Responding to the raids on its offices by the Stamps and Registration department of Andhra Pradesh, Margadarsi Chit Fund Private Limited has called the investigation an “attempt of conspiracy” by the YS Jagan Mohan Reddy-led government. The company has alleged that the government abused its power to target them. Margadarsi has been accused of being involved in a Rs 2,600 crore scam. The chit fund company is promoted by media baron Ramaji Rao of the Eenadu group, who is seen as a supporter of opposition Telugu Desam Party.
In a statement on the searches – which continued over three days, and concluded on Thursday, November 17– the chit fund company said that the authorities abused their office’s power by trying to create false evidence of violations after failing to find any irregularities. “As they could not find anything wrong even after three days of searches, the depressed official machinery as a last resort created a document with fictitious violations and faults. They added a twist in it so as to use it against Margadarsi in court. They kept pressuring managers to sign this document till Thursday night,” the statement read.
Margadarsi said that it had no history of illegal activities or complaints from account holders. “Chits details are regularly shared with the office of the Registrar of Chits. Yet, dozens of officials from the Registrar of Chits, Directorate of Revenue Intelligence and the Goods and Services Tax have been searching 18 offices of Margardarsi over the past 3 days. They have not found any violations and have been telling this to their higher officials orally, but the higher officials have been instructing them to find some fault,” the company alleged.
The Stamps and Registration department has been carrying out searches in several locations of Margadarsi offices since November 16. In a media statement, the Stamps and Registration department said that during the searches, officials seized records and materials relevant for proceedings under the Chit Funds Act, 1982. “Further evidence of diversion of funds, non-payment of GST, and not giving security under section 31 (of Chit Funds Act) were collected. In view of the above, all the Deputy Registrars of Chits in the state are directed to take necessary action including penal action on the above noticed irregularities and submit compliance,” the statement by the department read.
The Andhra Pradesh government has impleaded in the Margadarsi chit fund scam case by filing a special leave petition in the Supreme Court earlier this year. Margadarsi is accused of collecting money from its depositors in violation of Reserve Bank of India guidelines. The case against it was first filed by former Minister Undavalli Arun Kumar in 2006. However the case was dismissed in 2014 by the High Court after Ramoji Rao disassociated from the chit fund company. In 2020, Arun Kumar had approached the Supreme Court challenging the 2014 High Court verdict, after which the Andhra Pradesh government impleaded in the case.
Recently, as part of the Bharatiya Janata Party (BJP)’s outreach efforts, Union Home Minister and former president of the BJP Amit Shah had met Ramoji Rao. The meeting had triggered speculations of the revival of an alliance between the TDP and the BJP.