CBI court convicts Kushal Diamonds Ltd, two directors in cheating case
Synopsis
More than two decades after the CBI registered a case over alleged misuse of NSIC lending schemes, an Ahmedabad court has convicted Kushal Diamonds Ltd and two of its directors — sentencing them to five years of rigorous imprisonment and fines of ₹30 lakh each. All four public servants named in the charge sheet were acquitted, making the private firm and its leadership the sole parties to face punishment.
Key Takeaways
A CBI special court in Ahmedabad convicted Kushal Diamonds Ltd. and two directors on charges of criminal conspiracy and cheating.
Chief Managing Director Bakul Zaveri and Director Mazhar S.
Kapadia were each sentenced to five years of rigorous imprisonment and fined ₹30 lakh .
Kushal Diamonds Ltd. as a corporate entity was separately fined ₹30 lakh .
The alleged wrongful loss to NSIC Ltd. stood at ₹99,96,364 as of 31 March 1996 , out of a total disbursement of ₹2,34,85,081 .
All four NSIC public servants named in the charge sheet were acquitted; the case against a third private accused, Subhash Chhanana , was abated following his death.
The CBI had originally registered the case on 15 March 2000 and filed its charge sheet on 8 January 2002 .
A Central Bureau of Investigation (CBI) special court in Ahmedabad has convicted private firm M/s Kushal Diamonds Ltd. and two of its directors on charges of criminal conspiracy and cheating, in a case that dates back to a March 2000 CBI registration. The verdict, delivered on Tuesday, closes a legal chapter that began with an alleged fraud against the National Small Industries Corporation (NSIC) worth nearly ₹1 crore.
Sentences and Fines Imposed
The court imposed a fine of ₹30 lakh on Kushal Diamonds Ltd. as a corporate entity. Bakul Zaveri, the company's Chief Managing Director, and Mazhar S. Kapadia, a Director, were each sentenced to five years of rigorous imprisonment (RI) and fined ₹30 lakh apiece. The penalties reflect the gravity of the conspiracy as assessed by the court after a prolonged trial spanning more than two decades.
Background: The NSIC Fraud Allegation
The CBI registered the original case on 15 March 2000, initially targeting three public servants attached to the NSIC's Ahmedabad office — Virendra Kumar Sawhney (then Joint Director), Rohit Dhingra (Joint Manager, Finance), and Ram Avatar Agarwal (then Regional General Manager). Investigators alleged that these officials entered into a criminal conspiracy with the directors of Kushal Diamonds Ltd., headquartered in Mumbai.
According to the investigation, NSIC had disbursed a total of ₹2,34,85,081 to Kushal Diamonds Ltd. under the Bill Discounting Facility and the Raw Material Assistance Scheme. Of this, ₹1,34,88,717 was subsequently adjusted through various means — including adjustment against past outstanding dues, payments via cheques and demand drafts, receipts from overseas buyers, and adjustment of earnest money deposits. The remaining outstanding amount as of 31 March 1996 stood at ₹99,96,364, which was treated as a wrongful loss to NSIC Ltd.
Charge Sheet and Trial
After completing its investigation, the CBI filed a charge sheet on 8 January 2002 against eight accused. These included Kushal Diamonds Ltd. as a corporate accused, its directors Zaveri, Kapadia, and Subhash Chhanana, along with four NSIC public servants — Sawhney, Dhingra, Agarwal, and Rajesh Arora. The trial proceeded over subsequent years before the court delivered its verdict.
Acquittals and Abatement
Notably, all four public servants — Sawhney, Dhingra, Agarwal, and Arora — were acquitted of the charges levelled against them. The case against private accused Subhash Chhanana was abated after he died during the course of the trial. Only the company and its two surviving directors, Zaveri and Kapadia, were ultimately convicted.
Significance of the Verdict
This case is among several long-pending CBI prosecutions involving alleged misuse of government-backed lending schemes meant to support small industries. The Bill Discounting Facility and Raw Material Assistance Scheme were designed to ease credit access for smaller enterprises, making their alleged exploitation a matter of particular concern for regulators. The verdict, coming more than 24 years after the case was registered, underscores the protracted nature of financial fraud trials in India's court system. Legal observers note that the acquittal of all public servants while private parties were convicted adds a complex dimension to the case's legacy.
Point of View
Despite being named as co-conspirators in the charge sheet, leaves the narrative incomplete: if a criminal conspiracy existed, the courts found it was carried out entirely by private parties, without culpable participation from the government officials who authorised the disbursements. That asymmetry deserves scrutiny. More broadly, the case is a reminder that NSIC's preferential lending schemes, designed to empower small industries, have historically been vulnerable to exploitation — a structural gap that successive governments have been slow to address with adequate safeguards.
NationPress
9 Sept 2026
Frequently Asked Questions
What is the Kushal Diamonds CBI case about?
The case involves alleged criminal conspiracy and cheating against the National Small Industries Corporation (NSIC) in Ahmedabad. The CBI alleged that directors of Kushal Diamonds Ltd. conspired with NSIC public servants to misuse the Bill Discounting Facility and Raw Material Assistance Scheme, resulting in a wrongful loss of ₹99,96,364 to NSIC as of 31 March 1996.
What sentences were handed down to the convicted accused?
Chief Managing Director Bakul Zaveri and Director Mazhar S. Kapadia were each sentenced to five years of rigorous imprisonment and fined ₹30 lakh. Kushal Diamonds Ltd. as a company was separately fined ₹30 lakh.
Why were the NSIC public servants acquitted?
The CBI court acquitted all four NSIC public servants — Virendra Kumar Sawhney, Rohit Dhingra, Ram Avatar Agarwal, and Rajesh Arora — after the conclusion of the trial. The court found the charges against them not proven; specific reasons for the acquittal were not detailed in the official statement.
How long did the case take to conclude?
The CBI registered the case on 15 March 2000 and filed the charge sheet on 8 January 2002. The verdict was delivered in September 2024, meaning the legal proceedings spanned more than 24 years from registration to conviction.
What happened to the other accused, Subhash Chhanana?
The case against Subhash Chhanana, a director of Kushal Diamonds Ltd. who was among the eight accused named in the charge sheet, was abated after he died during the course of the trial. He was neither convicted nor acquitted.
