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Apex court notice on plea to recover deposits

By Our Legal Correspondent

NEW DELHI, JULY 22. The Supreme Court has issued notices to the Reserve Bank of India (RBI), the Tamil Nadu Government, the Royapettah Benefit Fund Ltd and six others on a special leave petition, to direct recovery of the money "siphoned off" by the chairman, Subramaniam, and others and distribute it to 1.90 lakh depositors within a time frame.

A three-judge Bench, comprising the Chief Justice R.C. Lahoti, Justice A.R. Lakshmanan and Justice G.P. Mathur, issued notice on the SLP filed by the RBF Depositors' Welfare Association. It was directed against a February 20 judgment of the Madras High Court asking individual depositors to initiate civil proceedings to recover their amount. The court already issued notice on a batch of appeals filed by RBF Nidhi and others.

Rs. 480 crores due

The association submitted that deposits to the tune of Rs. 480 crores were due to be paid to the depositors, who had put their hard earned money in the RBF Nidhi Ltd on the assurance and backing given by the RBI. The High Court had sidelined the interest of the depositors and had gone off at a tangent fixing the responsibility of the scam on Mr. Subramaniam, who was at the helm of affairs at that time and who was the mastermind behind the entire scam.

The grievance of the association was that having found that Mr. Subramaniam was responsible, the High Court had not given any positive direction to recover the said monies from the huge assets possessed by Mr. Subramaniam and his family. It said the RBI had a duty to safeguard the interest of the 1.90 lakh depositors and get back their money.

The association submitted that asking the depositors to resort to civil proceedings would be time consuming. Moreover most of the investors were very old and were finding it difficult to make ends meet as their monies were locked up, rather lost in the scam. It therefore prayed for quashing the impugned judgment and an interim stay of its operation.

As an interim measure, the association sought a direction for the recovery of monies "siphoned off" by Mr. Subramaniam and others as found by the High Court and distribute the same to the depositors. A direction to include a representative of the association in the Board of Administration of the RBF Nidhi Ltd was also sought.

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