The nexus in Tamil Nadu

The CBI says it has exposed Abdul Kareem Telgi's fake stamp paper network in Tamil Nadu with the arrest of two police officers in Chennai and an LIC officer in Madurai.

in Chennai

WITH the arrest of two police officers in Chennai and an administrative officer of the Life Insurance Corporation of India (LIC) in Madurai by the Central Bureau of Investigation (CBI) on July 1 in the fake stamp paper scam case, the spotlight has shifted to Tamil Nadu.

Deputy Inspector-General of Police A.P. Mohamed Ali of the Crime Branch-Criminal Investigation Department (CB-CID) and Deputy Superintendent of Police S. Sankar of the Anti-Dowry Cell were arrested after the CBI launched simultaneous searches of Ali's home and office and Sankar's home, all in Chennai. The LIC officer, Ramaswamy Sadhu, is accused of acting as a conduit for the supply of fake stamp papers to the LIC. They were charged under Sections 465, 467, 420, 258 and 259 read with Section 120-B of the Indian Penal Code. While Section 465 of the IPC prescribes punishment for forgery, Section 467 deals with forgery of valuable security, will, and so on. Section 420 relates to cheating and dishonestly inducing delivery of property, and Section 120-B deals with punishment of criminal conspiracy.

The CBI's investigations showed that Abdul Kareem Telgi, the main accused in the scam, had set up shop in Chennai as early as 1998 and established a network in printing, storing, transporting and selling fake stamp paper. His accomplices included A. Nizamudeen, Wahid, Sarfraz, Balaji and Saira Banu.

The CBI accused the police officers of not setting the law in motion after Balaji was found to have committed a cognisable offence under Sections 258 and 259 of the IPC, which relate to "sale of counterfeit government stamp" and "having possession of counterfeit government stamp".

The CBI pointed out that the Supreme Court in State of Haryana vs Bhajan Lal in 1992 had said that when the information disclosed commission of a cognisable offence, the Station House Officer had no option but to register a case and investigate. Balaji's name was not included as an accused in the First Information Report (FIR) filed in January 2002. Neither was it included when the CB-CID registered a case againt Nizamudeen in March 2002. As a result, between January and April 2002 Balaji continued to operate a bank account relating to the sale of fake stamp paper valued at Rs.2 crores, the CBI said.

E. Jacob R. Daniel, the CBI's Additional Legal Adviser and Special Public Prosecutor, told Additional Chief Metropolitan Magistrate D. Arulraj on July 7 that the three accused had "directly contributed to the sale of fake stamp paper". Daniel alleged that "many other police officials" in the State were involved in the racket. He opposed the grant of bail to Ali, Sankar and Ramaswamy Sadhu and told the Magistrate that "many clues and new information" were obtained during the interrogation of the three. Ramaswamy Sadhu had met Telgi in hotels in New Delhi five times, he said, to decide on the modus operandi of the racket.

Ali's counsel, A.K.S. Thahir and V.S. Venkatesh, argued that no incriminating material was found when the CBI searched the DIG's residence on July 7. He had not printed or sold fake stamp paper. Ali was being "hunted on suspicion", his lawyers contended. The FIR against the DIG was vague and there was no specific allegation against him, they said. Arulraj declined to grant bail to the three accused on the grounds that doing so might affect the investigation, which had just got under way.

NIZAMUDEEN, Wahid, Sarfraz, Balaji and Saira Banu set up two places in Chennai for the sale of fake stamp paper: Marina Services at Anna Nagar in 1998 and Sarah Enterprises at Purasawalkam in November 2000. The latter was under the charge of Saira Banu. Sarah Enterprises was set up to supply fake stamp paper exclusively to the LIC.

In January 2002, the "Q" Branch of the State police wrote to Mohamed Ali that it had information that fake stamp paper was being sold at two places in Chennai. Ali sent a police team from the counterfeit currency wing (CCW) of the CB-CID for verification. On January 7, a search of Marina Services by a CCW team yielded fake stamp paper valued at just Rs.3,750. This was seized and Balaji was brought in for questioning. All this information was conveyed to Ali. The seized stamp paper was shown to forensic experts, who certified them as fake. The CB-CID filed an FIR but did not include Balaji's name in it. Balaji was let off the same night (January 7) and asked to bring Nizamudeen to the police. The FIR, however, included Nizamudeen's name as an accused. The seizure of fake stamp paper for Rs.3,750 was also not shown in the FIR.

Informed sources in the CBI said that Ali directly supervised the case. They added that the CB-CID ought to have set the law in motion by registering a case against Balaji. By not including his name as an accused in the FIR, the CB-CID violated the guidelines set by the Supreme Court, the sources said. On January 10, 2002, the CB-CID registered a regular case against Nizamudeen, who was the licensed stamp vendor, and launched a search for him. Again Balaji was not included as an accused. On March 17, 2002, the police arrested Saira Banu and in the course of her interrogation obtained details of Nizamudeen's bank accounts. The CB-CID took steps to freeze the bank accounts of Nizamudeen and Balaji.

Between January and March 2002, Sarah Enterprises sold fake stamp paper valued at more than Rs.2 crores to the LIC. The LIC paid this amount through cheques to Sarah Enterprises. Balaji deposited these cheques in Sarah Enterprises' account at the Global Trust Bank branch at Purasawalkam. He was the authorised signatory to operate the account. Said a CBI source: "In the three months fake stamp paper valued at more than Rs.2 crores was sold and the proceeds were withdrawn. If Balaji had been arrested on January 7, would all this have happened? Why was Balaji not included as an accused along with Nizamudeen? It was to allow him to operate the bank account." The CBI sources alleged that the police did not register a case against Balaji because they knew that he was operating the bank account. "You can draw your own inference," they said.

As for Nizamudeen, his application for anticipatory bail was not granted and the CB-CID circulated his photograph, hoping that it might facilitate his arrest. Meanwhile, it searched a premises belonging to him in Coimbatore. On April 18, 2002, Nizamudeen surrendered at the CB-CID office in Chennai, with a lawyer accompanying him. The entry about this was recorded in the visitors' book of the CB-CID office. On April 22 he was arrested formally but was out on bail 10 days later. Subsequently, the Karnataka Police arrested him in another case.

On October 13, 2002, on the basis of information given by Nizamudeen, the police forces of Karnataka and Tamil Nadu conducted a joint raid on a flat at Shenoy Nagar in Chennai and seized fake stamp paper valued at more than Rs.120 crores.

Sources in the CBI said that when its officers wanted to see the entry on Nizamudeen in the visitors' book at the CB-CID office, they were told that the particular page had been torn off. When they wanted to seize the book, they were informed that it was missing. The sources said a senior DSP told the CBI officers that he had seen the visitors' book on Ali's table before their visit.

When Mohamed Ali filed another application for bail before the Magistrate on July 21, the CBI opposed it and said Ali had pulled up the CB-CID's investigating officer for freezing the bank account of Sarah Enterprises. This "pointed to the ulterior motive of the petitioner", the CBI said in its counter. It added that Ali's name was mentioned in a tape-recorded conversation as "one of the recipients of huge money as illegal gratification from Telgi's crime syndicate".

In his application, Ali described as "fallacious" the allegation that he did not take steps to arrest Nizamudeen after the "Q" Branch wrote to him on fake stamp paper being sold at two places in Chennai. The CBI had not produced any material against him other than filing an FIR, Ali said.