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Franchisees banked on brand to build business

Several franchise owners of Gitanjali Gems say they were invited to invest with Gitanjali Gems around 2010.

Published: 23rd February 2018 04:37 AM  |   Last Updated: 23rd February 2018 05:20 AM   |  A+A-

By Express News Service

BENGALURU: Several franchise owners of Gitanjali Gems say they were invited to invest with Gitanjali Gems around 2010. Assuming that the brand name would help in the business, they invested anywhere between Rs 5 crore and Rs 25 crore each, totalling more than Rs 300 crore. As per the contract, they were assured monthly payments over their deposits and also supply of gold and diamonds.

When many complained of not getting any money, Gitanjali officials convinced them by promising to hold jewellery exhibitions which they said would bring in investors as well as better profits.   

Amit Kumar of Mysuru says, “I opened the franchise in 2010 on a three-year contract. In 2013, when I asked for my money, a cheque (ICICI bank) for Rs 1 crore was issued to me. But when I went to encash it, the cheque bounced. My calls to the company were never answered. Eventually, I filed a cheque bounce case (CC/0001528/ 2015) in a Mysuru court which is still pending.”

S K Jain of Jodhpur, who opened a franchisee in 2011 on a three-year contract, incurred losses of Rs 1.8 crore and issued legal notice to the company.“I checked the balance sheets and found out Choksi was not filing income tax properly. His enterprises in India were running under losses but making profits abroad. Yet, he managed to get huge loans from banks. Eventually, I filed a case with the police in Jodhpur who filed a closure report without even looking into it,” Jain said.

Distress Calls

May 15, 2015: Seven of the franchise owners wrote letters to John Kingsly, Joint Director of Enforcement Directorate, Bengaluru, Minister of Finance and Corporate Affairs, SEBI head office, Economic Offences wing of Delhi Police, Mumbai city police commissioner and director of Serious Fraud Investigation Office. They claimed that by then, Choksi had availed loans to the tune of B4,000 crore from banks. He was barred from the stock markets as he was found to be round-tripping stocks of his group firms. In 2015, a Bengaluru court had even ordered Choksi to surrender his passport.
July 26, 2016: They wrote to the PMO mentioning details of nine cases against Mehul Choksi. By then, Gitanjali group has taken loans of  B9,872 crore, all from bank branches in Mumbai, they said.



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