HYDERABAD: A division bench of the Telangana High Court, comprising Justice Sujoy Paul and Justice Namavarapu Rajeshwar Rao, has instructed the court registry to publish in Telugu, Hindi and English newspapers to ensure broad awareness of the ongoing investigation into the Margadarshi case among depositors who did not get back their deposits. This decision comes as part of an inquiry initiated by the Supreme Court.
During the hearing on Tuesday, former MP Undavalli Arun Kumar, who is the petitioner in the case, along with senior counsel Siddhartha Ludra, representing Margadarshi Chit Funds, attended the session virtually. Ludra sought a two-week extension to respond to a counter filed by the Reserve Bank of India (RBI). In response, Arun Kumar argued that the RBI had determined that Margadarshi Chit Funds’ collection of deposits from subscribers was illegal under Section 45(S) of the RBI Act, emphasising the need for a thorough investigation at the grassroot level and for those responsible to be held accountable.
Arun Kumar further urged the court to direct Margadarshi to submit the details of its 70,000 subscribers, which had previously been provided to the Supreme Court, to the High Court in a digital format. However, the bench advised Arun Kumar to file an affidavit seeking these details. The governments of Andhra Pradesh and Telangana have been instructed to submit their counters within two weeks, with the next hearing scheduled for September 11.
In its recent submission, the RBI reiterated its stance that Margadarshi cannot avoid legal scrutiny by contending that Section 45(S) of the RBI Act does not specifically apply to Hindu Undivided Families (HUFs). The RBI argued that Margadarshi, by operating under an HUF, should be classified as an “association of individuals” under the Act and is therefore prohibited from accepting public deposits. The central bank further asserted that Margadarshi Financiers, owned by the late media mogul Ch Ramoji Rao, is liable for prosecution due to its violation of regulations by collecting funds from the public.
The RBI also opposed the petitions filed by Margadarshi and Ramoji Rao, which sought to quash cases initiated in 2008 by the Andhra Pradesh government. In its counter-affidavit, the RBI cited multiple judgments from both the Telangana High Court and the Supreme Court, arguing that the petitions should be dismissed as the actions of the petitioners appeared to meet the criteria for the alleged offenses.