AP CID attaches properties worth Rs 793 Crore of Margadarsi Chit Fund

Hyderabad: Sleuths of Andhra Pradesh Crime Investigation Department (CID) attaches movable properties worth Rs 793 Crore of Margadarsi Chit Fund Private Limited (MCFPL).

A GO has been issued by Principal Secretary Harish Kumar Gupta, Government of Andhra Pradesh in this regard.

During the investigation, CID noticed that certain movable properties are held in the name of the accused company, M/s. Margadarsi Chit Fund Private Limited. The details of the movable properties are estimated at a total of Rs 793,50,72,460.

Additional Director General of Police, CID N Sanjay, has requested the Government to issue an ad-interim order attaching the movable properties under sections 3 and 8 of the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 to file an application before the Court concerned, to make the orders absolute.

The Government, after careful examination of the matter issued an ad-interim orders for attachment of movable properties described in the Annexures IA, IB and II of this order in respect of M/s Margadarsi Chit Fund Private Limited (MCFPL). ADGP is given possession and control over the attached movable properties and to file an application before the Court concerned to make the orders absolute.

As per the GO, Government have appointed the N Sanjay as the case may be, as the "Competent Authority" under sub- section (1) of section 4 of the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 (Andhra Pradesh Act No.17 of 1999) to safeguard the interests of the depositors and to exercise control over the properties attached by the Government under sections 3 and 8 of the said Act.

CID has reported that MCFPL was established on August 31, 1962 at Hyderabad, and have 37 branches in the State of Andhra Pradesh.

The company operating chit groups ranging between Rs 50,000 to Rs 1,00,00,000, and presently, there are 1989 active chit groups operating in Andhra Pradesh and 2316 active chit groups operating in Telangana State.

"Chairman of MCFPL Ch Ramoji Rao, Managing Director Sailaja Cherukuri Managing Director, Foreman of different branches, auditor of the company have conspired and committed the offences," ADGP said.

ADGP has also stated that an inspection was conducted on November 15, 2022 at the branch offices of M/s Margadarsi Chit Fund Private Limited located throughout Andhra Pradesh by the officials of Registration and Stamps Department. During the inspection, a host of offences and violations of provisions of Chit Funds Act, 1982 were noticed under sections 27, 32, 31, 24 and Form-XXI under Rule 28(2) for each individual chit group.

On analyzing the statements, it is found that the Chit Fund collections from the branches are being transferred to the Corporate Office and the amounts Inturn being invested in mutual funds.

"It was also identified that the accused company had engaged in criminal activities by creating an ingenious vicious cycle perpetrating fraud, cheating, Criminal breach of trust and wrongful enrichment for its own gains at the cost of gullible chit subscribers for Non-Payment of subscription amount and violated to maintain bank accounts to mask the fraudulent activities, Illegal Deposits Scheme," said the ADGP.

Further, the company is not in a position to pay the amounts to the subscribers, when they demanded. It has also been noticed that the company diverted the funds to other investments illegally, which violates the RBI regulations and the provisions of section 12 of the Chit Fund Act,1982 and it is also an offence under section 5 of the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 (Andhra Pradesh Act No.17 of 1999).

Further, ADGP of CID, and the competent authority is requested to take necessary further action in the matter.