Three of its franchises in Nagpur forced to shut down; one of the owners says he cannot even clear EMI of loans taken after mortgaging his house and property for the business
Three of the franchises of the Choksi-owned Gitanjali Gems in Nagpur; (right) Shirish Jaiswal claimed this family invested all their savings and took loans from banks after mortgaging their residence and commercial outlet to execute the franchise deal
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The PNB scam in which Nirav Modi and his uncle Mehul Choksi are allegedly involved, has not only affected their companies and staff, but also their franchises. Three of the franchises of the Choksi-owned Gitanjali Gems in Nagpur were forced to shut down.
Shirish Jaiswal, who owned one of these franchises in Nagpur, found himself facing a major financial crisis. "I cannot recover my dues from the diamonds that were sold to us by Gitanjali at a price higher than the prevailing market price. The bank is after us to clear the monthly EMI of over Rs 3 lakh against the loan taken after mortgaging our house and property. Where do I go?" he asked.
Also read - PNB scam: Institute of Chartered Accountants of India issues notice to PNB, Gitanjali Gems auditors
The Jaiswals owned a bar and restaurant in Gandhiputala square, but when Shirish and his younger brothers became engineers, it was closed around 2011. Jaiswal was looking for an alternative. The Jaiswals were connected to Gitanjali Gems which was expanding its franchise network across India. Jaiswal said, "Soon we entered into an agreement with Mehul Choksi's company and were appointed as the franchise of Gitanjali."
Started the franchise
Jaiswal claimed that the family had invested all their savings and taken loans from banks after mortgaging their residence and commercial outlet to execute the franchise deal.
"Everything went well, until 2014, when the company share prices started sliding downwards. One day, we were informed that they wanted to wind up the franchise business. We agreed and asked them to clear our dues," said Jaiswal.
"The problem started when we were unable to sell the diamonds that they had supplied to us. They were not accepted in the market at the price that we were quoting. The market players said the diamonds were easily available for three times less price," added Jaiswal.
Jaiswal claimed they had numerous meetings with the company representatives and even met Choksi requesting to clear the dues, but their plea fell on deaf ears. Soon they received a phone call stating that the company had decided once again to keep the franchise network alive. "We were asked to pay another R40 lakh, which we paid, as we did not want to wind up the business," recalled Jaiswal.
CM intervenes
It was in January 2017 that Jaiswal decided to register a complaint with MIDC police, as Choksi was not willing to settle the dues, and they had an issue with the inferior quality diamonds. "He cheated us and betrayed our trust. We were new in the business, and by the time we gained knowledge about the market, we realised we were duped," said Jaiswal.
"Choksi wanted us to settle the matter for half the cost that we had incurred and this was unacceptable to us. My family was dependent on the income from this franchise. Paying the bank EMI has just become impossible and they have threatened to seize our property," he said.
When no action was taken by the police until April 2017, Jaiswal met Chief Minister Devendra Fadnavis and he directed that an FIR be lodged, after which the police registered it under Sections 406 (criminal breach of trust), 409 (criminal breach of trust by public servant), 420 (cheating) and 120 (b) (criminal conspiracy) of IPC against Mehul Choksi, his company and others.
Status today
Investigating police inspector Padmakar Devre said, "The accused moved the Bombay High Court for quashing the FIR registered sometime in July 2017 and the matter is pending before the court." When asked the reason for not taking action until the CM intervened, Devre said, "The complainant Shirish Jaiswal alleged that the accused were not sticking to their (franchise) terms and conditions and hence they had a dispute. On registering the FIR, we were in the process of calling some of the office bearers working with Mehul Choksi for questioning and recording their statements, when the accused moved the Bombay High Court." The officer said there were no arrests as the matter was still in inquiry state.
Outlet rented
Jaiswal's outlet has now been given on rent to a mobile accessory dealer for a mere Rs 70,000 per month, which is not sufficient to pay the Rs 3.50 lakh monthly EMI to the bank towards the loan. His younger brother, who works for a software company, supports the family financially.
Rs 3.50 lakh
The monthly EMI he is unable to pay
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