₹68.50 cr ponzi scam: SC paves way for trial of S. Natrajan

The private finance company and several others including Natarajan are accused of misappropriation of public money and fraudulent diversion of property in 2004.

October 01, 2017 05:31 pm | Updated 09:36 pm IST - New Delhi

The Supreme Court set aside a Madras High Court order quashing criminal proceedings against S. Natarajan, now a director in the Sriram Group, in the 2004 high-profile ponzi scam involving Chennai-based PNL Nidhi Ltd. which allegedly collected ₹68.5 crore from over 13,000 investors and defaulted in repayment.

A Bench of Justices Ranjan Gogoi and Navin Sinha held that the High Court order was not legally tenable. The proceedings against Natarajan, who is the 12th accused in the scam, will resume.

The court recapped the High Court’s reasoning, observing that the latter terminated the proceedings against the accused upon the conclusion that Natarajan served as director of PNL Nidhi Ltd. during the period between 1995 and 2000, while the default in repayment of dues to the depositors occurred in 2004.

The court countered the conclusion by pointing out two relevant facts. Firstly, Natarajan was director of PNL Nidhi when funds were diverted to different corporate entities and such diversion resulted in consequential default in repayment to the depositors.

Second, Natarajan, it emanates from the records, held the controlling interest in a private limited company, Calfin Credit Holdings Pondicherry Ltd., Chennai, which was one of the beneficiaries of the diverted funds and he had transferred this company to another accused in 1993.

“In the light of the above facts and circumstances we do not think that the High Court was right in quashing the criminal proceedings against the respondent-accused. We refrain from addressing any other issue, save and except, what is indicated above...,” the court held.

Settlement of dues

In 2014, the Madras High Court had appointed one of its former judges as administrator to settle the dues of PNL Nidhi Limited to depositors in Puducherry and Cuddalore. The PNL had agreed to settle 75% of the deposits collected by it.

A 3,000-page charge sheet was filed in May 2012 in a Puducherry court by the prosecution agency. A case was filed against the PNL Nidhi Limited for misappropriation of public money and fraudulent diversion of property in 2004 by the CID.

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