It is often said that in the eastern and central Indian States the biggest reserve of private cash is in a company which has multiple identities, the Rose Valley Group. According to the estimates of the investigating agencies the group had collected upwards of Rs.17,000 crore from the market. The small depositors association puts the figure around Rs. 40,000 crore.
The organisation allegedly violated guidelines of the Reserve Bank of India and other related financial fraud control acts, meant to regulate such companies raising small investments.
A company spokesperson told The Hindu in 2013 that the company “does not have any investment scheme [and] does not sell any financial product.” He claimed that Rose Valley Group is in the business of “time share” of hotels and had acquired about 50 properties in the country. It had multiple other investments especially in media, film and jewellery.
According to the investigating agencies, the money, however, was primarily accumulated by raising small investments in the rural areas of at least half a dozen States. Interestingly, unlike the other big chit fund company, Saradha, the Rose Valley was not a defaulter in Bengal as it was paying interest to its depositors.
But after the Saradha scam opened a Pandora’s Box, the Supreme Court instructed the Enforcement Directorate (ED) and the CBI to probe all the companies involved in raising funds from small depositors. As a part of that process, the Rose Valley Group was investigated.
A CBI release said on Tuesday that the case was registered in June 2014 under Section 420 [cheating], 408 [breach of trust], 409 [criminal breach by public servant], 120-B/34 [criminal conspiracy] of IPC and various sections [4, 5 and 6] of Prize Chits & Money Circulation Schemes (Banning) Act, 1978, “on the orders of the Honourable Supreme Court dated 09.05.2014.”
The order was passed on a writ petition “against the then Chairman of a private Group of Companies and others on the allegations that the said company had collected around ₹17,000 crore illegally from the general public after enticing them with the false promise of paying higher rate of interest.”
Gautam Kundu, chairman of the group, and other officials were arrested in March 2015.
Presumably after interrogating the officials of the group, TMC MPs Tapas Paul and Sudip Bandyopadhyay were arrested.
