The mighty says to the meek that you cannot command me to act; I shall act if I like, I shall not act if I choose not to act. The meek says that I possesses the strength of law to give you the command; the law, which is no respecter of person and which does not allow anybody to rise so high as to be above it. This could be the scenario if what has been submitted by Shri Patnaik, learned Counsel appearing for the State, were to be accepted by us fully, said Chief Justice Bl Hansaria (as His lordship then was in the Orissa High Court) in the case of Janamohan Das, popularly referred to as Cuttack liquor tragedy case.
This scenario repeated itself in the chit fund case in the Supreme Court in Alok Jena Vs Union of India, State of Odisha & Others. The economically weaker sections of Odisha had been robbed of their honest savings. The ramifications went beyond the State and even beyond the country. This concerns us and it would be apt to extract some of the relevant parts of the judgement delivered by Hon’ble Justice TS Thakur and Hon’ble Justice C Nagappan:
“There is yet another aspect to which we must advert at this stage. This relates to the role of the Regulatory Authorities. Investigation conducted so far puts a question mark on the role of regulatory authorities like SEBI, Registrar of Companies and officials of RBI within whose respective jurisdictions and areas of operation the scam not only took birth but flourished unhindered”.
“Suffice it to say, that the scam of this magnitude going on for years unnoticed and unchecked, is suggestive of a deep-rooted apathy if not criminal neglect on the part of the regulators who ought to do everything necessary to prevent such fraud and public loot. Depending upon whether the investigation reveals any criminal conspiracy among those promoting the companies that flourished at the cost of the common man and those who were supposed to prevent such fraud calls for a comprehensive investigation not only to bring those who were supposed to prevent such fraud calls for a comprehensive investigation not only to bring those who were responsible to book but also to prevent recurrence of such scams in future.”
“In Writ Petition (C) No.413 of 2013, we had by our order dated 26th March, 2014 confined the proceedings to 44 companies mentioned in two lists, one filed by Mr Alok Jena, the petitioner in the petition, and the other by the counsel for the State Government. The involvement of these companies in the scam had inter-State ramifications besides the fact that their collections had exceeded over 500 crore each” (The prayer of the State of Odisha to exclude certain specific companies out of these 44 was stoutly rejected by the Supreme Court).
“A perusal of the affidavit further shows that 163 companies were involved in the chit fund scam in the State of Odisha who have collected Rs 4,565 crore approximately from the public out of which a sum of Rs 2,904 crore has been collected by 43 companies mentioned in the list referred to earlier excluding M/s Nabadiganta Capital Services ltd against which no criminal case have been registered so far.”
“The factual narrative given in the foregoing paragraphs clearly establishes the following:
That financial scam nicknamed chit fund scam that has hit the States of West Bengal, Tripura, Assam and Odisha involves collection of nearly Rs 10,000 crore (approx) from the general public especially the weaker sections of the society which have fallen prey to the temptations of handsome returns on such deposits extended by the companies involved in the scam.
That investigation so far conducted suggests that the collection of money from the depositors was neither legally permissible nor were such collections/deposits invested in any meaningful business activity that could generate the high returns promised to the depositors.
That more than 25 lakh claims have so far been received by the Commissions of Enquiries set up in the States of Odisha and West Bengal which is indicative of the magnitude of the scam in terms of number of citizens that have been defrauded by the ponzi (chit fund) companies.
That the companies indulge in ponzi schemes have their tentacles in different States giving the scam inter-State ramifications. That such huge collections could have international money laundering dimensions cannot be ruled out and needs to be effectively investigated.
That Investigation so far conducted reveals involvement of several political and other influential personalities wielding considerable clout and influence.
That the role of regulators like the SEBI, the authorities under the Companies Act and the Reserve Bank of India is also under investigation by the State police agency which may have to be taken to its logical conclusion by an effective and independent investigation.
“… The question, however, is not whether the State police have faltered. The question is whether what is done by the State police is sufficient to inspire confidence of those who are aggrieved. … So also the larger conspiracy angle in the States of Assam, Odisha and West Bengal although under investigation has not made much headway partly because of the inter-State ramifications, which the investigating agencies need to examine but are handicapped in examining.”
The Supreme Court has also granted liberty to the Joint Director, CBI to place any prayers before them for any further cases to be added to the list of 44 covered by the judgement of the court. And soon the CBI shall enter the arena and the affected parties must ensure that their concern reaches the appropriate authorities.
(The writer, a Senior Advocate, is a former All India Service officer, a former diplomat, a former editor and a former Advocate General of Odisha. jayantdas@hotmail.com)