PMLA Tribunal Confirms Attachment Against CA For Enabling Bank Fraud

The Delhi Bench of Appellate Tribunal under the Prevention of Money Laundering Act (PMLA) has confirmed attachment against Chartered Accountant (CA) for enabling bank fraud.

The bench of Members G.C. Mishra and Rajesh Malhotra stated, “We fail to understand how a Chartered Accountant can be so negligent to issue project progress report and project completion report by relying upon the documents tendered by the party who is taking huge loan from the bank. Just because of negligence of the respondent, the Tayal Group of Companies were able to commit the fraud UCO Bank.”

The appeal stemmed from the ED’s earlier attachment order, which had been partially rejected by the Adjudicating Authority in 2017. The Tribunal found fault with the Authority's reasoning and upheld the ED's position that the funds in the Bhide Associates’ account represented proceeds of crime derived through professional negligence and suspected collusion in the fraudulent disbursal of loans.

The ED had initiated proceedings following three FIRs registered by the CBI against companies of the Tayal Group, which were accused of defrauding UCO Bank of over ₹270 crores through fraudulent term loans and diversion of funds. Bhide Associates, led by its CEO M.C. Bhide, was appointed by UCO Bank as a chartered engineering firm to certify project completion and installation of machinery — certificates that turned out to be based on allegedly unverifiable or fabricated documents.

The ED argued that Bhide Associates' "gross professional negligence" enabled the Tayal Group to obtain and misuse massive loans intended for textile machinery purchases, which were never actually made. The firm’s role was critical, as it issued completion reports that banks relied upon to release funds.

The Tribunal observed that Bhide’s actions could not be termed as acts of good faith. The panel noted that the firm's certification was either done blindly or in collusion with the accused companies, which ultimately facilitated the bank fraud.

"The said conduct on the part of the respondent cannot be termed as an act done in good faith, but either in blind faith or in collusion with the accused persons," the Tribunal ruled.

While the Adjudicating Authority had previously treated the Rs. 3.34 lakh in question as “legitimate professional fees,” the Tribunal disagreed, stating that negligence leading to such a massive fraud disqualified the claim of good faith earnings.

The appeal was allowed ex parte, as Bhide Associates did not contest the proceedings. The Tribunal confirmed the attachment of the funds in Bhide Associates’ Bank of Maharashtra account, modifying the earlier 2017 decision.

This ruling marks a key development in the ED’s broader case against the Tayal Group, as it reaffirms the principle that even professionals indirectly aiding financial frauds can be held accountable under the PMLA.

Case Details

Case Title: Directorate of Enforcement Versus M/s Bhide Associates

Case No.: FPA-PMLA-1806/KOL/2017

Date: 19.03.2025

Counsel For Petitioner: Ms. Nattasha Garg

Counsel For Respondent: None