The jeweller had earlier admitted to cheating customers in a gold scheme.

Explainer Why Nathella one of Chennais leading jewelers is under the scanner again Image for representation
news Fraud Saturday, March 24, 2018 - 12:50

A doyen among the big wigs of the jewellery industry operating in south India, Nathella jewellers is once again in the news for fraudulent practices. Once located at the heart of Chennai’s shopping district in T Nagar, Nathella was religiously sought after by regulars in the city for nearly 80 years for every jewellery need from weddings to children's ear piercing ceremonies.

The latest complaint involves the jewellers defrauding a consortium of 14 banks led by the State Bank of India to the tune of Rs 250 crore.

Lodging a complaint with the Central Bureau of Investigations(CBI), the SBI said, “Nathella Sampath Jewelry had misrepresented financial statements from 2010 and liquidated the primary asset kept as security/collateral. About Rs 250 crore loans were sanctioned by SBI in a consortium arrangement — which has been classified by the bank as fraudulent on December 22, 2017 — for having misrepresented the financial statements from 2010 and liquidated its primary asset. The matter has been reported to CBI for necessary action.”

In October last year, Nathella Sampathu Chetty, a part of the larger Nathella group, admitted to cheating investors to the tune of Rs 75 crore.

Following this, the jewellers had to shut shop, bringing to an end a 77 year-old business, for failing to repay dues to customers in a chit fund scheme. Hundreds of police complaints were filed against its management for duping customers in this ‘gold savings’ scheme from which they got no returns.

A case was registered against the managing director of the firm, Ranganatha Gupta, his sons Prabanna Kumar and Prasanna Kumar, and their relative Kota Suresh under IPC sections 406 (criminal breach of trust) and 420 (cheating) and relevant sections of the Tamil Nadu Protection of Interest of Depositors Act, 1997.

Speaking to TNM at the time, Mani, who had invested in the scheme had said, “I had started investing in the scheme three years ago and paid about Rs. 1,30,000 to Nathella Sampathu Chetty. I came to know about the scheme through a WhatsApp message which asked the customers to pay Rs. 2000 per month.

However, Mani had stopped making monthly payments when he learnt that his deposits had been swindled. He did not receive any money in return for his investments.

In November 2017, the jewellers assured the Economic Offences Wing investigating the case that they were “taking steps to mitigate the crisis” and that they “planned to repay dues to subscribers of gold savings schemes by March next year.”

The latest allegation is also important in a series of cases of jewellers being accused of fraud involving hundreds of crores of rupees. In February this year, it was learnt that diamond jeweller Nirav Modi had fled the country, allegedly duping the Punjab National Bank of two billion dollars, causing a huge uproar against the BJP-led Centre for letting the accused slip.

In fact, on Thursday, Chennai-based jewellers Kanishk Jewellers were quizzed by the CBI in an alleged Rs 800 crore scam. The CBI was once again acting on a complaint from SBI and a consortium of banks that had lent money to the jeweller.

Show us some love! Support our journalism by becoming a TNM Member - Click here.