The Calcutta High Court expressed its discontent as the Securities and Exchange Board of India (SEBI) has withdrawn from conducting a forensic audit into alleged financial irregularities within the committee overseeing investor refunds in the Rose Valley chit fund scam. The committee is headed by Justice (Retd) Dilip Seth.
The Rose Valley scam, which surfaced in 2013, involves the Rose Valley Group, which is accused of illegally collecting over ₹15,000 crore from depositors through unauthorized collective investment schemes and Ponzi schemes. The group primarily operated in eastern India, promising high returns on investments in land parcels and hotel time-shares. However, it failed to deliver on these promises, leaving an estimated ₹6,666 crore unpaid to investors.
SEBI's lawyer told the division bench of Justices Rajarshi Bharadwaj and Uday Kumar of the Calcutta High Court on Friday, October 25, 2025, that no SEBI officer would be able to lead the forensic audit of the bank accounts of the Asset Disposal Committee formed in the Rose Valley case. However, they also stated that SEBI will provide all possible assistance regarding the audit. After hearing this statement, the division bench stated that the Center would inform its opinion on the matter on the next day of hearing and if necessary, the court may order an officer from the Controller and Auditor General to lead the forensic audit.
The court's strong reaction reflects the gravity of the situation and the urgent need to protect the interests of the defrauded investors. The bench questioned how the investors would receive their money back if the money is spent on running the ADC. The court is primarily focused on refunding the depositors.
The Enforcement Directorate (ED) has been actively investigating the Rose Valley scam and has attached assets worth ₹1,172 crore in earlier actions. In August 2025, the ED provisionally attached movable and immovable assets valued at around ₹262.90 crore under the Prevention of Money Laundering Act (PMLA), including a bungalow and shares of 32 front companies. The ED's investigation revealed that the Rose Valley group diverted public investments across multiple associated firms, acquiring assets and issuing shares under the guise of equity infusion to mask its illicit activities.
In a previous ruling, the Calcutta High Court upheld SEBI's authority to regulate deposit-mobilizing firms, dismissing a petition by Rose Valley Real Estate and Construction Company challenging SEBI's powers. The court imposed a ₹10 lakh cost on the petitioner. SEBI had earlier ordered the shutdown of Rose Valley's holiday membership plan and directed refunds to depositors.
The Rose Valley Group's chairman, Gautam Kundu, is accused of masterminding the scam. The group allegedly lured investors with promises of high returns, ranging from 18% to 24% per annum, but failed to deliver, with thousands of crores remaining unpaid.
The withdrawal of SEBI from leading the audit raises concerns about the progress of the investigation and the recovery of funds for the affected investors. The court's intervention underscores the judiciary's commitment to ensuring a fair resolution and bringing those responsible to justice. The court has asked for the total number of depositors and the number of people who have been refunded with their information. Rose Valley will assist in gathering this information from the server held by the ADC.
