₹1,000 Crore Deposit Scheme Sparks Supreme Court Jurisdiction Battle

When thousands of investors across southern India poured their life savings into what promised to be a lucrative deposit scheme, few imagined it would trigger a constitutional question at India's highest court. Now, as the Supreme Court considers whether state police or federal investigators should handle multi-State financial fraud, nearly 73,000 depositors await resolution of a ₹1,000 crore (approximately £96 million) alleged scam involving Universal Trading Solution Private Limited.

The case, filed as Sureshkumar & Ors. vs. Union of India & Ors., highlights gaps in India's regulatory framework for financial schemes that operate across state borders. A Bench headed by Chief Justice of India Surya Kant issued notice on February 6, calling for the central government's response on whether such investigations fall under state or federal jurisdiction.

Background and Context

The scheme emerged in 2018 when Universal Trading Solution, a Coimbatore-based company, began advertising attractive investment opportunities. According to court documents reviewed by journalists, investors were promised 12 percent annual returns alongside a monthly payment equaling 10 percent of their principal investment, with full repayment guaranteed within one year.

By early 2019, the company allegedly defaulted on payments, revealing what petitioners describe as a systematic fraud. The Economic Offences Wing of Tamil Nadu Police registered the first FIR in June 2019 under cheating provisions, the Tamil Nadu Protection of Interests of Depositors Act, and the Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act).

Despite multiple FIRs being registered across several southern states where deposits were collected, the investigation has produced little progress in recovering funds or definitively identifying all affected investors. The fragmented approach has created jurisdictional conflicts, with the Kerala High Court already directing a CBI probe under the Delhi Special Police Establishment Act, while Tamil Nadu authorities maintain their state-level investigation.

Key Figures and Entities

The scheme's primary operator, Universal Trading Solution Private Limited, was managed by G Ramesh, who now faces legal challenges across multiple jurisdictions. According to the Supreme Court petition, Ramesh and family members allegedly used diverted deposits to purchase immovable properties, creating layers of financial complexity that investigators continue to unravel.

The petitioners, represented by advocates Mukund P Unny and Sanjay Nair S., contend that the Tamil Nadu Police investigation has proven inadequate given the scheme's interstate nature. They argue that only a centralized CBI probe can effectively address the full scope of the alleged fraud, which affected depositors across at least five southern states.

Legal and Financial Mechanisms

The case exposes weaknesses in the enforcement of the BUDS Act, enacted specifically to curb unregulated deposit schemes. According to court filings, key provisions requiring comprehensive depositor identification and asset realization have not been properly implemented, despite multiple FIRs spanning more than five years.

The Supreme Court has previously attempted to facilitate resolution through supervisory mechanisms. In May 2023, while hearing a challenge filed by the Managing Director, the Court appointed retired Madras High Court judge Justice M Govindraj to oversee asset sales. However, petitioners report that despite 30 months having passed, no properties have been auctioned and no funds disbursed to victims.

This follows two failed attempts by the Madras High Court, which first appointed a committee under former judge Justice KN Basha in 2019, then another under Justice M Sathyanarayanan in 2022. Both committees were dissolved before achieving meaningful restitution, with the High Court noting that disbursement before substantial recovery would be premature.

International Implications and Policy Response

While centered in India, the case resonates with global challenges in regulating multi-jurisdictional financial schemes. The jurisdictional conflict between Kerala and Tamil Nadu investigative approaches mirrors difficulties encountered by international authorities pursuing cross-border financial crimes, where differing regulatory frameworks can impede comprehensive investigations.

The Supreme Court's eventual decision on jurisdiction could set precedent for handling similar multi-State financial frauds in India, potentially influencing how federal and state authorities coordinate on complex financial crimes. The outcome may also inform legislative improvements to the BUDS Act and related financial oversight mechanisms.

Sources

This report draws on Supreme Court of India records, Ministry of Home Affairs notifications, the Banning of Unregulated Deposit Schemes Act, 2019, and previous Madras High Court orders related to the case between 2019 and 2024.