Disposing of the decade-old multi-crore Cossets scam in which scores of investors from across the region were duped of their hard-earned money, a local court has held the company's managing director (MD) and director guilty under the Prize Chit and Money Circulation Scheme (Banning) Act.
Chief judicial magistrate Anubhav Sharma on Monday convicted Puneet Nanda, 42, and Rajiv Dugala, who had been running Cossets Marketing Private Limited, Sector 26, Chandigarh, in capacity of MD and director, respectively.
The court while disposing of 45 challans filed against Nanda and Dugala imposed a penalty of Rs 1.12 lakh each on the convicts.
"The company was not engaged in manufacturing or in any service, and was generating profits and enriching the management merely by rotating money. This itself is a prohibited act falling in the definition of money circulation scheme. Thus, even if the investors have not supported the prosecution in terms they should have, yet from their statements, it can be observed that they had invested money in the company with a belief that without anything else than enrolling members, they would be earning by way of incentives. Just by adding members alone a person would have benefited increasing the profits," read the court order.
UT police had booked Nanda and Dugala in 2002 on complaint from Reserve Bank of India (RBI) on charges of duping residents of money. However, charges of cheating and duping residents were not proved.
The case at glance
A complaint dated November 16, 2002, was lodged by SP Negi, deputy general manager-in-charge, RBI, Sector 17, Chandigarh, accusing Cossets Marketing Private Limited, Sector 26, Chandigarh, of fraud.
The complainant submitted that the multi-level marketing company that had started operations in 2001 had enrolled three lakh members and had 40 centres across the country. The investors had made several complaints against the company of large-scale fraud.
However, the company directors got a reprieve when the then senior superintendent of police (SSP) BD Bector marked the case "untraced" and the company kept operating unhindered.
The investigation was then transferred to then UT DSP Devinder Singh Thakur and then to then deputy superintendent of police (DSP) Vijay Pal Singh.
Pal, during the investigation in 2003, added criminal sections against the company directors. However, the investigation was again transferred to Thakur after allegations that Pal had vested interests in handling the case and that investigating officers had been influenced.
The second investigation, too, did not yield much during the next eight months, allegedly allowing the company directors to invest the money collected from the public.
The investors and victims, meanwhile, approached courts and senior officers to transfer the case to the CBI, as officers in the Chandigarh police had allowed the company directors to siphon off the money of around three lakh people through their delaying tactics.
It was during the third investigation that sections 406 (criminal breach of trust), 420 (cheating) and 120-B (criminal conspiracy) under the Indian Penal Code (IPC) and Price Chits and Money Circulation Scheme (Banning) Act, 1978, were added to the case after the RBI approached the police to crack down on several multi-level marketing companies in the city.
June: Two directors of Online Job Work.Com Private Limited, Sector 26, Chandigarh, were convicted under the Prize Chit and Money Circulation Scheme (Banning) Act and fined Rs 30,000 each.
May: Court convicted four directors, including a woman, of Best Internet Solutions Private Limited, Sector 34, Chandigarh, under the act and fined them Rs 50,000 each.
April: Court convicted two directors of Sector-34 based Hamara Fortune Sales Network Private Limited under the act and imposed a fine of Rs 2,500 each.