Parliamentary panel wants special courts to deal with ponzi crimes

NEW DELHI: Amid rising instances of gullible investors getting cheated by fraudulent money-pooling schemes, a Parliamentary panel has recommended setting up of economic offence courts in every state to try such crimes and speedy disposal of the cases.

The Parliamentary Standing Committee on Finance, in its report on 'Efficacy of regulation of collective investment schemes, chit funds etc', has also proposed that the scope of special courts provided for in the recently enacted Securities Laws (Amendment) Act, 2014, be extended to deal with such cases.

The Committee also suggested "in order to complement strict enforcement action, economic offences courts may be set up or designated in every state for trial of such economic offences, including those under SEBI Act, RBI Act, State Depositors Protection Act, Prize Chits and Money Circulation Schemes (Banning) Act, etc."

"The special courts provided for in the recently enacted Securities Laws (Amendment) Act, 2014 may be extended in its scope for this purpose," the report submitted to Lok Sabha Speaker Sumitra Mahajan said.

When Parliament is not in session, parliamentary panels often submit their reports to Lok Sabha Speaker or Rajya Sabha Chairman. They are then tabled in Parliament in the next session.

The Committee, headed by former Law Minister M Veerappa Moily (Congress), said such designated courts will not only lead to speedy and timely trial but also eliminate unnecessary overlapping of litigation. They will also check the volume and size of fraud by such operators.

"This will also prompt compliance to orders passed by regulators such as SEBI who have been facing serious difficulties in this regard," the report said.

It felt that the 12 major ponzi companies indulging in scams worth thousands of crores of rupees, as mentioned in the Madhya Pradesh High Court order of 2012, should have been dealt with strongly by the concerned regulators and agencies.

"The Committee recommend that the Department of Economic Affairs, Ministry of Finance should monitor the follow-up action on these ponzi companies by regulators/investigating agencies on regular basis and make necessary administrative arrangements for ensuring better enforcement."