Nirav Modi's company sends legal notice to stop auction of 68 paintings

MUMBAI: Camelot Enterprises, a firm owned by fugitive diamantaire Nirav Modi, has sent a legal notice to the revenue department against the auction of around 68 paintings terming it unlawful. The three-day auction exercise is slated to start from March 27 and the department is expecting to recover over Rs 97 crore from the sale proceeds.

The Income-Tax department has initiated the auction of paintings created by some of the most celebrated Indian painters including Raja Ravi Verma, FN Souza, Jogen Chowdhury, VS Gaitonde and Akbar Padamsee to recover dues.

“The Saffronart online art catalogue lists 68 artwork due for auction, overlooking that only 19 work from the 68 artworks belongs to the company,” said the legal notice, sent through its law firm India Law Alliance Advocates to the department. “In the circumstances, the purported auction is unlawful and liable to be cancelled forthwith,” it further adds.


The legal notice, a copy of which was reviewed by ET, also says that the sole director of the company Hemant Dahyalal Bhatt is in judicial custody and all the books, papers, records of the company have been seized by the statutory authorities and the premises of the company have been sealed.

“In the circumstances, the purported tax assessment proceedings and tax recovery notice of February 5… purporting to quantify the tax arrears of the company in the sum of Rs 95 crore or steps for sale of assets in aid of tax recovery, are prima-facie invalid and liable to be declared otiose,” the notice claimed.

According to senior chartered accountant Dilip Lakhani, "The attempt on the part of a law firm to stall the auction may turn out to be futile as the tax recovery officer has the power to auction assets of the assessee against whom the demand is raised and has not been stayed. However, the claim of the law firm would survive to the extent for 19 paintings which belong to the assessee and not 68 which are put up for auction. The Tax Recovery Officer can only auction assets of assesses in default."

Earlier on March 20, the Prevention of Money Laundering Act (PMLA) court allowed investigation agencies to auction 173 paintings and 11 vehicles owned by Nirav Modi.

Later, the tax department had approached the court to allow it to auction 68 paintings out of the lot, and the court allowed after it received Enforcement Directorate’s (ED) 'no objection' as it had attached them under the PMLA. Remaining paintings will be auctioned by the ED.

The paintings belonging to Camelot and other subsidiaries of Nirav Modi promoted firms were seized by the tax department as part of their probe to recover tax dues of Rs 95.91 crore. The revenue department had informed the court that Nirav Modi is the ultimate beneficiary owner of paintings that belong to Camelot.

The ED and the Central Bureau of Investigation (CBI), Department of Revenue Intelligence (DRI) are investigating Modi, his wife Ami, brother Nishal and uncle Mehul Choksi—prime accused in the $2-billion Punjab National Bank (PNB) fraud case.