Note: Ajay Agarwal (Applicant), a non-resident Indian living in Dubai, was involved in a scheme aimed at defrauding Punjab National Bank (Issuer). In furtherance of the scheme, Applicant applied for credit facility via foreign letters of credit through Issuer and issued formal invoices addressed to three shell companies set up in the names of employees of a co-conspirator (Beneficiaries) to evidence fictitious orders. Another co-conspirator, the head of Issuer's foreign exchange department, arranged for issuance of the foreign letter of credit in violation of India's import policy. False bills of lading were then addressed to Issuer. Issuer contacted Applicant, who verified the correctness of the bills of lading and claimed to have inspected the goods on board the vessel. Relying on information from Applicant, Issuer paid the full amount of the three letters of credit US$439,200 to Beneficiaries. An investigation revealed that the ship on which the goods were allegedly inspected was nonexistent and all three letters of credit were fabricated and drawn under false shipping documents. Charges of criminal conspiracy were brought against Applicant.

The trial court dismissed the charge of conspiracy against Applicant, reasoning that all acts committed by the Applicant occurred outside of Indian jurisdiction; therefore, sanction was needed from the Central Government in order to prosecute. The High Court reversed and remanded the issue for further proceedings, holding that the conspiracy took place within Indian jurisdiction and Applicant's offenses were pursuant to that conspiracy and were thus within Indian jurisdiction. On appeal, the Supreme Court, K. Ramaswamy, J. dismissed Applicant's argument that, because his offenses took place outside of Indian jurisdiction, sanction from the Central Government was needed for prosecution. The Supreme Court reasoned that the unlawful acts committed by Applicant in Dubai were part of the initial scheme involving the head of Issuer's foreign exchange department in India. The Court stated that where a conspiracy is enacted between a resident Indian and others abroad, Indian courts have jurisdiction for the initial offense of conspiracy and all subsequent acts committed in pursuit of the conspiracy until the scheme is realized, frustrated, or dissolved. Since Indian courts had jurisdiction, no sanction was needed from the Central Government to prosecute of Applicant for his acts committed abroad in furtherance of the conspiracy regardless of whether Applicant was an original party to the conspiracy or simply brought into the fold after the scheme was enacted.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.