MUMBAI: After years of investigation into one of India’s most complex diamond-trading frauds, a Mumbai court has narrowed the legal focus of the case against Winsome Diamonds and Jewelleries Ltd., shifting it away from allegations of official corruption and toward charges of cheating and criminal conspiracy involving private actors.
A Case Recast by the Court
On Monday, a special court in Mumbai ordered the transfer of a ₹214.35-crore bank fraud case against Winsome Diamonds and Jewelleries Ltd. (WDJL) from a sessions court to a metropolitan magistrate court at Esplanade. The move followed a submission by the Central Bureau of Investigation (CBI) that its probe had not uncovered evidence to sustain charges under the Prevention of Corruption Act against any public servant or bank official.
Accepting the agency’s plea, Special Judge Dr. J.P. Darekar directed the sessions court registrar to forward the first information report (FIR) and all related documents to the chief metropolitan magistrate for further proceedings. The magistrate court will now take cognisance of the remaining allegations—primarily cheating and criminal conspiracy—against the company and other private individuals named in the case.
The decision effectively reshapes the prosecution’s trajectory, removing the corruption dimension that had initially placed the matter before a special court and placing it within the jurisdiction of a lower criminal court.
The Origins of the Alleged Fraud
The case dates back to April 4, 2017, when the CBI registered an FIR on the basis of a complaint filed by a general manager of Vijaya Bank. The complaint alleged that WDJL and its promoters had defrauded the bank of ₹214.35 crore through the misuse of eight standby letters of credit issued to overseas bullion banks.
Investigators later described the FIR as one among at least 12 cases registered against the company, part of a broader set of allegations that WDJL had collectively caused losses of around ₹4,627 crore to several public sector banks. The FIR invoked sections relating to criminal conspiracy and cheating under the Indian Penal Code, along with provisions of the Prevention of Corruption Act that referenced the possible involvement of unknown bank officials.
According to the CBI, the alleged conspiracy took shape during 2012–13, when credit facilities were availed in the name of importing gold and diamonds.
Round-Tripping and Overseas Layers
Investigating agencies have alleged that instead of using the borrowed funds for genuine imports, the company’s management engaged in a form of round-tripping. Gold and diamonds were purportedly traded through 13 firms based in the United Arab Emirates that were said to be fully under the company’s control.
Money received by these UAE-based entities was allegedly siphoned off and layered through bank accounts in multiple countries. Some of the funds, investigators say, were accumulated in accounts linked to firms controlled by family members of Jatin Mehta, the promoter of WDJL, who has been described by authorities as a fugitive diamantaire.
The overseas transactions, routed through foreign banks including the London branches of the Bank of Nova Scotia and Standard Chartered Bank, formed a central strand of the alleged scheme described in the FIR.
What Remains Before the Magistrate
With the corruption charges set aside for want of evidence against public officials, the case now turns on whether prosecutors can establish cheating and conspiracy by private individuals. The metropolitan magistrate court will examine the charge sheet filed by the CBI against the company, its promoters and directors, and determine the next procedural steps.
The CBI has maintained that while the investigation did not yield incriminating material against bank officials, the evidence collected supports prosecution of the remaining accused under non-corruption offences. The transfer of the case marks a procedural narrowing rather than a closure, ensuring that the allegations tied to the alleged misuse of credit facilities will continue to be tested in court.
