Andhra Court rules seizure orders of Margadarsi assets worth Rs 1,050 cr as invalid; junks CID's petitions

The Andhra Pradesh CID, which wanted formalisation of its interim seizure of Margadarsi properties worth Rs 1,050 cr, could not produce any evidence of deviation from the Chit Fund group on repaying the customer. Recording the submissions of the Margadarsi counsel, the Guntur Principal District Judge dismissed the petitions from the ADGP. The court rejected the CID's counsel's argument that the confiscation will help protect the interests of the chitfund subscribers.

Amaravati: The Guntur Principal District Judge has junked three petitions from Andhra Pradesh CID seeking to finalise the seizure of Rs 1,050 cr worth properties of Margadarsi Chit Funds, holding the connected government orders used to enforce the attahcment as invalid, on Monday.

The court dismissed the petitions filed by the ADGP Andhra Pradesh CID, after it concluded that the CID could not prove that the Maragadarsi had failed to pay its subscribers on maturity.

Guntur Principal District Judge YVSBG Parthasarathy held that the three government orders - GO 104 issued on May 29, GO 116 dated June 15 and GO 134 bearing July 27, which permitted the CID to carry out the 'ad interim' seizure of Rs 1,050 cr worth properties, as infructuous, after a lengthy hearing.

Senior Advocate Posani Venkateswarlu and Advocate P Rajarao who advanced the arguments on behalf of Margadarsi, submitted that that the question of confiscating the company's assets does not arise since no subscriber complained about non-payment.

The counsel accused the government and the CID of having initiated the confiscation of properties in the guise of protecting the subscribers, while reiterating that Margadarsi's business activities were subject to the rules of chit fund.

"If there are any deficiencies in the management of chits, they should have be dealt with according to the provisions of the Chit Fund Act. Instead, the CID is invoking the AP Protection of Depositors of Financial Establishment Act (AP Depositors Act-1999) and confiscating the assets," the counsel said.

The confiscation of the assets would be detrimental to the welfare of subscribers as there are no allegations of the company not paying the money from its customers, they said.

Margadarsi has business operations in four states and there is a malicious intent behind the AP CID's allegations, unlike in any other state, the counsel said, addign that "The CID has not placed the information before the court even though the court has ordered them to submit the details of the number of subscribers who have not received their their money, their names, and the amount of money due to them."

The CID has not been able to place any evidence before the court to prove that Margadarsi has failed to pay the money to its subscribers, and that the confiscation orders should not be arbitrary and vindictive. The government does not have unbridled powers on confiscation of properties, they argued.

The Margadarsi counsel urged the court to reject the petitions of the CID.

The CID's counsel argued that the confiscation was aimed at protecting the interests of the subscribers. After hearing both sides, the judge stated that the CID could not prove that Margadarsi had failed to pay the money to the subscribers. Attributing this as its reason, the courtn nullified the GOs 104, 1116, and 134 issued by the government facilitating the interim seizure of Margadarsi Chit Funds properties. All three connected suits filed by the CID were also dismissed by the court.

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