E-Paper
SC dismisses Andhra Pradesh's plea to transfer chit fund fraud cases from Telangana HC
The bench advised the lawyers to approach the apex court only after the final orders were passed by the Telangana high court
The Supreme Court on Friday dismissed the petition filed by the Andhra Pradesh government seeking transfer of the cases pertaining to alleged financial fraud by Margadarsi Chit Fund Private Ltd (MCFPL) from the Telangana high court to the Andhra Pradesh high court, people familiar with the matter said.
A Supreme Court bench of Justices J K Maheshwari and K V Viswanath set aside the argument of the state government that the Telangana high court had no jurisdiction to hear the cases pertaining to MCFPL, as the alleged fraud had taken place in various branches in Andhra Pradesh.
The bench ruled that there was no need for any re-trial in the case as the trial was already ongoing in the case. It advised the lawyers, representing the case on behalf of the state government, to present their arguments before the Telangana high court.
The Supreme Court bench left the case to the Telangana high court to inquire based on the merits. Further, the bench advised the lawyers to approach the apex court only after the final orders were passed by the Telangana high court.
The bench also refused to interfere in the Telangana high court’s orders to not take strict action against media baron Cherukuri Ramoji Rao and his daughter-in-law Ch Sailaja Kiran, who are the chairman and managing director respectively of Margadarsi Chit Funds.
Earlier, senior advocate Neeraj Kishan Kaul and advocate Mahfooz Ahsan Nazki arguing for the Andhra Pradesh government told the Supreme Court that the case concerns offences and violations under the Chit Funds Act, the Andhra Pradesh Protection of Depositors in Financial Establishment Act and the Indian Penal Code allegedly “committed by the MCFPL and its management and affiliates in Andhra Pradesh”.
“All the FIRs were registered in Andhra Pradesh for offences committed exclusively and primarily in the state, and they are being investigated by the state police. The largest number of subscribers to the chit funds of the MCFPL are located in Andhra Pradesh and the majority of the branch offices are located in the state. Therefore, the cause of action arises in Andhra Pradesh and only the state high court will have jurisdiction over these matters,” the state government contended.
On June 18, Andhra Pradesh Crime Investigation Department declared the chit fund operations of MCFPL as one of the biggest financial frauds ever surfaced and the state government was taking all steps to safeguard the hard-earned money of the chit subscribers.
Then CID additional director general N Sanjay told reporters then that the MCFPL, which had a history of accepting deposits illegally, had violated Chit Fund Act of 1982, by indulging in various irregularities by exploiting weak and gullible subscribers, including diversion of funds to its associate companies and made other unknown investments clandestinely.
He further alleged that the Margadarsi group had also indulged in fraudulent accounting practices such as inflating cash balances in the name of cheques on hand and cash on hand at the branch level, not filing the mandatory balance sheets and accounts as per the Chit fund Act etc.
Sanjay said the CID had registered seven FIRs based on the complaint from the commissioner and inspector general of stamps and registrations, under Sections 420 (cheating), 409 (criminal breach of trust), 120(B) (criminal conspiracy), 477(A) read with 34 (falsification of accounts) of Indian Penal Code and Section 5 of Andhra Pradesh Protection of Depositors of Financial Establishments (APPDFE) Act-1999 and Section 76, 79 of Chit Funds Act 1982.
While Ch Ramoji Rao was named as Accused No. 1 (A-1), his daughter-in-law and company managing director Sailaja Kiran was named as A-2. Besides, concerned branch managers (called foremen), the company and its principal auditor K Sravan were named as other accused in the case.
