K'taka to bring in law that lets cops attach scam-tainted property

Bengaluru: The Karnataka government will introduce a Bill that will allow its police to attach the property of companies and individuals accused in pyramid scams, the state’s home minister MB Patil said on Wednesday.

In an exclusive interview to ET on the I Monetary Advisory (IMA) Jewels deposit scheme, Patil said an amendment to the Criminal Law Amendment Act, 1944, would be introduced by the government in the next session of the Legislature. The amendment would give the police the power to attach movable and immovable property of those accused. Such a provision under law exists in Tamil Nadu, Patil said.

In several similar cases under investigation by the Police’s Criminal Investigation Department (CID) and Central Crime Branch (CCB) Bengaluru, recovering property turned out to be a challenge, with percentage of recovery ranging only between 15% and 50%, he pointed out.


The home minister said that the government’s priority, presently, is to arrest the absconding managing director of IMA Jewels, Mohammed Mansoor Khan.

Khan’s assets are being seized and directors of the company arrested.

No to CBI, Yes to SIT
Hinting that Khan may have fled India, Patil said he would not hazard a guess at how long it would take to bring him in.

Meanwhile, the Special Investigation Team (SIT), set up to investigate the case, has written to the Central Bureau of Investigation, seeking a red-corner alert to trace Khan. Khan, who is absconding since June 7, has allegedly cheated over 40,000 investors, most of them from the Muslim community. Khan promised them “Halal investment” where the investors were also partners in the business, and would get their share of profit. Most investors are from middle and lower middle-class families.

Interestingly, all transactions Khan made – both receiving investments and disbursing profit – was made through cheques. “The whole thing is on bank records. We will be able to calculate the exact amount of money involved,” said Patil.

On whether the state police is competent to handle the case, considering how the names of leaders in the coalition government are being attached to Khan, and there being demands for a CBI probe, Patil pointed out that the CBI could not solve the cases of Gauri Lankesh’s and MM Kalburgi’s murders and that it was the SIT set up by Karnataka which made breakthroughs.

“Do not undermine the state police. I assure that we will not spare anyone involved in the case, whoever it is,” he said.

Earlier, revenue minister RV Deshpande said Khan had approached him for a favour – to obtain a no-objection certificate that would enable him to get a bank loan – weeks before he disappeared. He met Khan at the behest of Congress MLA R Roshan Baig, Deshpande had revealed. The Congress suspended Baig on Tuesday for anti-party activities.

To prevent such scams in future, Patil said “We will set up a task force involving the Registrar of Companies, Registrar of Cooperative Societies, IT Department, ED, Police, Revenue, Finance and BBMP, to monitor such fraudulent activity. I have directed the chief secretary to hold a meeting these departments and fix responsibilities.” This would be carried out within a month, he said.

Despite the IT department, ED and the RBI notifiying the state government about financial irregularities in IMA’s business, the state police gave a clean chit to IMA – as recently as late 2018 — as no investor came forward to file a complaint, revealed Patil. “They had so much faith that their money was in safe hands,” he said. Asked why the police could not take up a suo moto case against IMA, Patil revealed that in case of Limited Liability Partnership (LLP) companies, the police can step in only after an inquiry by the Registrar of Companies.