Registered with the Registrar of Newspapers for India under R.N.I 53640/91

Vol. XXIX No. 11, September 16-30, 2019

The General Traders cheating case

by L.M. Kitto – Administrative Inspector of Police, Crime Branch, Madras City

Business and Banking are almost synonymous in the higher strata of financial life today. The current system of providing facilities to businessmen by the banks is of such a flexible nature, that it is often exploited by the criminally minded for their personal benefits. There are three categories of such facilities in operation at present, the first being the discounting on Bills presented, the second as Key Loans on stocks deposited, and the third as Over Drafts on running accounts. Of these, the first is the most popular, and incidentally, the most abused.

Sri V.C. Srinivasa was a resident of the intellectual area of Mylapore, and a descendent of a highly placed family whose forebears made history in the Madras Bar. Discontinuing his studies in the Presidency College at Madras after an early reverse in the Intermediate examination, he set up as a small-scale Electrical Goods Dealer in Triplicane in 1946, on a capital of Rs.15,000 given to him by his father. As days passed, he found his business expanding, and so he shifted his firm in Triplicane to 3/21, China Bazaar Road, Madras – 1, the main business centre at the time. He had studied the facilities accorded by the banks to the businessmen and he decided to make capital out of them. For this purpose, he studiously cultivated the friendship of the leading bankers in the City, and he spared no expense in accommodating them in whatever way they wanted. High placed officials of the Punjab National Bank, the State Bank of Mysore, the State Bank of Hyderabad and some other lesser banks fell easy victims to his wiles. Thereafter he formulated a plan whereby he could draw money, as and when he wanted, from the banks for circulation in his business and this was to despatch scrap iron and spurious goods outside the City by rail, bill them as costly electrical goods, and supported by the Railway Receipts, discount such bills for large amounts. However, it was obvious that this system of fraud could not be operated in the vicinity of the City, as time and distance were essential factors in the scheme. It was also apparent to him that he would have to take his staff into his confidence and to install agents at distant places to receive such spurious consignments and rebook them back to him, lest the scheme be discovered. Sri. V. Srinivasaraghavan, his personal Clerk, Sri. J. Balan, his Manager, and Sri. A. Charles were working for him almost since the inception of his firm and to them he unfolded his plan and swore them to active co-operation and secrecy. For his outstation agents, he drew upon his customers who were obliged to him for money and materials and from these he installed Sri. G. Ramiah, Proprietor Gnana Electricals at Neyveli, Sri. A. Arunachallam Pillai at Trichy, and Sri. A. Rajendran at Tanjore, having prevailed upon them to accede to his plan. His next step was to select a bank to operate on, and thereafter instill confidence into the bank officials to gain access to their vaults. For this purpose, he selected the Punjab National Bank at Sowcarpet, as its Asst. General Manager was a relative for his and was obliged to him for some wiring contracts executed free of cost. The Asst. General Manager was willing to accommodate him and as a test allowed him to discount twelve minor bills. Even though the stipulated time for clearance of the Bills was a period of one month, Srinivasan had them promptly cleared through Charles and Srinivasaraghavan, who carried the necessary cash to the Agents at the other end. Thereafter, the Punjab National Bank opened its gates to him, and Srinivasan poured his bogus bills covering every item in the catalogue of his trade. But this was small money, and Srinivasan was ambitious. He was anxious to venture into the field of Documentary Bills. Here Bills would be discounted for very heavy sums for transactions with only Government or Quasi Government concerns, and the time given for clearance of the Bills was from six months to a year and even more, for the banks were sure that the Government would ultimately pay. Srinivasan prevailed upon the Asst. General Manager to give him such accommodation, and it was given, though much against the will of the young and skeptical Bank Agent G.S. Rao who had an instinctive distrust of Srinivasan. Having surmounted this difficulty, Srinivasan was faced with another problem. How was he to get the Government concerns to accept his spurious goods? And how was he to get those goods back again without detection? And then he had a brainwave! 1961 was a busy year for the State Electric Board, who had on their agenda, a scheme for the electrification of rural areas. What was easier for Srinivasan than to convert his agents quasi Government Officials as Secretaries of the Rural Electrification Scheme. He introduced them to the bank as such. Officials never bothered to verify the authenticity of the Rural Electrification Scheme but entertained a hazy idea that such a programme was being worked out by the State Electricity Board. Srinivasan discounted his Documentary Bills for huge amounts at the bank with the active cooperation of his staff and the uneasy acquiescence of his outstation agents who were becoming perturbed over the heavy bills coming in their names. The prospect was not too bright for them, for Srinivasan was becoming careless. Had he stuck to his original intention of rotating the money obtained from the banks into his business, he eventually would have come off with a lighter outstanding, but with so much to hand, he turned to wine and women. He lavished his money on his concubine, Srikalar, and he built her a mansion in Madras, Mysore, Bangalore, and Pondicherry and she witnessed his drunken sprees. As a consequence, the outstanding bills in the banks mounted up – for he had invaded other banks also.

There was a total outstanding of over 3 lakhs of rupees and the Punjab National Bank had chalked up a sum of rupees One Lakh and odd. G.S. Rao, the Agent of the Punjab National Bank, was getting uneasy with no prospect of any money coming in from Srinivasan. Incidentally, he was getting highly suspicious of the bonafide of the General Traders, and so he directed one of his agents at Tanjore to examine the contents of a consignment sent by Srinivasan and billed as costly electrical goods, lying uncleared at the Tanjore Goods Yard. The Agent reported back that the consignment contained spurious goods, and the cat was out of the bag. Srinivasan was confronted with the fact and he admitted the hoax and promised to make good the whole amount, but try as he would, he could not raise the money and so the Punjab National Bank placed the matter in the hands of the Madras City Crime Branch Police.

A case in Madras City Crime Branch Cr. No. 496/61 under section 420 I.P.C. read with 120 B. I.P.C. was registered and the investigating officers waded through an amazing pile of documents at the Office of the General Traders, the various banks in the City, the Post and Railway institutions at Madras, Neyveli, Tanjore, Kumbakonam, Tiruchirapalli and the Neyveli Lignite Corporation to assemble the evidence against the accused. Forty-nine boxes containing spurious goods and scrap iron were also seized from the Railway Goods yards at these places and the several gunny casings on each of them containing various addresses and Railway markings, gave mute evidence of their circulation even from the year 1958.

V. Srinivasaraghavan and A. Charles turned approvers for the State and they stuck to their statements to the very end. V.C. Srinivasan, his manager Balan and his three bogus secretaries Ramiah, Arunachalam, and Rajendran were brought to trial for cheating and conspiracy to cheat the banks. The myth of the Rural Electrification Scheme had been exploded by the State Electric Board. The trial in both the Lower and Sessions Court was keenly contested, and eminent lawyers highlighted the proceedings with their brilliant cross examination and arguments. But justice was not to be denied, for V. C. Srinivasan and his accomplice Ramiah were convicted and sentenced to one year of R. I. each, while the three others were given the benefit of doubt in S.C. No. 14/62.

The Firm of M/s. General Traders, 3/21, China Bazaar, Madras – 1, was wound up and its nefarious business closed down. In its place, the sunshine reflects the happy glitter of an ever-silver shop with its domesticated utensils. – (Reproduced from The Madras Police Journal, January-March 1964.)

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