The Supreme Court of India issued notices to Telangana, Andhra Pradesh, the Reserve Bank of India and Margadarsi Financiers over allegations of unauthorised public deposit collection. The Court sought detailed responses regarding regulatory breaches and financial accountability.
The Supreme Court Monday served notices on the States of Telangana and Andhra Pradesh, the Reserve Bank of India (RBI), and Margadarsi Financiers in a case alleging the unauthorised collection of public deposits.
The Court also indicated that the entity’s assets could be attached, even though its proprietor, Ramoji Rao, has died.
The bench, comprising Justices MM Sundresh and NK Singh, made it clear that criminal proceedings concerning a continuing financial entity do not abate solely because an individual associated with it has passed away.
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Adding that it may consider directing attachment of the entity’s assets, the Court observed,
“Though Ramoji Rao has passed away, the entity Margadarsi Financiers is still continuing,”
Senior Advocate Mukul Rohatgi, appearing for the respondent, argued that the case should be closed on account of Rao’s demise. He said an affidavit would be filed to show that the dues owed to depositors had been settled.
During the hearing, Senior Advocate K. Parameshwar and Advocates Ramesh Allanki and Aruna Gupta were also heard.
The Court, however, emphasised that the key question went beyond individual liability and related to the alleged statutory violations by the entity particularly the manner in which it is said to have handled public funds.
The matter stems from a Special Leave Petition (SLP) challenging an August 4, 2025 judgment of the Telangana High Court. That judgment had quashed criminal proceedings against Margadarsi Financiers in an economic offence involving public deposits.
The petitioner submitted that the High Court erred in putting an end to the proceedings at a stage when the investigation was still ongoing, thereby preventing inquiry into a larger alleged financial irregularity. It was argued that Margadarsi Financiers, an unincorporated entity, collected substantial amounts from the public in violation of Section 45S of the RBI Act, 1934.
The plea further stated that regulatory concerns regarding such deposit-taking have existed for decades, yet the entity continued its operations, with collections running into thousands of crores.
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The petition also contended that the High Court failed to follow a prior remand order of the Supreme Court, which required fresh consideration after inviting claims from bona fide investors.
According to the petitioner, the High Court adopted an unduly narrow approach by treating the complaint as though it were complete, instead of allowing the investigation to proceed.
The petitioner relied on Superintendent of Police, CBI v. Tapan Kumar Singh, where the Supreme Court held that an FIR is not expected to be an encyclopaedia of facts.
Case Title: Arun Kumar Undavalli v. Margadershi Financiers & Ors.