Telangana: HC Tells Registry to Invite Claims of Margadarsi Financiers’ Investors

Hyderabad:The Telangana High Court on Tuesday ordered the High Court Registry to publish a notice inviting claims or objections from the bona fide investors of Margadarsi Financiers and if such claims are received or not.

A division bench comprising Justice Sujoy Paul and Justice Namavarapu Rajeshwar Rao directed the Registry to publish notices in newspapers of English, Hindi and Telugu.

The order was issued while hearing criminal petitions of 2011 filed by Margadarsi Financiers and Ramoji Rao (who died recently), seeking a stay on criminal prosecution against them on the allegations of Margadarsi Financiers collecting deposits from Investors by violating RBI guidelines.

On a complaint filed by former Congress MP Undavalli Arun Kumar in 2008, the erstwhile united AP government began criminal prosecution, which was later upheld by a magistrate court.

According to Arun Kumar, Margadarsi Financiers raised deposits from the general public to the tune of Rs 2,610 crores as on March 31, 2006. He submitted that Hindu Undivided Family (HUF) is an unincorporated association of individuals, and as HUF is not a juristic person, it is prohibited to collect the deposits under Section 45S(1) of RBI Act.

On December 31, 2018, the Hyderabad High Court quashed the criminal prosecution against Margadarsi Financiers and Ramoji Rao. Challenging the verdict, Arun Kumar approached the Supreme Court, which found fault with the High Court orders and remanded back the case to the Telangana High Court for hearing afresh.

Meanwhile, the Division Bench headed by Justice Sujoy Paul heard the petitions and RBI filed counters stating that Margadarshi had violated the norms in collecting the deposits.

On Tuesday, during the hearing of the case, senior counsel Sidharth Luthra, representing Margadarshi Chit Funds, requested a two-week time to file a reply to the counter filed by the Reserve Bank of India (RBI).

Arun Kumar urged the court to direct Margadarshi to submit the details of its 70,000 subscribers, which had previously been provided to the Supreme Court to the High Court in a digital format. However, the division bench advised Arun Kumar to file an affidavit seeking these details.

Based on the affidavit, the bench would issue orders to Margadarsi Financiers. The governments of Andhra Pradesh and Telangana have been instructed to submit their counters within two weeks, with the next hearing scheduled for September 11.