'Can't Remain Silent': Court As SEBI Withdraws From Audit In Rose Valley Scam

SEBI (Securities and Exchange Board of India) has withdrawn from the responsibility of conducting a forensic audit into alleged financial irregularities by the committee headed by Justice (Retd) Dilip Seth, which was formed by the Calcutta High Court to oversee the refund of investors' money in the Rose Valley chit fund scam. 

A division bench of Justice Rajarshi Bharadwaj and Justice Uday Kumar is keen to hand over the responsibility to the Comptroller and Auditor General (CAG), and the Centre has been asked to inform the court next week whether the body can take up this task.

"If SEBI is unwilling to conduct the forensic audit, the court cannot remain silent. We had even told SEBI to seek the help of the CBI, if necessary, but they avoided the matter. Therefore, an investigation must be carried out," the bench said. 

The lawyer representing the Assets Disposal Committee (ADC) told the court that everything is in order. "Let there be an investigation, but it should not be termed a forensic audit," the lawyer said, arguing that since the committee is led by a former judge, using the term would send the wrong message. 

The court clarified it had ordered SEBI to conduct a forensic audit only after examining all relevant documents and accounts. The markets regulator, however, expressed its reluctance, citing a lack of qualified personnel.

On the issue of using Webel's (West Bengal Electronics Industry Development Corporation) technology for refund operations, the Enforcement Directorate (ED) raised objections once again and the Justice Seth Committee supported the agency's stance. The ED argued that Webel is not competent for the task and submitted a written application seeking permission to engage another company. The Rose Valley company's lawyer, however, objected to this proposal and the bench appeared to agree. 

"For another committee (the Talukdar Committee), Webel did excellent work - there are records to prove that. Now your committee is saying Webel is not performing well and wants to bring in an outside agency. Who will pay that agency? Can the committee pay? It has no funds. Why should the depositors' money be spent on this? Ask the Centre to provide funds if necessary. Under no circumstances should funds be taken from the depositors' accounts for this purpose," said the Calcutta High Court  

"Despite so much talk from the ED, they have recovered only Rs 500 crore of the total Rs 17,500 crore that remains unpaid. Where is the remaining Rs 17,000 crore? What has happened all this time? What has the ADC Committee done? First, the forensic audit will take place, and only then will we hear all arguments," the bench said.

The next hearing is scheduled for November 7.