The Appellate Tribunal under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) recently upheld the Enforcement Directorate's (ED) attachment of properties belonging to former ICICI Bank CEO Chanda Kochhar and her husband Deepak Kochhar in a money laundering case linked to the Videocon loan scandal.
The Tribunal overturned the Adjudicating Authority's decision and confirmed the attachment of a Mumbai flat and wind power assets worth crores, finding substantial evidence of proceeds of crime stemming from alleged quid pro quo arrangements in loan sanctioning.
"We find that Adjudicating Authority has recorded its finding ignoring the material on record and by taking irrelevant facts into consideration," the Tribunal stated.
The matter from a Central Bureau of Investigation (CBI) case registered on January 22, 2019 alleging criminal conspiracy and cheating in the sanctioning of loans worth ₹1,730 crore to various Videocon Group companies between June 2009 and October 2011.
These loans subsequently turned into non-performing assets, causing wrongful loss to ICICI Bank and wrongful gain to the borrowers.
Central to the allegations was a ₹300 crore loan sanctioned to Videocon International Electronics Ltd (VIEL) on August 26, 2009, when Kochhar chaired the sanctioning committee meeting. The loan was disbursed on September 7, 2009 and the very next day, Videocon transferred ₹64 crore to Nupower Renewables Private Limited (NRPL), a company allegedly managed by Chanda's husband Deepak Kochhar.
The ED attached flat no. 45 at CCI Chambers, Churchgate, where the Kochhar family has resided since 1996, along with wind power assets acquired by NRPL and cash of ₹10.5 lakh. The flat's ownership history involves multiple transfers between companies connected to both the Kochhar family and Videocon Group, ultimately being transferred to a family trust in 2016 for just ₹11 lakh despite being valued at over ₹5 crore.
A key element was the complex web of companies including Credential Finance Ltd (CFL) [where Chanda Kochhar held shares], Pacific Capital Services Pvt Ltd (PCSPL) and Supreme Energy Private Ltd (SEPL), through which the alleged money laundering occurred. The investigation revealed that though Videocon appeared to hold majority shares in NRPL on paper, actual control rested with Deepak Kochhar, who served as Managing Director.
The Adjudicating Authority had originally refused to confirm the provisional attachment order, finding that the Enforcement Directorate had failed to establish the properties as proceeds of crime.
The lower court concluded that the investment of ₹64 crores by Videocon Group was in its own company (NRPL) and that the flat had been owned by Deepak Kochhar since 1996, dismissing allegations of illegal gratification.
The tribunal found compelling evidence that Chanda Kochhar violated banking regulations by failing to disclose conflicts of interest. The judgment detailed the long-standing financial relationship between the Kochhar family and Videocon Group dating back to 1994-95.
"Thus, we find that the sanction of loan of Rs.300 Crores by ICICI Bank to the Videocon Group of Industries where Chanda Kochhar remained part of the committee was against the rules and policy of the bank."
The tribunal established through documentary evidence that the flat was mortgaged to Videocon Group as early as 1996, making claims of ignorance about the relationship untenable and demonstrating a clear obligation to disclose conflicts of interest.
The tribunal systematically rejected the respondents' arguments that Chanda Kochhar was unaware of her husband's business dealings.
"It was submitted on behalf of Chanda Kochhar that she was not knowing the business affairs of her husband, rather pleaded ignorance. The argument aforesaid is made contrary to the facts available on record and sufficient to demonstrate that even respondent Chanda Kochhar herself was the shareholder of CFL," it said.
The tribunal concluded that accepting such arguments would render banking conflict of interest regulations meaningless, as every bank official could simply claim ignorance about family members' business dealings.
Regarding the controversial transfer of ₹64 crores, the tribunal found it constituted illegal gratification despite arguments that it was an intra-group transaction within Videocon.
"Thus, we find substance in the allegation of the appellants for quid pro quo to Chanda Kochhar for sanction of loan of Rs.300 Crores to Videocon Group of Industries and thereupon, a sum of Rs.64 Crores was transferred to M/s NRPL, a company managed by Deepak Kochhar and, in fact, he was the Managing Director of the said Company," the tribunal said.
It relied heavily on statements recorded under Section 50 of the PMLA, particularly VN Dhoot's admission that while he held shares in NRPL on paper, actual control rested with Deepak Kochhar.
Thus, the tribunal confirmed the attachment of most properties while making one exception for the cash amount, finding that the lower court had committed errors in its analysis.
It determined that the property transfers, particularly the flat's conveyance to a family trust for a nominal amount of ₹11 lakh despite its much higher value, constituted clear evidence of proceeds of crime requiring protection through attachment order.
ED was represented by special counsel Zoheb Hossain and special public prosecutor NK Matta along with advocates Vivek Gurnani, Kanishk Maurya, Aaditya Raj Sharma, and Faizan Khan.
Kochar was represented by Senior Advocate Vikram Chaudhri and advocates Arveen Sekhon and Muskaan Khurana.
Read Judgment