The Uttarakhand High Court has ordered the linkage of a major chit fund fraud case to an ongoing Public Interest Litigation (PIL) and urged for a Central Bureau of Investigation (CBI) probe into the matter. The case concerns the Loni Urban Multi State Credit & Thrift Cooperative Society Ltd, accused of defrauding investors in Uttarakhand of over ₹800 crore before shutting down operations.
The society, based in Ghaziabad, allegedly established offices in Dehradun, Rishikesh, and Pauri using local agents to solicit investments by promising high returns. It is reported that the entity was not registered under the Societies Registration Act in Uttarakhand, yet it operated through unregistered offices and persuaded locals to invest using trusted regional agents.
Complaints by investors followed when the society failed to honour returns, and its offices in Uttarakhand were shut. Authorities registered fourteen FIRs within the state and 56 in other states. Investigations showed that the main accused has fled to Dubai, while many local agents are now facing backlash from aggrieved investors who feel misled.
In court proceedings, a single-judge bench presided by Justice Pankaj Purohit linked the fraud case with an existing PIL that raises questions about the registrar of societies and the state government’s possible negligence in permitting an external, unregistered entity to operate in Uttarakhand. The registrar’s office had earlier issued a show-cause notice to the society’s chairperson and CEO for operating without authorization. The society had issued responses denying wrongdoing, but these were found contradictory upon scrutiny, leading to its closure in March 2024.
During the hearing, counsel appearing for the Central Bureau of Investigation informed the court that instructions are under consideration regarding its ability to take over the investigation. Given the magnitude of loss and public interest involved, the case has now been officially merged with the PIL for joint hearing by a division bench.
Victims and local leaders have expressed relief at the court’s directive, hoping for a central probe that might ensure better investigation and accountability. Many investors have been trying to recover losses; they opened up about how agents had characterized returns and operations more favorably than facts. The discovery that the society operated without registration added weight to petitions claiming regulatory failure.
Legal experts suggest that the court’s move could be significant in ensuring that similar schemes are scrutinized more closely in the future. The role of registrars, state oversight agencies, and the implementation of regulatory safeguards are likely to come under more detailed examination.
The High Court’s direction also emphasizes the potential limitations of state police in investigating large multi-state frauds and the need for specialized agency involvement when public losses run into hundreds of crores.
As the case proceeds, investors await clarity on whether their claims will be treated as priority, and whether the state will implement measures to ensure restitution. The merging of the case with the PIL marks a key moment in Uttarakhand’s legal history of dealing with financial frauds.
