Fraud case: Delhi HC allows Canada to recover Rs 65.9 crore from Indian banks of convict

New Delhi: The Delhi High Court has directed two private banks to remit Rs 65.9 crore in the bank account of the Government of Canada from the accounts of Sanjay Madan, an Indian origin former Canadian bureaucrat, in an embezzlement case before foreign courts.

Justice Manmeet P S Arora passed the order after Madan, appearing virtually, gave his no objection if IndusInd Bank and RBL Bank remitted the money lying in the respective accounts under his name and his associates to the Crown (Government of Canada) after compliance with the rules.

His counsel informed the court while Rs 38.3 crore was lying in IndusInd Bank, RBL Bank had Rs 29 crore.

The court directed the banks to co-operate with Madan in getting the KYC compliance done within two weeks as the accounts were in a dormant condition.

"After the above said KYC compliance is done, defendant no. 5 (IndusInd Bank) and defendant no. 10 (RBL Bank) are further directed to remit an amount to the tune of Rs 65.9 crore in the bank account of the Crown/ plaintiff in accordance with applicable law/ rules," the high court said in its June 23 order.

The court was dealing with a suit filed by Government of Canada, seeking recovery of funds, rendition of accounts and injunction.

Madan, the suit said, exploited his senior position within the Ministry of Education, Government of Canada to manipulate the payment system of the Support for Families Program, thereby diverting substantial sums into bank accounts under his direct or indirect control.

It was further stated Madan, in collusion with his associate, abused his authority as director of the access branch to rig the selection process for IT consultants (fee-for-service consultants) within the Ministry of Education, Government of Canada securing illicit commissions from vendors of record contractors and subcontractors through a kickback scheme.

The suit is part of ongoing efforts by Canadian authorities to recover funds allegedly diverted to India by Madan as part of a 47.4 million Canadian dollar (around Rs 290 crore) fraud perpetrated over several years.

The proceedings against Madan and his associate were said to have been initiated by the Canadian government in the Ontario Superior Court of Justice in Canada.

In April 2023, he was sentenced to 10 years in prison after pleading guilty to multiple counts of fraud, breach of trust, and money laundering.

As part of a plea agreement, Madan agreed to repay the entire defrauded amount, returning CAD 30 million upfront, and committing to pay the remaining over 15 years.

The foreign government urged the high court to restrain Madan and his associates from operating or transacting with any funds held in their Indian bank accounts.

The high court allowed Madan to use the bank accounts "only to the limited extent" of remitting this amount of Rs 65.9 crore and making payments for legal fees based on "valid invoices".

It also directed YES Bank, Kotak Mahindra Bank, Axis Bank, Punjab National Bank, ICICI Bank, IDBI Bank, and others — to submit affidavits disclosing account information and transaction details within six weeks.

The court also directed Madan and another defendant to provide a full disclosure of assets in India and listed the matter for hearing in September.