An alleged illegal money-raising scheme in Uttar Pradesh (UP) has put the savings of thousands of bondholders, worth several hundred crores, in jeopardy. Across the state, investors have registered several complaints against two real estate companies — Sai Prakash Group and Sai Prasad Group.
The UP police had arrested Pushpendra Singh Baghel, the chairman and promoter of Sai Prakash, on charges of alleged cheating and forgery and investigations were underway against both the groups, said a senior UP police official. “We received the first complaint on February 5. Two people, including Baghel of Sai Prakash, are already under arrest. Several complaints have been registered across the state against Balasaheb Bhapkar and Shashank Bhapkar of Sai Prasad Group. Investigations are on,” the police official from Kanpur told Business Standard.
He added the companies had issued “bonds” to raise money from the public and now, these had defaulted on payments. Cases have been registered under sections 420, 406, 467, 468 and 471 of the Indian Penal Code. If the accused are proved guilty, these sections, which deal with cheating, forgery, etc, could account for imprisonment of up to 10 years.
Some agents of both the companies have also been detained by the police in Agra and Kanpur.
Many illegal schemes by real estate companies that raise money from the public through bonds and debentures, promising attractive returns, have been reported in rural areas, which are ignored by banks and mainstream financial institutions.
A spokesperson for Sai Prakash said Bhagel was arrested in a case of mistaken identity. “The case was against Sai Prasad, but they (the police) picked up officials of Sai Prakash. Bhagel has since got bail,” the spokesperson added. Shashank Bhapkar said his company’s name was dragged into the case by Bhagel, when he was arrested. “Initially, there was some confusion. We have already clarified we have no connection with Sai Prakash,” Bhapkar said, directing further queries to Sanjay Roy, chief executive of Sai Prasad. Roy did not respond to calls on his mobile phone.
A second police officer from Kanpur confirmed the cases against both the firms. “Getting bail does not mean the case is over,” he said.
In January, Business Standard had reported a multi-agency probe was underway against the activities of Sai Prasad Group, following several complaints and subsequent investigations by the Goa Police and the Ministry of Corporate Affairs. The Securities and Exchange Board of India, too, is looking into the affairs of the company.
In a press release issued at the launch of its TV channel, Sai Prakash Group had said it was “founded in 2009, under the able leadership of Pushpendra Singh Baghel, the Sai Prakash Group of companies is an eminent business group from Madhya Pradesh. The group has diversified business interests.
The group’s vision & mission is to enhance and sustain an environment of trust and service for its valuable customers, through its growth as a leading company in the areas of properties development, telecommunications, organic farming and other endeavours.”
