NRI can claim $330 million from HSBC

A top court in the UK has ruled in favour of an Indian businessman that he can continue his claim of damages for $330 million against HSBC, which had refused to transfer money in his account to another bank on suspicion of money laundering.

Earlier when Jayesh Shah had commenced a claim in English Court, Shah's action was dismissed by a High Court judge Justice Hamblin after HSBC had applied to it to dismiss the case on the ground that the international banks particular conduct was not justifiable.

The English Court of Appeal has ruled in favour of Shah that he can continue his claim of damages for $330 million against HSBC which had refused to transfer $28 million in his account to another bank in Geneva on suspicion of money laundering.

The conduct of the bank concerned the wrongful suspicion of Shah's funds with the bank as part of money laundering.

In 2006, Shah, an Indian national from Gujarat, had requested HSBC Bank to transfer USD 28 million in his HSBC account to another of his bank account in Geneva.

HSBC refused to carry out the transfer and consequently reported Shah to the Serious Organised Crime Agency (SOCA) on suspicion of money laundering.

Shah was only told by HSBC that the transfer was suspended as the bank was complying with its UK statutory obligations.

No other information was provided to him by the bank. Consequently HSBC's actions led to Reserve Bank of Zimbabwe also freezing Shah's account and causing him to lose substantial interest on his deposits in his Zimbabwe accounts.

Shah appealed against Justice Hamblin's judgment and has now won the Appeal. In this appeal the secretariat of the State was also given leave by the Court of Appeal to participate in the proceedings.

He will now be able to claim damages against his Bank for failure to comply with his instructions and other breaches of duty of a bank to a customer.

In this case Shah had instructed the bank to transfer his deposit to another bank in Switzerland but the bank failed to do so and made a suspicious activity report to the statutory authority that they suspected the money was criminal property.

Shah's case was that the suspicion was self inducted because the bank at the particular period needed to keep his money for their own use.

The Court of Appeal in its judgment said that any claim by a customer that his bank has not executed his instructions is, on the face of it, a strong claim if the instructions have not in fact been executed.

It is only when the bank says that it suspects the customer was money laundering that any defence by the bank to the customer's claim begins to emerge.

Shah's successful appeal was handled by Zaiwalla & Co. Solicitors, a leading Indian Solicitors firm in London.