Wednesday, 7 November 2012

Renowned gold merchants cheating people with illegal schemes

Big Corporate Houses like Tanishq, Kirtilal, Mahaveer Jewelers, Mohammad Khan & Co Kalyan Jewelers and a score of others which are into sale of gold ornaments, diamonds and other products have been cheating millions all over the country in the name of various schemes.
But there is one similarity in all these schemes. All these schemes violate Prize Chits & Money Circulation Schemes (Banning) Act, 1978. Though they have been cheating millions in the name of schemes, in spite of the complaints by Corporate Frauds Watch, police are not taking action against these companies on the pretext that there are no victims to lodge a complaint against them.
The Madras High Court in Apple FMCG Marketing vs. Union of India in 2005 stated that the mere fact that no complaints were received does not make an act legal, if it be otherwise illegal.
Section 2 (e) of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 defines what is Prize Chit. It clarifies that the conventional chit fund won't fall under this enactment. 
A close look at their schemes reveals how they are cheating the gullible with the promise of benefit to the customers. In fact, they are only making easy and quick money.
Section 2(e) “prize chit” includes any transaction or arrangement by whatever name called under which a person collects whether as a promoter, foreman, agent or in any other capacity, monies in one lump sum or in installments by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service or service charges to or in respect of any savings, mutual benefit, thrift, or any other scheme or arrangement by whatever or the income accruing from investment or other use of such monies for all or any of the following purposes, namely:-
(i) giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in any other manner, prizes or gifts in cash or in kind, whether or not the recipient of the prize or gift is under a liability to make any further payment in respect of such scheme or arrangement ;
(ii) refunding to the subscribers or such of them as have not won any prize or gift, the whole part of the subscriptions, contributions or other monies collected, with or without any bonus, premium interest or other advantage by whatever name called, on the termination of the scheme or arrangement, or on or after the expiry of the period stipulated therein, but does not include a conventional chit. 

As per the schemes, the members have to pay money in installments for a certain period and by the end of the period, the member would be repaid in kind but not in cash. Anyway, the enactment prohibits in repayment of cash too.
For instance, if a member pays Rs. 1000 per month the company would receive Rs. 12,000 in a year. If they collect the subscriptions from 1000 members, the company would be collecting every month Rs. 10 lakh and in a year and the amount would be a staggering Rs. 1.2 crore.
The company repays only in kind i.e., gold ornaments or other products. In effect, there would be an assured business of Rs. 1.20 crore to the company with profits. Moreover, the money would be with the company through out the scheme period fetching interest on the deposit which is also another profit to the company. This is nothing but easy and quick money. 
And the most dangerous part, there is no guarantee for the deposits if the company vanishes with the deposits.
The companies may claim that their companies have long-standing record of repayment perfectly to the customers. But that does not make an illegal act, a legal one. It is illegal to collect deposits from the public without the permission of the Reserve Bank of India.
In June, 1974, the Reserve Bank of India had constituted a Study Group under the Chairmanship of James S. Raj, the then Chairman of Unit Trust of India for examining in depth the provisions of Chapter III-B of the Reserve Bank of India Act, 1934. In its report submitted to the Reserve Bank in July, 1975, the Group observed that the prize chit/benefit/ savings schemes benefit primarily the promoters and do not serve any social purpose, and that they are prejudicial to the public interest and affects the efficacy of the fiscal and monetary policies of the country.  The Study Group formulated the Prize Chits & Money Circulation Schemes (Banning) Act and it was enacted in 1978.


raghubere said...

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shah712 said...
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shah712 said...
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Unknown said...

rDont u think that you are the only person who is right always and all other persons are wrong. you want to say indirectly that Lawyer and journalism is right and all other businesses are fraud.

Shyam Sundar said...

Ashish, just tell me where I am wrong. I will change whenever or wherever I am wrong.
I have informed under what law and which section these schemes are illegal. If you think they are legal just prove it.

Anonymous said...

Dear Mr. Shyam,
I am following your blog since last few days. Actually, I had come across with MLM concept in fact one of the Ponzi business scheme running under the lable of MLM/Network marketing in 2005 in Surat, Gujarat through one of my friend. After understanding the scheme, I felt that this business is ethically wrong and hence I always kept distance from them. I learnt from your blog that, this type of activities fall under the purview of PCMCS (banning) act 1978 and are not only ethically wrong but also illegal. It seems that most of our country men/villagers are not aware about this and therefore these types of fraudulent companies are taking benefit of their ignorance to make huge money.

One can imagine, upto what extent these activities can be harmful to the economy and productivity of our nation because they are diverting the youth in the wrong direction showing them lure dreams of “easy money” thus making them unproductive.

As we all are aware that, these companies encourage people to enroll their relatives, friends and others who trust them to promote their business. Therefore, even though, people realizing they are trapped in a Ponzi scheme, they avoid to take any legal action because who enrolled them is their relative, friend or closed one and also people don’t want to involve themselves in a legal matter. They prefer to bear a loss of money than getting involved in a legal matter. I really appreciate your/corporate fraud watch’s efforts to put a bridle on such activities which are becoming harmful to our Nation.

I request you to give me answers of the following questions with respect to a company called “RMP” as you must have examined/studied its business scheme because you have dragged it into the High Court of AP.

1) Whether RMP still doing its business in AP? If not, then
2) How can it work in other states? Because, this company is running its business in full pace in the villages/cities of Jalgoan, Dhule, Nandurbar districts (northwest part) of the Maharashtra. These people are coming upto Surat to trap their relatives/friends.
3) Can CFW be able to take action against this company in these areas? If CFW is already engaged with other issues, then
4) Can CFW encourage other NGOs to take action? Or
5) Can CFW inform to the responsible authorities in these areas to look into?

I hope CFW will take necessary action here also. I have already started informing my relatives, friends and others about these types of illegal activities so that they will not fall prey to such Ponzi schemes due to their lack of knowledge. Making people aware about this may also play an important role to slow down the pace of these activities because knowingly people, other than greedy, will not enroll themselves in such Ponzi schemes.

Let us hope, the Govt. will not keep any loop hole in the new law being framed for Direct MLM so that these types of activities shall not grow more.

Unknown said...

dear sir,
another company running slow poisonus MLM business and target students.many students across india strated doing this mlm &lost their money and also enrolling others in this type of activities which is illegal.they make false comment and say that you will rich overnight after join this and show plan that you want to make only two members than they make two and chain grows and you make lacs of rupees overnight.
target community: students & unemployed youngsters


company name:SARSO BIZNET International Pvt. Ltd.

PROMOTORS: MOHIT SARDHANA & AMRITPALSINGH SODHI , both are fraudent and make huge money by their motivation and fooling young students who are willing to earn money quickly but they don't know that after joining they feel that they were fooled but after motivate them and they are forced to work for company to make new members. students waste their time,money and effort,their academic performance go down. at last they cant make money and leave company. only few of members (near 0.1%) make money,so,they want to run the chain so they fooling people and company& few members make money and thousands loosing money,time and their mental ability.

MOHIT SARDHANA & AMRITPAL SODHI were member/leader of eBIZ.COM PVT LTD (which is also big fraud headed by fraudant PAVAN MALHAN).they both make crores of rupess from ebiz from 2002 to 2011.and then they stared their own company,which is also fraudent.

exactly as eBIZ.COM PVT LTD ,SARSO BIZNET International Pvt. Ltd. is slow poison entering in society.

please be aware of such type of fraud companies and do not join any MLM or quick money plan,you will never earn money in this,only losing money.

please be aware and make aware others about this type of companies and tell them to not join any quick rich plan.

file FIR in police station against fraudent.if you are not confortable to file FIR than FILE FIR after making group of people who where fooled by such companies.

Unknown said...

dear sir,

fraudent gopal shekhvat takeover listed company parekh distributor ltd.

see links :

and explain the things.

Shyam Sundar said...

Dear saumil
RMP is a fraudulent company and several cases were filed against it in Andhra Pradesh. It is almost dead as far as Andhra Pradesh is concerned. In the rest of the country it may be active, since there is no coordination among the police of various states.
Moreover, the victims generally won't come forward to file criminal cases and that is why these companies clandestinely run their operations.
The Press could be held responsible for the mess. The Press is not giving necessary information to the people regarding such schemes. And it is not giving publicity whenever criminal cases were filed against such companies.
If more people knew about such frauds, they may not fall for it.

Dimpee said...

Shyam ji,
I think cfw should use social neworking sites for the same....

Anonymous said...

ABP News exposed Nmartretail fraud. This news was broadcasted on 10.11.2012 by 9:15 p.m. on ABP News. See the link given below.

We should give a vide publicity of this news by other means also.

George said...

If these are renowned jewellers, it's because they have built the trust over so many years. If someone like Shyam Sunder were to start this scheme, they would not take the risk to deposit even 1 Rupee.

Shyam Sundar said...

People like Shyam Sundar never indulge in such unlawful and illegal activities.
I am warning people not to fall prey to such inducements and lose their hard-earned apart from losing the trust of their friends and relatives.

George said...

There are laws and lawyers like you to take care of people if cheated. You may justify your actions as "Prevention rather than Cure"

But what you are advocating only creates a lack of trust with any business. Business thrives on trust and that's the reason why Marwaris are very successful with business and rest of the country is very bad at business.

People like you will never be able to do any kind of business. And if there are 100 Shyam Sunders in this country, people will stop trusting everything... including their parents.

Communisim in Russia many decades ago was so bad that a husband or wife could not trust his or her spouse. No one was sure if the other person was a spy for the government.

We live in a country where a licence for performing Classical Dance is used to run a dance bar which is as good as prostitution.

Agreed that, we are a nation run by many scoundrels.. but calling everyone a scoundrel is not the solution.

You should know where to draw the line.

Shyam Sundar said...

George, your reality inverting argument is incredible. Where did I say that every business house is fraud.
I have pointed out which companies have been illegally making money with the promises of easy and quick money. I never said that all the businesses are frauds.
There are thousands of business houses which are doing legitimate business.
I have categorically singled out the illegal activities of the business houses which are indulging in money circulation schemes.
You are talking about trust. These fraudulent companies have been playing with the trust of people and making illegal money.
In fact, because of these companies people are losing trust in their friends and relatives. The fragile relations between them is being damaged due to these chain schemes.
People who joined in these schemes at the behest of their friends and relatives would never trust them in future though they may not file criminal cases against them. That is the most dangerous part of these chain schemes.
You are totally inverting the argument and saying I am responsible for lack of mutual trust among people and towards business houses.
Whatever I said everything was based on the law of the land.
Be a law-abiding citizen and lead a normal life. Don't be greedy and don't fall for the easy and quick money promises of fraudulent companies.

A.P.S. aka TTM said...

mlm sucks. mlm is a slow poison in our society. it is making people day dreamer, and lazy.

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