Author: Samidha Ramdas Chaudhari, Dr. Babasaheb Ambedkar memorial college of law Dhule
To the point :- The India is in the fourth place in the world GDP rank. India is also ranked 4th among the powerful countries. And as big as India is, the scams are also big in India. Financial scams have become very common. Sometimes scams are committed by leaders and sometimes by bank officials. And today we are going to know about one such big scam. Rose Valley Financial Scam. This is a big financial scam and is also related to politics. Rose Valley Finance and Investment Company Limited is a non-government company and was established on 10th December 1997. At that time, the director of the company was Kajal Kundu. And then Gautam Kundu became the director. This is a political scam that was exposed in 2010 under which the general public was being financially defrauded through unauthorized collective investment schemes, Ponzi schemes, and money laundering, etc.
Use of the legal jargon :-
PMLA Act ( section 7):-Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money-laundering after having regard to the material before it.
PMLA Act (section 8) :- Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering
IPC section.120B. Punishment of criminal conspiracy.—(1) Whoever is a party to a criminal conspiracy to commit an offence punishable with death, . (2)[imprisonment for life] or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence.
IPC section.420. cheating and dishonestly inducing delivery of property :- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
SEBI ACT, section 11(c) :- suspend any office-bearer of any stock exchange or self-regulatory organisation from holding such position.
PMLA Act, section 3. Offence of Money -Laundering :- Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the 1[proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. 2.a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually Involved in one or more of the following processes or activities connected with proceeds of crime, namely:–
(a) concealment; or
(b) possession; or
(C)acquisition; or
(d) use; or
(e)projecting as untainted property; or
(f) claiming as untainted property,
In any manner whatsoever; the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.
SEBI ACT section. 12(A) :- Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control.
SEBI ACT section 24 :- Without prejudice to any award of penalty by the adjudicating officer under this Act, if any person contravenes or attempts to contravene or abets the contravention of the provisions of this Act or of any rules or regulations made thereunder, he shall be punishable with imprisonment for a term which may extend to ten years, or with fine, which may extend to twenty-five crore rupees or with both.If any person fails to pay the penalty imposed by the adjudicating officer or fails to comply with any of his directions or orders, he shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to ten years, or with fine, which may extend to twenty-five crore rupees or with both.
The Proof :- The West Bengal-based Rose Valley group cheated investors of Rs 17,000 crore, the CBI has confirmed, making the chit-fund scam seven times bigger than the Saradha scandal that generated a lot of political heat in the eastern state.The hospitality to real estate group robbed millions of investors, most of them from low-income group, in at least 10 states, including West Bengal, Odisha and Andhra Pradesh, promising exaggerated returns, agency sources told HT on Thursday. In popular perception, the Saradha Group has been the biggest culprit that duped the public of its hard-earned money, but it was actually the RV (Rose Valley) group in India’s Northeast and eastern states,” a source familiar with the investigation said.A lot of numbers were being thrown around after the Supreme Court in May 2014 ordered a probe against 24 chit-fund firms in a Rs 1.2-lakh crore financial scandal but it is now that the Central Bureau of Investigation has come up with the sums stolen from investors.Saradha chairman Sudipta Ghosh’s alleged admission of cheating in April 2013 had blown the lid off these scams. Rose valley group chairman Gautam Kundu was arrested last year on charges of money laundering.
The RV group made a modest start in the hospitality sector in Bengal in the late 1990s. It later expanded to real estate, film and media sectors and was also as a corporate agent of a state-owned insurer.The CBI, which is still investigating the case, has submitted a charge sheet against four senior Rose Valley officials, including Kundu, in a Bhubaneswar court in January. Three group firms—Rose Valley Real Estate & Construction Ltd, Rose Valley Hotel & Entertainment Ltd and Rose Valley Real Estate & Land Bank India Ltd – have also been named.West Bengal-based Basil International Limited, which allegedly robbed investors of Rs 3,500 crore, is second on the CBI’s ‘scamster list’, pushing Saradha group to the third place. The collapse of Saradha group wiped out Rs 2,500 crore in deposits .
Two Trinamool Congress (TMC) Lok Sabha members, Sudip Bandopadhyay and Tapas Pal were arrested by CBI in 2017.Bandopadhyay got bail after 136 days but Pal, who was also a popular actor in Bengali cinema, was in judicial custody for around three years. He died in 2020, months after being granted bail.
Subhra Kundu, a former actress, was arrested by CBI from her Kolkata residence in January 2021. She is now in judicial custody in Odisha where CBI filed a case on the basis of complaints lodged by people who invested in Rose Valley. The two TMC MPs were also lodged in an Odisha jail. ED arrested Gautam Kundu in 2015. He is in judicial custody at Kolkata’s Presidency correctional home. Although CBI and ED are investigating several high-profile Ponzi scam cases such as the Saradha and Rose Valley, a trial has not started for these.
The group had allegedly floated a total of 27 companies for running the alleged chit-fund operations out of which only half a dozen were active. It is alleged that the firm had floated the scheme by promising inflated returns on investments between 8% and 27% to gullible investors in various states.In 2018, ED attached assets worth over ₹4,200 crore, including hotels, land, luxury vehicles, and other properties. In August 2024, the ED facilitated the restitution of ₹19.40 crore to defrauded investors after approval from a special PMLA court.
Abstract :- Rose Valley Scam: In the financial chit fund scam case, 22 lakh people were cheated financially. In this scam, Gautam Kundu, the director of Rose Valley Group, was the main accused in this case. This scam was exposed on 2013. He committed this scam in many nearby cities, mainly in West Bengal, Assam, Odisha, Tripura, Jharkhand etc. This move comes after years of investigation by the Enforcement Directorate (ED), which had attached the amount between 2015 and 2017 by tracking the money trail across 2,987 bank accounts used to divert funds collected from innocent investors.The assets, which were held in the form of fixed deposits in various bank accounts, were attached by the ED for being the case’s proceeds of crime during its money-laundering probe. An Assets Disposal Committee (ADC) was constituted on the directions of the Calcutta high court under the chairmanship of Justice (retired) Dilip K Seth, with the ED and others as its members.
The ADC has already processed 32,319 claims, resulting in the disbursal of around ₹22 crore of funds to investors, ED sources said. The restitution process is likely to acquire optimum pace over the coming months, as more claims are being scrutinised and validated by the ADC.Over 31 lakh investors of the Rose Valley Group have registered their claims on a dedicated website, www.rosevalleyadc.com, for restitution purposes, ED sources said, adding that pursuant to the persistent efforts of the ED, eastern region, the special court at the district and sessions court complex, Khurda, by an order of March 7, allowed the application filed by the ADC for restitution of the assets.The ED, Kolkata, played a crucial role in facilitating the attachment, possession and disbursement of the assets of the Rose Valley Group, thereby smoothening and expediting the restitution of properties to thousands of victims in West Bengal, Odisha, Assam, among others”. In January 2017, Trinamool Congress MP Sudip Bandyopadhyay was arrested by the Central Bureau of Investigation (CBI) for allegedly promoting Rose Valley schemes and benefiting financially. Actor and Trinamool MP Tapas Paul was a director in Rose Valley’s media wing and was also arrested in relation to the scam.
Case Law :-
Satyam scam – ( Satyam computer scam) amount of money involved 7,000 crore. This scam was exposed as early as 2009, when India was already in the middle of the recession . The company and its founder confesses to misrepresentation and manipulating accounts worth 7,000 crore’s in front of it’s board , stock exchanges , investors and other stakeholders. In this case revolves Rama Raju and Ramalinga Raju. His confesses to this scam and he was imprisoned was further charged with the following offences,
Criminal conspiracy .
Breach of Trust .
Forgery.
Auditor of the company was held guilty of such conspiracy , and his licence was cancelled for 2 years.
Jharkhand Mining Case :-
In this case , IAS officer pooja singhal , secretary of the department of Mines and Geology and the managing director of jharkhand state Minerals development corporation limited, who is also an aide to the jharkhand , Hemant Soren had her property raided in a money laundering case linked to the alleged embezzlement of MANREGA funds in the state khunti and chatra district’s . Amount of nearly 20 crores was recovered from the officer and her chartered accountant and an arrest was made against her in May 2022. Further, the ED also carried out a raid on Ranchi’s Pulse hospital , owned by her husband, Abhishek zha.
Conclusion :- From the above information, we can conclude that India is progressing but in this progress only the rich are getting richer and the poor are getting extremely poor. And taking advantage of this poverty, Satyam scam, Punjab National Bank scam and this Rose Valley scam are deceiving many poor people and investing their money and getting rich themselves. The root of all these scams is greed and corruption. Scam cases depend on these two roots. Where money laundering cases have come to light, the markets are not well-organized and developed. There should be strong control over such financial markets. Due to this, it is seen that the crime rate is increasing. The trust of the general public in the domestic financial system is being affected. Due to money laundering, the economic, moral and social status of the society is being weekends.
FAQS
What is money laundering in simple words ?
Answer – disguising financial assets so they can be used without detection of the illegal activity that produced them.
PMLA Act?
Answer – The PMLA, or the Prevention of Money Laundering Act, is a piece of Indian legislation enacted in 2002. Its primary goal is to combat money laundering and confiscate illegally acquired assets. The act outlines procedures for investigating and prosecuting money laundering offenses, and it empowers authorities to seize and confiscate proceeds of crime.
What is the most famous scam in India?
Answer – a. WhatsApp scam
b. Instant Loan scam
c. Voice Cloning scam
d. Credit Card scam
f. Fake delivery scam
g. Digital Arrest scam.
