The Enforcement Directorate (ED), which had seized it along with other assets of Nirav Modi in the Punjab National Bank scam case, has released the property following a court order so that banks can sell it to recover their dues from the diamond merchant. Nirav Modi-controlled Firestar Diamond International had purchased the heritage property in 2017 from the Curmally family – who had run the music shop for over seven decades before closing it down due to falling sales – to reportedly open a jewellery showroom.
“The ED has begun the process of detaching assets held by Firestar Diamond International and Firestar International. Rhythm is the first such detachment,” the court-appointed liquidator for the assets, Santanu T Ray, told ET.
The Mumbai bench of the National Company Law Tribunal had in February 2020 ordered liquidation of the assets and appointed Ray from AAA Insolvency as the liquidator.
But banks could not sell the assets as those were in the custody of the ED, which probes money laundering.
In August, a special court under the Prevention of Money Laundering Act (PMLA) ordered the ED to release the attached properties. The banks are expected to soon get the custody of other seized assets as well.
Nirav Modi is currently lodged in a UK jail, facing extradition to India.
In early 2018, Mahindra Group chairman Anand Mahindra had suggested crowd funding to acquire and revive the landmark music store if it is put on auction. After the ED seized the property, he had tweeted: “…how about a bunch of us in Mumbai collectively acquiring it, restoring it & turning it into a performance venue for rising musicians & a hangout for music lovers? Happy to be part of such a band.”
The total outstanding debt of Nirav Modi’s Firestar International to a PNB-led consortium is estimated in excess of ₹ 1,265 crore, including costs and interest. Firestar Diamond International owed ₹232 crore to another consortium led by United Bank of India, which is now merged with PNB.
“The claimants state to have clearly suffered a quantifiable loss on account of the fraud committed by the accused, who are being prosecuted in the captioned proceedings,” the PMLA court said in its order on August 13.
Legal authorities ran a valuation process of all those properties, running into hundreds of crores.
Besides Rhythm House, the ED had attached about 30 properties. These included factories in Surat, flats in swanky Mumbai locations and company inventories. Half a dozen flats at Samudra Mahal in Mumbai’s Worli area, owned by Nirav Modi and his wife, were reportedly among the assets seized by the ED.