Delhi Court Summoned ED Director Over Delay in Unickon Securities PMLA Case
The case originated from a complaint filed by the Securities and Exchange Board of India (SEBI), which alleged that Unickon Securities Pvt. Ltd., in collaboration with Unickon Fincap Pvt. Ltd. and other entities, defrauded clients by misappropriating funds through unauthorized pledging of client securities. SEBI’s investigation revealed that these funds were transferred to Unickon Securities and its affiliated companies for purposes unrelated to client welfare.
The Patiala House Court, recently, summoned the Director of the Enforcement Directorate (ED) and the Investigating Officer (IO) in the Unickon Securities PMLA case due to a delay in providing legible copies of documents to the accused. The court took this step after observing repeated delays in furnishing essential documents.
Special Judge Aparna Swami observed, “In view of the submissions and the delay in the matter with regard to providing of the legible copies as seen from the order sheets dated 28.03.2024, this court deems it appropriate to direct the Director of ED alongwith the Investigating Officer to appear in the court and give in writing the status of documents to be provided to the accused persons”.
SEBI determined that Unickon Securities failed to maintain a distinction between client funds and business funds. The company transferred client funds into business accounts and subsequently routed them to group entities, primarily Unickon Fincap Pvt. Ltd. and UREPL. Further findings indicated that funds raised through illicit pledging were utilized to create Fixed Deposit Receipts (FDRs) for overdraft facilities and to provide Inter-Corporate Deposits (ICDs) to its sister concerns.
According to SEBI, investor claims amounting to Rs. 88.84 crore remained unsettled, constituting proceeds of crime. These funds were integrated into the economy through various business activities and investments, leading to charges of money laundering. Investigations further disclosed that 4,156 investors submitted complaints to SEBI, of which the National Stock Exchange (NSE) admitted claims worth Rs. 75 crore from 3,100 investors, and the Bombay Stock Exchange (BSE) acknowledged claims worth Rs. 13.84 crore from 456 investors.
Further inquiries confirmed that Unickon Securities pledged investor securities without consent to its sister concerns and third-party lenders. The Unickon group, controlled by Gajendra Nagpal and Ram Mohan Gupta, facilitated money laundering activities. Nagpal oversaw operations and business strategies, while Gupta managed financial transactions. Additionally, Neeraj Grover (Compliance Officer) and Vikas Mallan (Chief Financial Officer) played significant roles in the financial diversions.
The complaint elaborated on the shareholding structures, directorships, and financial transactions within the Unickon group. Based on the available evidence, the court took cognizance of the offence and proceeded against all accused under Section 3 of the Prevention of Money Laundering Act (PMLA), 2002, which is punishable under Section 4.
During a recent hearing, the court noted that Special Public Prosecutor (SPP) Simon Benjamin, representing the ED, failed to appear in court, either in person or via video conferencing. However, the Deputy Director of the ED appeared through video conferencing and contended that the copies provided to the accused were the best available versions in the department’s records.
The court directed the ED Director to personally appear before the court, along with the Investigating Officer, and submit a written update on the status of the documents to be provided to the accused. Citing the submissions made and the continued delay in furnishing legible copies, as documented in the order sheets dated March 28, 2024, the court found it necessary to summon the ED officials.
The court scheduled the next hearing for March 26, 2025, to review compliance with its directives and assess further proceedings in the case.