Chinese officials on Thursday said the two Indian traders rendered homeless in Shanghai while awaiting a judgment cannot leave the country unless their case was resolved and they “honoured their compensations”.

Deepak Raheja and Shyamsunder Agarwal have been accused by Chinese traders of owing more than 10 million RMB ($1.58 million) after the Yemeni owner of their trading firm in the southern hub of Yiwu fled abroad leaving dues unpaid. The two traders were held hostage in Yiwu for two weeks in December. They were allowed by a local court to leave for Shanghai after surrendering their passports while prosecutors investigated the case.

The two were forced to spend the last two nights on the streets of Shanghai after being thrown out of their hotel because they could not pay their bills. The Indian Consulate in the city had been covering their expenses but said it did not have the approval to go beyond the 45,000 RMB ($7,142) it had already spent on the two men.

While the traders have told the Indian media they will go on a hunger strike until they are allowed to leave China, such a prospect remains unlikely until the legal procedures run their course.

Chinese officials also stress that the traders still have to answer the charges of suppliers who lost millions on account of the trading firm where they worked. “As far as we know, the local court has tried to mediate the case and handle it according to law,” said Foreign Ministry spokesperson Hong Lei.

“Since the two Indian businessmen up to now have not honoured their compensation commitment, the relevant court has ordered them not to leave. This order is still in effect. We hope the businessmen will respond to the demand of the relevant Chinese businessmen so that the issue can be properly handled.”

Mr. Raheja and Mr. Agarwal have said they were only employees in the firm and it was the Yemeni owner who was responsible for the payments. However, Chinese traders have produced in court documents and receipts with the signatures of the Indian traders acknowledging the dues. The Indian traders said the documents were signed under duress.

Hearings began in an Intermediate court in Jinhua, near Shanghai, on March 1.

According to one legal expert familiar with the workings of the Chinese system, even the best outcome for the traders would possibly be deportation without jail time but would likely also entail a heavy fine, one which Mr. Raheja says he will be unable to pay. “Even if the owner is Yemeni, if he cannot be found it is very hard to imagine the authorities letting foreign nationals leave scot free when there are angry Chinese traders still owed money by the same firm,” said the expert.

With the trading firm's Yemeni owner still untraceable, Mr. Raheja told The Hindu he was in a “dire” financial situation, having already paid 900,000 RMB ($143,000) out of his own personal savings while he was being held captive. He has also demanded compensation for his money and for the trauma he faced while being illegally detained by Chinese suppliers.

Indian officials have asked Chinese authorities to speed up investigations and announce a verdict. With three weeks having passed after the hearing, an official said the “situation cannot go on forever”.

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