LexSUBRATA CHATTORAJ versus UNION OF INDIA & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2014] 6 S.C.R. 783
SUBRATA CHATTORAJ
v.
UNION OF INDIA & ORS.
{Writ Petition (Civi~ No. 401 of 2013)
'MAY 9, 2014
[T.S. THAKUR AND C. NAGAPPAN, JJ.]
A
B
INVESTIGATION: Chit fund scam-· Tran~er of ongoing
investigation from the State Police to CBI - The scam in
question affectecf lakhs of depositors across several State in
C
the Eastern part of India - Huge amount of money (10,000
crores) collected from depositors - Such collection was
neither legally permissible nor invested in any meaningful
business activity - Investigation so far conducted revealed
;nvolvement of several political and other influential o
oersonalities wielding considerable clout and influence - Role
of regulators like SEBI, authorities.under the Companies Act
and RBI also under investigation by State Police Agency """'."
Writ Petition praying for transfer of investigation from State
Police to CBI - Held: Investigation by State Police in the scam
E
that involved thousands of crores collected from the public
allegedly because of the patronage of people occupying high
positions in the system would not carry conviction when even
the regulators expected to prevent or check such scam
appeared to have turned blind eye to what was going on -
F
Looking to the nature of the scam and its inter-state
ramifications, cases registered in the State of Tripura have
since been transferred to the CBI for investigation at the
request of the State Government - In the circumstances,
directions passed to transfer certain cases registered in
different police stations in State of West Bengal and Odisha
G
from State Police Agency to CBI - Scam.
The question which has arisen for consideration in
783
H
784
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A the instant writ petitions was whether the transfer of the
ongoing investigation from the State Police to the CBI
was called for in the chit fund scam which has affected
lakhs of depositors across several States in the Eastern
part of India.
B
Disposing of the writ petitions, the Court
HELD: 1. The financial scam nicknamed chit-fund
scam that hit the States of West Bengal, Tripura, Assam
and Odisha involved collection of nearly 10,000 crores
C (approx.) from the general public especially the weaker
sections of the society which fell prey to the temptations
of handsome returns on such deposits extended by the
companies involved in the scam. The investigation so far
conducted suggested that the collection of money from
D 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. More than 25 lac claims have
so far been received by the Commissions of Enquiries
E set up in the States of Odisha and West Bengal which is
indicative of the magnitude of scam in terms of number
of citizens that have been defrauded by the ponzi
companies. The companies which have indulged in ponzi
schemes have their tentacles in different States giving the
F scam inter-state ramifications. Such huge collections
could have international money laundering dimensions
and needs to be effectively investigated. The
Investigation so far conducted revealed involvement of
several political and other influential personalities
G wielding considerable clout and influence. The role of
regulators like SEBI, 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 indepentlent
investigation. If upon investigation it is found that SEBI
H
SUBRATA CHATTORAJ v. UNION OF INDIA
785
did have the jurisdiction to act in the matter but failed to
A
do so then such failure may tantamount to connivance
and call for action against those who failed to act
diligently in the matter. 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
B
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 c
supposed to prevent such fraud calls for· a
comprehensive investigation not only to bring those who
were responsible to book but also to preveExcerpt shown. Read the full judgment & AI analysis in Lexace.