Wary of the fallout of the anger of small depositors who were duped of their savings by ponzi firms operating in the state, the Orissa government is now planning to bring an amendment in the Orissa Protection of Interests of Depositors (in financial establishments) Act 2011 to enable it to pay them back.
The government move seems to have been triggered to contain a negative fallout of the chit fund scam on Naveen Patnaik’s image as CBI – which is now investigating 43 chit fund companies in Orissa – is conducting raids on the homes of several BJD MPs and MLAs. The CBI has recovered Rs 28 lakh in cash from BJD MP Ramchandra Hansda and raided the house of former party chief whip Pravat Tripathy last week. The agency is likely to take a few BJD politicians in custody for more interrogation.
After the chit fund scam broke in early 2011, the Naveen Patnaik government enacted the OPID Act 2011 which had the provision of selling the properties of ponzi firms for repaying the defaulted depositors. Going by the affidavits submitted before the justice RK Patra Commission, which is probing involvement of influential persons including politicians and bureaucrats in the chit fund scam, the number of duped depositors in Orissa could be more than 1 million. In Orissa chit fund firms collected around Rs 4,600 crore by defrauding the people.
Government sources told The Indian Express that last week finance department officials and economic offences wing of Criminal Investigation Department in a meeting decided to amend sub-section 6 of section 9 of OPID Act, 2011 through an ordinance. The amendment is being deemed necessary as it is apprehended that future legal complications may arise as under the same sub-section, the designated courts are required to pass an order within a period of 180 days from the date of application by the designated authorities for attachment of the properties of the ponzi firms.
So far the movable and immovable properties of 14 such ponzi firms running into a few thousand crores have been attached by the CID, the Bhubaneswar Commissionerate Police and some district superintendents of police under section 3 of OPID Act. The ponzi firms whose properties have been attached are Saradha Group, Artha Tatwa, Seashore Group, Astha Group of Companies, Nabajyoti Realty, Green Ray International, Ashore Group of Companies, SLB Multi State Cooperative, Sastra Enterprises, Safex India, Golden Land Developers, Rose Valley Group and Flourish India.
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An official said the 180 days time limit would be revised to give the designated courts more time for attachment of properties. The OPID Rules, 2013 would also be suitably amended for inclusion of mechanism for repayment to the depositors.
The officials said the sub-section 7 of section 9 of OPID Act 2011 would also be amended for giving preference to small depositors during repayment. Under sub-section 7, the designated court, on an application by the competent authorities (additional district magistrates), pass such order for equitable distribution among the depositors of the money attached or realized out of the sale. Of the 1 million depositors, more than 70 per cent are believed to be small depositors. Apart from the money realised from the sale of the attached properties, the government would also recoup the losses of the small investors from the Rs 300 crore corpus that it announced last year.
The Indian Express went though the attachment orders of the 14 companies and found that the firms had bought hundreds of acres of lands in Khurda, Puri, Koraput, Balasore and Mayurbhanj districts from the money that they collected from unsuspecting investors. Flourish India bought over 246 acres of land in different districts. Some like Aartha Tatwa Group even bought 40-odd flats in Bengal – the value of which would be more than Rs 20 crore.
In case of Golden Land Developers, the police froze Rs 84.5 crore kept in scores of bank accounts. The Commissionerate police of Bhubaneswar seized 11 vehicles from Artha Tatwa Group which included Bolero, Safari, Volkswagen Polo, Scorpio and a Suzuki Intruder. The Seashore Group is alleged to have duped its investors to the tune of Rs 700 crore from investors. The chief of the group, Prashant Das, labelled as Orissa’s Sudipta Sen for starting a TV channel like Saradha group was arrested from Mumbai in June last year.
Officials said that to identify the depositors and ascertain the losses incurred by them, the competent authorities would soon invite applications from the depositors in the prescribed format by a public notice in terms of Rule 6(1) of the OPID Rules, 2013. Such information would be verified by the investigating agencies who have filed the proposal for ad-interim attachment order.