Saradha vow faces tricky sums

Calcutta, Aug. 18: Mamata Banerjee’s promise to reimburse the hardest-hit Saradha depositors is stuck in financial and procedural problems four months after she announced a Rs 500-crore fund for the purpose.

The plan is to compensate the poorest victims who had invested Rs 10,000 or less each with the collapsed deposit-collection company. Writers’ officials said the government wanted to do this by October so that the chief minister could showcase it as her “Puja gift”.

“But the initiative has hit a series of roadblocks,” an official said.

A cabinet minister said: “We somehow escaped a backlash from the default crisis in the rural polls because the chief minister had promised to compensate the victims. If we don’t start paying them before the Lok Sabha polls, we could face the investors’ wrath.”

Here’s a list of the obstacles facing the government:

Some 17.39 lakh people have applied for compensation to the Justice Shyamal Sen Commission, which Mamata set up to examine the Saradha default victims’ claims. The special investigation team probing the crisis has found that nearly 83 per cent of the applicants invested Rs 10,000 or less.

This means the cash-strapped government would need far more money to deliver on Mamata’s promise than the Rs 500 crore she had estimated while announcing the relief fund. (See chart)

The chief minister had then said the money would be raised through an additional 10 per cent tax on tobacco products.

“But this (tax hike) will fetch only around Rs 150 crore. It’s still not clear how the rest of the funds would be generated,” a Writers’ official said.

Even creating the fund is a problem as the budgetary rules have no provision to compensate investors of a private company. “This is preventing the government from allotting money for the purpose from other sources such as the disaster management fund,” an official said.

Since the rules don’t allow such a fund, the government may face a legal challenge if it sets it up through a cabinet proposal. The government, therefore, is looking at a criminal procedure code provision that allows compensation for victims of crime.

Preliminary enquiries have shown this option can be applied to Saradha depositors if a court order allowing it is obtained. “The victims need to appeal to the court, or the state can do so on their behalf,” an official said. But the state must prove in the court that the alleged crime committed by Saradha has left the victims in an unusual plight.

The other option — raising money by attaching Saradha’s property — faces its own hurdles.

This could have been done under the West Bengal Protection of Interest of Depositors in Financial Establishment Bill 2013, but it has still not secured presidential assent.

Another option is to seek court permission to attach Saradha’s property, but this can be a long haul. The process of liquidation of the assets of a deposit-mobilising company against which the Left government had moved court in the early 1990s is still continuing.

“This step (for Saradha) has not been initiated yet,” the official said.

The Sen commission’s terms of reference say it will recommend the names of beneficiaries after hearing out all the claimants. The panel has heard only about 4,700 applicants so far, beginning April 28. At this rate, the process will take 108 years.

Commission chairman Justice (retd) Shyamal Kumar Sen, a former Allahabad High Court chief justice, told The Telegraph: “We want to expedite the process.”

A commission official said the panel had proposed amending the order to do away with the hearings. “To speed up the process, the commission would only hear cases it deems fit,” the official said, without explaining how “fitness” could be determined without hearings.

The proposal, sent around four weeks ago, has yet to elicit a reply from the government.