Calcutta High Court summons Global HSBC Head honchos on criminal fraud committed on retired Indian Army major

HSBC has done it again. In the past Suchitra Krishnamoorthy, a film star who played “Anna” opposite SRK in Khabhi Khushi Khabhi Ghum, had complained to SEBI of the way she had been defrauded by the Bank. The actress had been fighting a long battle with the global banking major. When HSBC found out that she had money deposited in her HSBC account they promised her extravagant assured return of 24% from mutual funds as well as insurance. Each time Ms. Krishnamoorthy complained about losses in her account, the standard reply was that the relationship manager has been fired and that the bank will make up for the losses with judicious investments. Needless to say, the losses were never made good. The one-way road for the customer was downhill.

It was a case of systematic looting and exploitation of the emotionally vulnerable who had got Rs 3.6 crore as part of her divorce settlement with Sekhar Gupta. As a single mother, the money was supposed to be the means of livelihood for herself and for her daughter. The bank used confidential information about the hefty deposit in her savings account and began to market its toxic services to her. Since bankers are seen as trustworthy, she believed that her relationship manager was advising her correctly.

The modus operandi for HSBC in this case has been a combination of toxic churning of the portfolio management system (2% entry load on every purchase made by it on behalf of client), insurance products promising 24% returns, insisting her on taking a loan instead of withdrawing funds without even disclosing that the client was entitled for a smart loan.

The end result after five years was Rs 83 lakh—direct loss from investment, Rs 29 lakh in commission to HSBC, Rs 8 lakh (50% of investment) lost from an insurance policy, Rs 10 lakh (again, 50% of investment) valuation decline in insurance policy still in force, Rs 4.5 lakh tax paid on redemption of short-term mutual funds (including Rs 1.85 lakh penalty to the Income Tax department due to non-disclosure of gain by HSBC to the client) and Rs 58 lakh interest on home loan earned by the bank. Suchitra was lucky.

Being a film star HSBC settled with her after the SEBI served a show cause notice upon the Bank. But what relief does a common man get for the loss of their hard-earned money?

In an unprecedented development in Indian judicial practice, Hon’ble Justice Ananya Bandyopadhyay of the High Court of Calcutta, passed an order directing personal appearance of head honchos of HSBC before the court.

In a case which is being taken up almost ten years after the appeal was filed, the High Court has summoned HSBC, represented through Ms. Naina Lal Kidwai, erstwhile director and country head, India, Mr. Stuart T. Gulliver, erstwhile Global Chairman, HSBC, Mr. Clement Philip, erstwhile branch head, HSBC Shakespeare Sarani Branch and numerous other employees who had acted as the Relationship Managers and had churned his portfolio to earn commissions for the Bank.

The complainant, Mr. Das is the son of a distinguished retired Army Major, who served the country in the 1965 war with Pakistan and was involved in the 1971 liberation campaign of Bangladesh. Mr. Das studied in Kolkata and moved to London, UK later for work. After finishing his schooling from Don Bosco, Park Circus, he graduated from NLSIU, Bangalore, in 1996. And has since worked in India and England, heading legal teams in some of the biggest IT/ITES companies across the world.

Like most NRI’s of his generation, Mr. Das held an account with HSBC Bank, London, to regularly transfer money to his aged parents, retired Army Major Ranjit Das and his mother who are based in Kolkata. Every year NRI’s across the world transfer billions of dollars back to India. In 2021 this figure stood at $89 billion. Numerous banks and financial institutions have cultivated NRI’s like Mr. Das who are trying to support aging parents in India to help facilitate the inward remittance.

Since, November 2005, when HSBC convinced Mr. Das to open accounts in Kolkata, the bank has enmeshed him in numerous schemes including in mutual funds, ULIPs through them, and encouraged him to take home loan (even when he had insisted on liquidating his mutual funds to purchase real estate with his own funds), according to the complaint filed with the High Court.

The publication has obtained the official court records and the FIR and from it has understood that in a very similar manner to Ms. Krishnamoorthi, HSBC has allegedly, caused massive financial loss to Mr. Das, through dubious practices, like getting signatures on blank letters of instructions, removing money from his account and later when all the money was removed. Finally, when there was none left, the Bank being unable to adjust for the home loan instalments, goons were sent to Major Das’s house where they threatened physical violence upon the retired army officer.

Being a common man Mr. Das was unable to get any relief from HSBC after bringing this the matter to the attention of Bank officials at the highest levels. When Mr. Das realised that his aged parents where being threatened with violence he had no option but to lodge a police complaint with the Shakespeare Sarani Police Station on 9 July 2013 and thereafter filed Complaint Case No. 39217 of 2013 under section 200 of Code of Criminal Procedure, 1971 before the Court of Learned Chief Metropolitan Magistrate. The case was then dismissed under section 203 of Code of Criminal Procedure, and on 9 December 2014, a revision application under section 401 read with section 482 of Code of Criminal Procedure, 1971, Criminal Revisional Jurisdiction, was filed before the High Court of Calcutta vide CRR NO 3731 of 2014 alleging the said order of the Ld. Magistrate was erroneous and bereft of judicial reasoning, as is required in such matters.

In this criminal revision, Hon’ble Justice Ananya Bandyopadhyay of the High Court of Calcutta, passed the landmark order dated 14 March 2023, directing personal appearance of the opposite parties, offering some recourse to the retired army man and his NRI son against one of the world’s largest banks.