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False representation of deposit scheme -- MRTPC pulls up Sahara India

Richa Mishra

NEW DELHI, May 6

SAHARA India Ltd has been pulled up by the Monopolies and Restrictive Trade Practices Commission (MRTPC) with charges of unfair trade practices (UTP) being established against the company.

The company had indulged in unfair trade practices by making false representation regarding performance of service and its benefits. And, by availing the services of Sahara India, damage and injury has been caused to the applicants, the commission said.

This was also reflected in the monetary loss of a substantial part of earnings in the form of interest, it said.

Sahara India, engaged in the business of accepting deposits and providing finance for development of flats or land, in order to promote its business, came out with a scheme named `Golden Key Account Scheme.'

Under the scheme, a person was required to make a deposit of Rs 2,500 with Sahara India, which, in turn, was to be invested by the company in the `Reinvestment Plan Deposit Certificates' of the post office or the National Savings Certificates (NSCs).

On the maturity of deposit, for a period of 12 years, the depositor was entitled to a sum of Rs 4,000, i.e., refund of the initial investment of Rs 2,500 plus Rs 1,500 towards interest. Further, each depositor was entitled to prizes which included a hous e, car, colour television and electrical appliances, by way of 144 draws to be held during the period of 12 years.

In the event of death of a depositor, his legal heirs were entitled to a one-time payment of Rs 50,000. The account-holder was also entitled to interest-free loans, as per the terms and conditions of the scheme.

On examining the scheme, the Director-General (Investigation & Registration), DG(I&R), was of the view that by alluring the public by false promises, the company had indulged in unfair trade practices, the commission noted.

Considering the submission of the counsel for DG(I&R), Mr O.P. Dua and Ms Deep Shikha Bharati, as well as the company, the commission observed that ``factually speaking, the clause of the terms and conditions of the scheme has been so worded that it does not reveal the material facts in regard to the amount deposited in the post office or the bank.''

``One is left with an impression that the entire amount would stand deposited in the post office or bank, which was not the case,'' it noted.

There was also suppression of the fact that out of the total amount of Rs 2,500 of each account-holder, Rs 1,500 would be at the disposal of the company to be invested in any concern at its discretion, the commission observed.

As per the company's own admission, that the scheme's advertisement needed modification, it is established that the public was misled by suppression of facts relevant for making a proper decision before opting for the scheme, it observed. However, on the issue of investment of a part of funds of account-holders in the business of its sister concern, the commission noted that it is apparently in business interest.

And as no consideration has been separately charged for participation in the draws, the aforesaid charge is not established, the commission said.