Oct 16, 2009 07:17 PM
2746 Views
During 1985 to1990's there were similar companies in Tamil Nadu offering exorbitant interest rates to investors (40% to 60% yearly). The method of collecting the money might vary but it was exactly as like City Limo or City Realcom. Almost all these companies went bust within 2 years and most of the investors were left in lurch (70% of the investors were above 60 years).
Most of the cases dragged in the court for more than a decade and still some of the cases have not even cleared the magistrate court. For some companies the court gave relief to the investors by way of selling the assets of the company and giving partial amount to the investors (5 to 10% of the principle amount).
Mostly this how it would work out since I hardly think the City people would return the amount. Rather it is easier for them to approach the court and pay a hefty sum to a lawyer to defend the case and to drag it as long as possible. We people have a bad memory and we are sure to forget about this when another big institution defaults on payment. I know this because when I started my career I was auditing one of these big firms in Chennai and there were many irregularities like most of these companies finance the investor’s money into film production (that is how you get 40% interest on your investment).
The economic offence wing very well knows about this but they would not question these companies until they commit fault in their payments. Money plays its part in all section to make sure the company carries on it's business until it goes bust. The City Limo owners are very well protected by the Economic Offence Wing and the Police because these owners are goose which lays golden egg. They would definitely not break it. Remember Gold Quest, the police is now accused of taking a huge bribe to cover up the case.
I have noticed one thing here that there isn't much illiterate or people from villages investing in these schemes. It is all very well educated people who go for these schemes knowing very well that there is risk involved here and losing their money is inevitable. It is simply gambling and greed.
I can only feel sorry for all the investors. It would be a long court battle and ultimately most of the investors would get back the principle amount but it would be given partially after selling the assets of the company.
Your comments are welcome.
