAQs
In the PNB fraud case, what were the main accusations made against Nirav Modi?
In addition to being charged under the Prevention of Money Laundering Act for deceiving Punjab National Bank of ₹14,000 crores through forged Letters of Undertaking, Nirav Modi was also charged under the Indian Penal Code with fraud (Section 420), criminally conspiring (Section 120B), and counterfeiting (Section 468). Additional allegations included violations of the Prevention of Corruption Act of 1988 and criminal breach of trust under Section 409 IPC.
How did the fraudulent scheme involving Letters of Undertaking (LoUs) operate?
Through the SWIFT messaging system, unauthorised bank guarantees were issued as part of the plan, but PNB’s core banking system did not have the necessary entries. These letters of intent were used to circumvent internal controls and regulatory oversight procedures in order to obtain loans from foreign associated banks for businesses associated with Nirav Modi and Mehul Choksi.
In this instance, what role does the Fugitive Economic Offenders Act of 2018 play?
Under this Act, Nirav Modi was designated a Fugitive Economic Offender, which permits the seizure of assets without a conviction in cases where an accused individual flees from court. The purpose of this act was to address prominent economic criminals who evade prosecution by leaving the nation.
What were the main obstacles in the extradition process in the UK?
Complicated legal arguments about dual criminality, human rights issues, Indian prison conditions, and the right to a fair trial were all part of the extradition procedures. The reliability of the evidence and the value of international legal collaboration were demonstrated by Nirav Modi’s legal team’s several appeals and bail requests, all of which were finally denied.
What changes were brought about by the PNB fraud case?
Improved SWIFT message authentication, more stringent inspection of correspondent banks, better internal control systems, and updated know-your-customer regulations were among the major banking sector reforms brought about by the case. Regulators also strengthened audit processes for high-value transactions and imposed more stringent standards for beneficial ownership disclosure.
What effect does this case have on the enforcement of international financial crime?
The case serves as an example of how well-coordinated international law enforcement activities, bilateral treaties, and mutual legal assistance institutions work. As a paradigm for future international collaboration in instances involving economic offences, it has set significant precedents for asset recovery, extradition processes, and investigations of cross-border financial crimes.
Sources
Business Standard – “What is PNB Scam | PNB Fraud Case | Nirav Modi Case” (2025)
Wikipedia – “Punjab National Bank Scam” (2025)
Plutus Education – “Nirav Modi Scam: Full Case Study, Timeline, Impact & Legal Action” (2025)
SCC Online – “PNB Fraud Case | ATFP upholds attachment of Nirav Modi’s aide’s New York property” (2025)
Lawful Legal – “PNB NIRAV MODI SCAM CASE” (2024)
Wikipedia – “Nirav Modi” (2025)
The Print – “London court rejects Nirav Modi’s fresh bail plea” (2025)
The Tribune – “UK High Court denies Nirav Modi’s bail plea in PNB fraud case” (2025)
Live Law – “Nirav Modi’s Extradition: India’s Chequered Endeavour” (2021)
Central Bureau of Investigation – Press Releases and Case Updates (2025)
Enforcement Directorate – Asset Recovery and Confiscation Orders (2020-2025)
Prevention of Money Laundering Act (PMLA) Court Judgments (2019-2025)
