In a significant move aimed at expediting relief for nearly 20 lakh investors allegedly defrauded in the Adarsh Credit Cooperative Society scam, the Rajasthan High Court has constituted a high-powered committee headed by former Chief Justice of India Justice Sanjiv Khanna to oversee the liquidation of the society and the process of returning money to depositors.
The committee has been tasked with closely monitoring the liquidation proceedings, identifying measures to accelerate the recovery and distribution process, and submitting its preliminary report before the Court on August 5. The committee’s first meeting has also been scheduled for the same day.
Hearing the matter on Thursday, the Single Bench of Justice Sameer Jain observed that the case concerns an alleged financial scam of an extraordinarily large magnitude involving lakhs of investors across the country.
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During the proceedings, counsel appearing for the investors informed the Court that the society had collected principal deposits of nearly ₹10,000 crore, while the accumulated interest claimed by depositors is estimated at around ₹15,000 crore, taking the total financial exposure to approximately ₹25,000 crore.
The Court noted that the scale of the alleged fraud warrants urgent judicial intervention to ensure that the liquidation process progresses efficiently and that investors receive their dues at the earliest.
The High Court described the alleged fraud as a carefully orchestrated white-collar crime, observing that depositors had been lured into investing by promises of unusually high returns.
According to the Court’s observations, the funds mobilised from investors were allegedly diverted into real estate ventures through a network of shell companies instead of being managed for the benefit of depositors.
The Bench expressed concern that approximately 20 lakh investors have been waiting since 2018 to recover their hard-earned savings, with many still receiving no relief despite the passage of several years.
The Court was informed by Official Liquidator H.S. Patel that no investor has received any payment over the last eight years.
Patel submitted that the liquidation exercise has progressed at an extremely slow pace due to severe administrative limitations. He informed the Court that the entire liquidation process is presently being managed with only one employee, making it practically impossible to handle a matter involving thousands of properties and millions of stakeholders.
The Court acknowledged that the lack of manpower and institutional support has substantially delayed the liquidation proceedings.
During the hearing, the Court was also informed that recovery efforts have been complicated by actions initiated by the Enforcement Directorate (ED) and the Income Tax Department.
Apart from statutory attachments, interim orders passed by different courts have prevented the auction and sale of several attached assets, thereby delaying the generation of funds required for repayment of investors.
According to submissions made before the Court, properties having an estimated market value of nearly ₹5,000 crore continue to remain under attachment.
The High Court took note of the human impact of the prolonged delay, observing that many affected investors belong to economically vulnerable sections of society.
The Bench recorded that numerous depositors are senior citizens, pensioners, middle-class families and ordinary citizens who invested their retirement benefits, life savings and accumulated earnings in the cooperative society.
The Court observed that many investors are now struggling to meet essential medical expenses, finance family weddings and manage day-to-day household requirements due to the non-return of their deposits.
Recognising the complexity of the liquidation exercise, the High Court entrusted the committee headed by former Chief Justice of India Justice Sanjiv Khanna with supervising the entire process.
The committee has been empowered to examine the status of liquidation, recommend steps for expediting the recovery and distribution of assets, and ensure effective coordination among all stakeholders.
The Official Liquidator has been directed to appear before the committee chairman on August 5 and place all preliminary information concerning the liquidation before the committee.
To assist the committee in dealing with the legal and administrative complexities involved, the High Court directed the National Law University, Jodhpur, and the Gujarat National Law University (GNLU), Gandhinagar, to extend research and academic assistance.
The committee has also been authorised to seek assistance from subject experts, Chartered Accountants, advocates and other professionals whenever required to facilitate an effective liquidation process.
The High Court further directed the Central Government to provide the committee with adequate office space, logistical infrastructure and financial assistance to enable it to discharge its responsibilities efficiently.
In another significant direction, the Court vacated all interim orders that had been operating in favour of the former management of the society and various shell companies allegedly connected with the diversion of investor funds, thereby removing legal obstacles that had impeded liquidation proceedings.
The committee is expected to hold its inaugural meeting on August 5, following which it will submit its preliminary report before the High Court.
The proceedings are likely to shape the future course of one of India’s largest cooperative society liquidation exercises, with millions of investors hoping that the newly constituted oversight mechanism will finally accelerate the recovery of their long-pending dues after nearly eight years of uncertainty.
