Tuesday, October 15, 2013

State moves to dilute cases against fraud cos

MUMBAI: In an apparent attempt to dilute cases where investors were duped, the state government has issued orders asking police to chargesheet them under the Indian Penal Code (IPC) instead of the special act MPIDA or Maharashtra Protection of Interest of Depositors Act (in financial establishments).

MPIDA was enacted in 2000, on the RBI's desire for a stringent law against financial establishments which duped investors by offering huge returns. The existing laws were found to be inadequate to deal with the growing number of such companies. MPIDA's salient feature was that the properties of the companies could be attached and auctioned to repay the investors. But some companies moved the Bombay high court questioning the state's powers to promulgate such an act. In November 2005, the HC struck down the act putting the trial in these cases in a limbo.

There are at least 50 cases in the state where investigations were complete but chargesheets could not be submitted as the act became defunct. In the remaining 454 cases the chargesheets were submitted but the trial could not take place following the SC order which gave interim relief to fraudsters.

The state government went in appeal in the Supreme Court to restore the act. Even as the appeal is yet to be decided, the state government this month directed the police across the state to chargesheet the pending cases under IPC. The reasoning is that since the appeal is yet to be decided by the SC it does not make any sense to wait further.

Officers say that the government order will pave the way for the SC to take a view that since chargesheets are being submitted under IPC there is no need to restore the act, a move that will benefit the companies.

TOI has a copy of the order signed by special inspector general Rashmi Shukla on behalf of the director general of police. "This is part of the GR issued by the government,'' she said but refused to elaborate further.

Police officers told TOI that they were surprised that the government took a decision without consulting any of the officers dealing with such cases. "The government on the one hand has been speaking about setting up special units across the state to handle cheating cases. At a meeting with officers on January 13, state home minister R R Patil asked us to take the assistance of lawyers and chartered accountants in complicated cases. This order will benefit the companies. The government claims to have discussed the issue with the law and judiciary department,'' a police officer said.

According to them, once a chargesheet is submitted under the IPC, all the properties attached under MPIDA will have to be relased. "The properties were attached under the provisions of MPIDA and not IPC. Besides, the bank accounts of these fraudsters frozen under the special act will also have to be activated. There is also the issue of limitation, where the magistrate courts will say the chargesheets have not been submitted within the stipulated time. The courts will throw out the chargesheets,'' a police officer said. Additional commissioner of police (economic offences wing) Sanjay Saxena refused to comment.
C Unnikrishnan, TNN Jun 7, 2010, 03.36am IST

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