Investing money has always been a cause of concern for many of us, we always get trapped in some attractive schemes without knowing the genuineness of the scheme. In India, more than 100 Public Interest Litigation (PIL) has been filed before the High Court against the chit fund companies who had duped the investors. In this article, we will discuss, what is chit fund, what Talukdar Committee is, what matters are referred to the committee and how far has the committee been successful in solving the problem of the investors?
What is Justice S.P. Talukdar Committee?
In Calcutta, the investors of various chit fund schemes had approached the High Court stating that the chit fund companies had failed to pay their money invested. Looking at the seriousness of the matter, the High Court came up with the decision of forming a committee that would create a mechanism for recovering the money of the investors.
Therefore, Justice S.P. Talukdar Committee is also known as the ‘One Man Committee’ was formed by an order dated 23rd December 2015 by the High Court, Calcutta comprising Hon’ble Justice Joymalya Bagchi and Hon’ble Justice Manjula Chellur.
The head of the Committee was the Former Judge of the High Court, Calcutta, Justice Sailendra Prasad Talukdar.
What is the Chit fund?
Chit fund is one of the most common types of money circulation schemes prevalent in many Asian countries like India, Bangladesh, Sri Lanka, Pakistan, etc. It can be done through a financial institution or privately.
Now, how does it work? In a Chit fund, a certain number of people form a group and invest a fixed amount of money every month for a particular period of time. The money that is collected is in turn given to the investors as a prize when a chit containing that person’s name is drawn.
In India, the Chit fund companies are regulated under the Chit Fund Act, 1982 and administered by the State Government. The Reserve Bank of India regulates the deposit-taking activities of the chit fund companies.
What is the function of the Talukdar Committee?
The matters referred to the Talukdar Committee are as follows:
a) To identify, make an inventory (a formal list of property of the company) and keep a record of all the moveable as well as immovable properties of the chit fund companies and its directors including properties that are the property that is seized by the police officer. Documents such as original sale deeds, fixed deposit receipts, etc. that belong to these companies should also be seized with the help of the state and central machinery such as State police, CBI, SEBI, etc.
b) To ascertain or confirm the name and other details of the depositors (excluding agents) and verify the exact amount invested by the investor through the application.
c) To conduct a public auction to dispose of all the moveable and immovable assets of the chit fund company and its directors.
d) All the money that is payable to the chit fund companies should be recovered and credited to the corpus fund created by the committee for the purpose of the scheme by attaching the moveable as well as immovable property, bank account, etc.
e) After identifying the name of the investors and the amount invested by them and completing the process of the sale of the companies’ assets, a scheme will be formulated by the committee which will be placed before the High Court for its approval.
f) Once the scheme is approved, the committee will distribute the amount to the investors (not agents) after proper identification.
What is the Procedure for refund of investor’s money?
In the Alchemist Group of Companies case, the High Court had put forward the procedure for investors to apply online for a refund of their money in the following manner:
1) Firstly, a notice has to be published in newspapers such as Sanmarg, Ananda Bazar Patrika, Times of India requiring the investors to visit the Talukdar Committee’s website and check the procedure for submitting online applications and receiving the money online.
2) The website contains the format for making an online application for a refund of money. The investors can also seek the assistance of the Government offices of the concerned such as District Magistrate, S.D.O, B.D.O, Panchayat Offices, etc. or even State agencies.
3) The application should contain the investor’s particulars such as; name, address, certificate number, amount, bank details, mobile number. The original documents of the same should be submitted at the time of making an application.
4) On submission of the application, the documents will be scanned by the system, and accordingly, the applicant will get a unique number.
5) The scanned mobile number of the applicant will be verified by the data entry operators and then the name of the applicant will be confirmed as a valid applicant.
6) In the event, the application is found to be incomplete, then such application will be kept for pending verification list. The applicant can complete the details within a fixed period of time. Once, complete the applicant’s name will be registered.
7) And if the applicant fails to complete the application within the given time, then such application will be rejected. However, such rejected applicants will be allowed to justify his/her claim at a later stage.
8) Once the registration of the application is complete, the online refund of money will be proceeded by the committee. There are two modes of refund of money namely;
a) Each valid applicant will get a fixed minimum amount of money as refund by the Committee (i.e., Rs. 2000/- or Rs. 5000, or Rs. 10,000/-) as may be approved by the High Court depending upon the accumulated/corpus fund and the number of valid applicants.
b) Each valid applicant may get a proportionate amount of payment by the Committee which ratio will be decided based on accumulated/corpus fund and a number of valid applicants, subject to the approval of the High Court.
9) If the valid applicant is satisfied with the refund amount, then such applicant’s name will be removed from the list and the remaining applicant’s name will stay in the applicants’ list displaying the amount to be paid to them in the future.
10) All the payments will be made directly to the investor’s bank account mentioned in the applicant’s form.
Relevant Case laws on Chit Funds
MPS Group of Companies
In this case, the High Court had ordered to sell all the moveable and immovable properties of the MPS Group of Companies and deposit the amount collected in the corpus fund of the committee. The public auction was conducted with the assistance of SEBI. Most of the MPS Group of Companies property valuation has been received but some of the properties have not yet received valuation by the State agencies. Due to the inability to sell the property of the company the High Court had ordered to conduct valuation and auction of the company’s properties with the assistance of the Russell Exchange Agency. The Committee has collected Rs. 14,63,03,180.00/- in the corpus fund by public auction of MPS Group of Companies properties. This amount will be refunded to the investors once the scheme has been approved by the High Court.
Vibgour Group of Companies
In this case, the Vibgour Group of Companies was ready to repay the amount to the investors in accordance with the pattern submitted by the Alchemist Group of Companies. It was also approved by the High Court that the depositors who are terminally ill and are unable to make applications may be given precedence. The Committee had conducted a public auction of the Vibgour Group of Companies properties with the assistance of SEBI and Russell Exchange Agency. Rs. 36,28,937/- has been refunded to the investors. The committee has collected Rs. 12,36,032/- in the corpus fund of Committee. The said amount will be disbursed to the investors on the approval of the scheme by the High Court.
Alchemist Group of Companies
In this case, the High Court had put forward the procedure for disbursement of the investor’s amount. The Court had also stated that the refund process will be initiated on the seniority of the matured deposits. The company did not follow the direction of the High Court. The Court had directed the SEBI to sell the shares in the Demat accounts with M/s India Infoline Limited, Mumbai in the open market and deposit the sale amount to the corpus fund of the Committee. Rs. 26,40,03,533.74 has been collected by the Committee in the corpus fund. This amount will be refunded to the investors under the direction of the High Court.
Justice S.P. Talukdar Committee formed by the High Court; Calcutta was initiated with the object to refund the amount deposited by the investors in the chit fund company. The Committee has created an online procedure to apply so that the aggrieved investor can reimburse the amount that he/she has not recovered when it was due. The Committee has been directed by the High Court to conduct an investigation of the matter and sell the moveable as well as the immovable property of the chit fund companies by way of public auction and deposit the amount collected into the corpus fund of the Committee and once the stipulated amount is collected, the Committee put forward the scheme to the High Court for its approval and then refund the amount to the listed investors.