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April 7, 2001
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Money > Business Headlines > Report April 7, 2001 |
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Gitanjali Gems sues Chokshi for Rs 80 million fraudFreny Patel The Rs 30 billion Gitanjali group has filed a civil suit against KL Chokshi for recovery of Rs 80 million. This takes place on the back of the Rs 700-million bullion scam, triggered by the bouncing pay orders issued by Classic Cooperative Bank. It follows State Bank of India's "official letter informing its client that the two pay orders valued at Rs 80 million have been dishonoured." Shailesh Sangani, director, Gitanjali Gems Ltd, said that on the legal advice "as the dishonoured cheques (pay orders) fall under the Negotiable Instrument Act, the group has filed a civil suit as the first recourse." After a month, it will file a criminal suit against the proprietary firm, KL Chokshi. The latter had presented two pay orders issued by Classic Cooperative Bank for Rs 30 million and Rs 50 million to Gitanjali. Without realisation of payment, Gitanjali gave gold worth Rs 80 million to K L Chokshi. These pay orders were then deposited into the group's SBI account. Gitanjali has no personal guarantee against KL Chokshi as Sangani stated the group's faith stemmed from their having done "business with them for the past 5-6 years." Following the arrest of Naresh Chokshi, the present proprietor of the firm, four other banks are also in line to recover funds exceeding Rs 600 million. This includes SBI's exposure of Rs 396 million, Stanchart's Rs 93 million, Punjab National Bank's Rs 70 million and Bank of India's Rs 50 million. SBI and BoI have filed a first investigation report on Classic Cooperative Bank for dishonouring the pay orders issued. The Ahmedabad bullion trade had been operating on a pay order system wherein the bullion banks used to give the gold without realisation of the pay orders issued by co-operative banks. This had been a regular system till the pay order scam came into light last month. Powered by ALSO READ:
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