Winsome Diamonds Scam: The Jatin Mehta Fraud That Shook Indian Banking

While the Nirav Modi–Punjab National Bank scandal grabbed headlines in 2018, it was not India's first major diamond-industry banking fraud. Years earlier, Surat-based diamond trader Jatin Mehta and his company, Winsome Diamonds and Jewellery Ltd, had already left Indian banks with losses running into thousands of crores — a case that investigators, courts, and regulators are still pursuing years later.

The Company and Its Founder

Winsome Diamonds & Jewellery Ltd was an Indian diamond trading company founded by Jatin Mehta in 1985, which went on to become a major player in the global diamond industry. Alongside its subsidiary, Forever Precious Jewellery and Diamonds Limited, the group built an extensive international trading business, exporting gold and diamond jewellery to buyers across the Middle East and beyond.

How the Fraud Unfolded

In November 2012, Winsome informed its lending banks that certain UAE-based buyer companies were unable to make payments, citing losses from derivative trading, which prompted bullion banks to invoke standby letters of credit (SBLCs).  The company pointed to negative trade-journal reports as a reason it had shifted focus toward the UAE market. Despite securing additional credit in March 2013, Winsome was unable to meet its payment obligations to banks. Attempts to resolve the crisis included meetings between company officials and a Jordanian business associate, Haytham Salman Ali Abu Obaidah, in Dubai in March and April 2013, and a personal visit by Jatin Mehta himself in May 2013 — but banks were ultimately unable to recover their dues, resulting in massive losses. 

In 2013, Winsome was formally declared a wilful defaulter by its lending banks, with Winsome and its associate companies owing roughly ₹68 billion (about $1 billion) to a consortium that included Standard Chartered and Punjab National Bank. 

The Alleged Mechanism: Shell Companies and Round-Tripping

Investigators later alleged that the fraud involved a web of shell companies, round-tripping of funds, and diversion of loan money meant for legitimate export-import trade. The CBI alleged that Winsome diverted at least $750 million to six entities based in Hong Kong, the Bahamas, and the UAE — companies allegedly controlled directly or indirectly by Jatin Mehta through this network of dummy firms. While Mehta blamed foreign buyer companies for failing to remit funds, his company reportedly had not signed any agreement between the consortium banks and these foreign companies to guarantee such payments — a gap investigators viewed as evidence of an intent to defraud.

Mehta Leaves India

As scrutiny intensified, Jatin Mehta and his family — wife Sonia and sons Vipul and Suraj — left India and did not return. The family relocated abroad, leaving behind a documented loan default of around ₹6,800 crore, with some estimates suggesting the true figure could be higher. Mehta went on to comfortably reside in the UK, registering a company called Diamond Distribution Co (UK) Ltd in 2016 at a London address, and remained active on social media, blogging as late as 2016 about payments he claimed to be owed following cases in UAE courts. 

Regulatory and Investigative Action

In June 2016, the government assigned the Serious Fraud Investigation Office (SFIO) under the Ministry of Corporate Affairs to investigate Winsome Diamonds' activities. That same year, the All India Bank Employees Association (AIBEA) publicly named Winsome Diamonds among India's wilful defaulters, and by 2017, the CBI had registered six separate cases against Winsome Diamonds and Jewellery Ltd and Forever Precious Jewellery and Diamonds Ltd for allegedly cheating government-owned banks. 

In March 2018, the CBI made its first arrest in the case, taking into custody Hasmukh Shah, a former director and authorised signatory of Forever Precious Jewellery and Diamonds Ltd, described as a close confidante of Jatin Mehta who had allegedly orchestrated the company's export-import operations and served as its liaison with banks. 

In August 2018, the CBI filed a chargesheet against two former chairmen of Canara Bank, along with a former director of the bank, in connection with a ₹146 crore loan default by Winsome Diamonds — the chargesheet named 21 individuals and entities in total, including Jatin Mehta, his wife Sonia Mehta, and 15 bank officials. The CBI went on to file a chargesheet against 21 accused, including Mehta and public servants, in the Central Bank of India case in June 2018, though no chargesheet had been filed by that point in the separate case stemming from a Punjab National Bank complaint. 

The Enforcement Directorate also pursued the case under money-laundering law. It registered two cases in June 2020 and filed a chargesheet in one of them, and separately approached the National Company Law Tribunal in June 2019 to halt the liquidation of Winsome Diamonds and Jewellery Ltd until it could complete its investigation into the money trail behind the alleged fraud. Investigators later traced parts of the money trail to Macau, considered a favoured destination for money launderers, and the CBI sought Letters Rogatory from authorities in the UAE, Singapore, the UK, and the British Virgin Islands to gather further evidence connecting Mehta and Obaidah to the alleged siphoning of funds. 

Legal Battles Abroad

While Indian agencies pursued the case at home, the matter also reached UK courts. In February 2023, a UK court ruled that the Mehta family — who were residing in the UK — would be tried there, in a case brought by accountancy firm Grant Thornton and Standard Chartered Bank, alleging that England-registered companies had been used to launder the proceeds of the fraud. UK courts had already frozen assets belonging to the Mehta family worth $932.5 million, based on evidence presented by liquidators pursuing the family on behalf of companies allegedly used in the laundering process. 

In November 2022, in a related ruling, a judge on the England and Wales High Court's Chancery Division stated he was satisfied there was a strong, good arguable case that a major international fraud had taken place.

A Muted Response Back Home

Despite the scale of the case, follow-through in India has drawn criticism. Commentators have noted that the CBI's closure report from 2021, along with the failure to secure an Interpol alert against Mehta, were later cited by the Mehta family in their own favour in court — arguments that were ultimately set aside by the judge. The case has frequently been contrasted with the higher-profile pursuit of other fugitive businessmen accused of bank fraud, raising questions about consistency in how India's investigative agencies chase down large-scale wilful defaulters who leave the country.

Why the Case Still Matters

The Winsome Diamonds case is often cited as an early warning sign for weaknesses later seen in bigger scandals like the PNB-Nirav Modi fraud: overreliance on trust-based letters of credit, inadequate verification of overseas buyers, and slow, fragmented follow-up once promoters leave the country. More than a decade after the defaults began, the case remains unresolved in India, even as UK courts continue to press forward with civil proceedings against the Mehta family.

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*This article is based on publicly reported information. Details of ongoing legal proceedings may have evolved since publication.*