INDIA'S franchisee scam, SUPREME COURT issues notice seeks CBI, SFIO, ED probe against Westland Trade

 India' Franchisee Scam, Supreme Court issues notice; seeks CBI, SFIO, ED probe against Westland Trade 

The Supreme Court has issued notice in a plea seeking a probe into Westland Trade Private Limited, which is allegedly "India's biggest franchisee scam".

The Bench of Chief Justice of India SA Bobde and Justices AS Bopanna and V Ramasubramanian was hearing a plea by 38 petitioners claiming to be cheated and duped by Westland Trade Private Limited.

It may be recalled that in early September, a group of 38 individuals moved the Apex Court alleging that they had been cheated and duped by 'Westland Trade Private Limited' which floated bogus companies.

It was alleged that this company floated bogus companies such as Hyper Supermarket, Hyper Mart, Big Mart Super, Mart, Louies Salon, Midnight Cafe, Franchisee World, BM Mart, H Mart, S Mart etc. These ghost companies claimed to help individuals to start business in retail sector but dishonestly misappropriated and converted petitioners' hard earned money into black money and benami properties in violation of the contract.

The petitioners had in September sought an investigation into the company by the Central Bureau of Investigation (CBI), the Enforcement Directorate (ED), or the Serious Fraud Investigation Office (SFIO).

Senior Advocate Gopal Sankaranarayanan submitted that the 38 petitioners approached the Apex Court as "no action was taken either by the states or the Central agencies."

The plea alleged that the company collected franchise fees of Rs. 3 lakh and assured certain payouts and attracted 500 investors in May 2019. It opened stores in Karnataka, Telangana, Goa, Maharashtra, Bihar, West Bengal, Chhattisgarh, Gujarat, Uttar Pradesh, Haryana, Rajasthan, Punjab, Madhya Pradesh, Delhi and many other states.

However, in April, this year, the company defaulted in payment, duping all the 500 investors.

The plea states that the directors of Westland had established bogus companies to create a scam.

"In collusion with ROC and Bank Staff, the fraudsters have registered many fake, bogus & ghost companies and brands viz. Hyper Supermarket, Hyper Mart, Big Mart, Super Mart, Louies Salon, Midnight Cafe, Franchisee World, BM Mart, H Mart and S Mart etc. The ghost Companies claimed to help individuals to start business in retail sector but dishonestly misappropriated and converted petitioners' hard earned money into black money and benami properties in violation of the contract."

Further, according to the plea, the company defaulted in the payment during the lockdown and sent an email in May saying it was enforcing Force Majure clause listed in the agreement. The plea claimed that this was strange because even during the lockdown, Grocery stores were open and the business was as usual.

"The injury is large because under a well planned conspiracy, directors, sleeping partners and employees deceived the petitioners by fraudulently and dishonestly inducing them to deliver their hard earned money," the plea alleged.

The petition stated that by May 2020, the petitioners started digging more to understand who was actually running the company and "soon a lot of scary information started coming out."

Detailing a need for an SFIO probe, the plea states that the "petitioners' hard earned money have been looted by the fraudsters by creating bogus-ghost companies throughout country."

"It is necessary to state that SFIO has experts from financial sector capital market, accountancy, forensic audit, information technology, company law, taxation law, customs and investigation."

The petitioners add though they addressed a letter to the Gurugram Police seeking registration of an FIR, no case has been filed in the matter.