Calcutta High Court orders Rs 550 crore to Rose Valley depositors by 15 November, merges failed committee
Justices Rajarshi Bharadwaj and Sudip Deb record grave dissatisfaction with the Asset Disposal Committee, void its hotel management contracts and merge it into the Justice Talukdar Committee.
A committee set up by the Calcutta High Court in 2015 to sell the assets of the Rose Valley Group and repay its depositors has, in eleven years, auctioned ten properties and distributed about Rs 55.45 crore of a corpus worth some Rs 600 crore. The High Court has now given it five final months. Justices Rajarshi Bharadwaj and Sudip Deb directed that the entire Rs 550 crore lying in the depositors' account be disbursed against 32,43,220 pending claims by 15 November 2026, ordered monthly compliance reports, held that the management contracts the committee allowed over Rose Valley hotels were void ab initio, and ruled that the committee be merged into the Justice S. P. Talukdar Committee, which already handles the claims of depositors across 103 chit fund companies.
A hotel contract that brought the whole file back to court
The petition actually decided was a narrow one. M/s Mahijas Infra Private Limited sought the quashing of eviction directives issued by the Asset Disposal Committee and restoration of possession of Park Prime Hotel, Durgapur, along with compensation for each day of lost operation. It relied on a management contract agreement of 13 September 2021 with M/s Chocolate Hotels Private Limited, and said it had spent Rs 93,27,973 in advance outlay clearing labour liabilities, electricity arrears and municipal taxes, and on capital overhauls to make a damaged hotel operational again. It was evicted over the weekend of 22 and 23 June 2024 following an administrative directive of 18 June 2024.
Chocolate Hotels and the Enforcement Directorate answered that the company is a wholly owned subsidiary of the Rose Valley Group whose attached properties fall under proceedings under the Prevention of Money-Laundering Act, that the management contract was a non-continuous one-year service agreement which expired on 30 September 2022 without formal renewal, and that the petitioner had committed material breaches including unauthorised sub-letting, illegal construction and financial defaults, besides being involved in criminal proceedings.
The Bench dismissed the writ petition on the ground that the dispute is essentially a private commercial one turning on complex and disputed questions of fact. Sitting as a specialised Ponzi Bench entrusted with summary powers for asset preservation and depositor liquidation, it held, the Court cannot entertain private contractual controversies or enforce specific performance of determinable commercial agreements. The petitioner was given liberty to approach the appropriate civil or commercial forum.
The committee had no power to let anyone run a hotel
What mattered more was the legality of the arrangement itself. The Bench held that no power was ever vested in the Asset Disposal Committee except the supervision of the sale of Rose Valley Group assets and the disbursement of the proceeds to victimised depositors. Chocolate Hotels, being a Rose Valley subsidiary, was in no way authorised on the Committee's behalf to enter into management contracts with third parties for running the group's hotels. By executing such contracts the company improperly generated funds from the proceeds of crime, and the Bench held all such management contracts unauthorised, null and void ab initio.
That finding tracked the submissions of the amicus curiae, Mr Swatarup Banerjee, who took the Bench through the minutes of the Committee's own meetings. The Committee, he argued, had no power or authority to allow anybody to enter into a management contract; under the orders of 11 May 2015 and 14 December 2017 it was only to take steps to sell properties following the guidelines the Court had framed, its purpose being to develop a scheme for recovery, monetisation and disbursal. It ought to have approached the Court before permitting third parties in. Because it did not, he submitted, the depositors suffered, as no effective steps were taken to pay them.
Rs 17,520 crore, and the machinery built to recover it
The parent proceeding, brought in the public interest in 2016, concerns the life savings of millions of small depositors in West Bengal and neighbouring states ruined by illegal Ponzi and collective investment schemes run by a group of 54 companies under diverse corporate aliases. Deposits were solicited with assurances of exorbitant interest and lucrative commissions for field agents, in defiance of the Companies Act and of Reserve Bank directions under Chapters IIIA and IIIB of the Reserve Bank of India Act, 1934, which regulate deposit acceptance, interest caps and agent remuneration. On the Enforcement Directorate's findings, the group mobilised Rs 17,520 crore from over one crore predominantly poor and middle-class investors, of which Rs 6,666 crore is verified proceeds of crime.
The operations were made to look like trade. The group purported to sell land, tour and travel packages, solar products and consumer goods, and to run a hotel network, which the Bench recorded were in reality fronts for gathering public money under the guise of product sales, while the group held itself out as an authorised non-banking financial company despite regulatory warnings as early as 1996-97. After the Saradha Group collapsed in January and February 2013, the group defaulted on returns and principal alike, shut its branch offices, locked its premises and absconded with public funds, while local police stations repeatedly refused or neglected to register FIRs against its management. The writ petition also detailed failures by the Reserve Bank, the Registrar of Companies and the Securities and Exchange Board of India to use the powers each held.
The machinery for recovery was built by the High Court itself. In Rose Valley Real Estate & Construction Limited v. State of West Bengal the Court formulated an asset liquidation scheme and, by its order of 11 May 2015, constituted the Asset Disposal Committee chaired by Justice (Retired) Dilip Kumar Seth, with the rider that asset disposal would be subject to the Court's confirmation. In parallel, a Division Bench of Chief Justice Manjula Chellur and Justice Joymalya Bagchi constituted the One-Man Committee under Justice (Retired) Sailendra Prasad Talukdar by a judgment of 23 December 2015, with the mandate of liquidating corporate properties for depositor refunds, after the Enforcement Directorate had challenged the constitutional validity of the earlier committee.
That authority was settled above. When the Directorate carried the challenge to the Supreme Court, the special leave petitions were dismissed by an order of 28 October 2016, holding that High Court-appointed committees were fully entitled to operate and sell corporate assets for depositor refunds while criminal and money-laundering investigations proceeded concurrently. The Asset Disposal Committee was later reconstituted as a three-member body — its Chairman, a senior State official not below the rank of Joint Secretary nominated by the Chief Secretary, and an Enforcement Directorate officer not below the rank of Assistant Director — supported by SEBI and the Inspector General of Registration. A judgment of 18 August 2026 in the same writ petition confirmed court-monitored e-auctions and rejected the group's objections under Article 300A and Sections 5 and 8 of the Prevention of Money-Laundering Act.
The Additional Solicitor General, for the Central Bureau of Investigation, filed a report in a sealed cover. It records that the group's promoter and his family diverted proceeds of crime between 2017 and 2023 and, though the assets were under the Committee's control, obstructed it from discharging its duties.
What the fraud investigators found
The scale of the failure came from a Serious Fraud Investigation Office inquiry into twenty-four Rose Valley Group companies, mandated by the Court's order of 4 December 2025 and a Ministry of Corporate Affairs notification of 13 February 2026 under Section 212(1)(c) of the Companies Act, 2013. Its scope covered attached assets, sale transactions, financial records, valuation reports, auction proceedings and disbursement trails.
The Committee, constituted by an order of 11 May 2015, remained substantially non-functional for nearly a decade for want of infrastructure, funds, office premises and staff, becoming effectively operational only from March 2024. On claims, it invited applications exclusively through an online portal, cross-checked against an offline database supplied by the group which was itself incomplete — it held records for five companies, while depositors uploaded claims relating to nine. Out of an estimated investor base of 1.2 crore, only 32 lakh claims were received, a registration rate of about 25 per cent, which the investigators attributed to digital-access barriers, a complete lack of public outreach and the absence of any helpline or grievance facility on the portal. More than half the applications were returned for modification, and because the portal had no basic logical validation, roughly 14 per cent of registered applications carried a zero claim amount, making the aggregate portal figure unreliable against the group's admitted liability of Rs 9,090 crore.
Processing was slower still. Only 4.14 lakh claims, about 13 per cent, had been processed, and disbursals made against 1.75 lakh, about 5.5 per cent — a pace at which clearing the backlog would take more than twenty-five years. The investigators also identified a structural flaw: claims were invited certificate-wise rather than per investor, so more than 30 per cent of depositors holding multiple certificates had to file repetitive applications.
On assets, the attached pool is grossly insufficient against outstanding liabilities exceeding Rs 9,000 crore in a scam estimated at over Rs 17,000 crore. The Enforcement Directorate's list runs to 1,288 assets valued at Rs 1,223.07 crore; the Committee's runs to 4,417 assets valued at Rs 1,551.23 crore; and the Committee holds title deeds for only 29 per cent of the properties it has attached. The forensic exercise identified 242 additional untraced assets worth over Rs 230 crore. Of 864 attached immovable properties, valuations were complete for 80 — about 9 per cent — at a rate which would take another twenty-two to twenty-six years for the remaining 784. Ten properties had been auctioned.
The money that has moved, and the money that has not
The Committee's accounts, audited in two phases by independent chartered accountants, show how little passed through it for most of its life. From October 2015 to February 2021 it handled aggregate receipts of Rs 10,39,945 — a seed grant of Rs 5,00,000 from the State, Rs 5,00,000 from the defendant party and Rs 39,945 in bank interest — spent largely on advocate's fees and clerical charges. From February 2021 to March 2025 it received Rs 1,10,91,533.85, of which Rs 1.08 crore came from Chocolate Hotels, against which it paid Rs 54,00,000 as remuneration to its Chairman, Rs 11,16,955 in legal fees and Rs 13,93,197 on advertisements.
Monetisation has produced Rs 70,58,12,959.21 in all, from ten immovable properties auctioned through SEBI and four motor vehicles through MSTC, with Rs 2.22 crore held at the Punjab National Bank High Court branch, Rs 68.15 crore with SEBI and Rs 24.17 lakh with MSTC, and 97 further properties in the pipeline. Chocolate Hotels remitted Rs 3.54 crore to the Committee and directly met Rs 8,29,87,355 of its staff salaries, office infrastructure and portal costs. The Special PMLA Court transferred Rs 517.54 crore including accrued interest in April 2025. Against all of that, the Committee has historically disbursed Rs 127,64,08,806 to 1,73,271 depositors across sixteen phases.
A roadmap for automated disbursement through a web portal, prepared by Stock Holding Document Management Services, was placed before the Court. Payments were to begin on 21 September 2026 with a trial of ten a day until 1 October, scaling to 3,000 disbursements per bank working day by 10 October 2026, with a lump-sum event on 12 October 2026 covering roughly 60,000 investors and the daily rate sustained on a five-day week thereafter. The Committee holds Rs 470.38 crore in the depositors' account, projected to be exhausted within six months at those velocities. Satisfying all 14,10,816 unique investors — aggregated on a one-Aadhaar-one-payment basis against the 32 lakh registered claims — would need about Rs 1,200 crore at a refund cap of Rs 10,200 per claimant, with a separate three-month portal upgrade for Aadhaar linking. Payments are to be prioritised in five phases by aggregate deposit, beginning with claimants up to Rs 10,200 and rising in bands to Rs 50,000. If the balance runs out before fresh inflows, the portal stays open for verification and registration while transfers pause and resume when funds arrive.
Grave dissatisfaction, and a deadline
Reviewing eleven years of this, the Bench expressed grave dissatisfaction with the Committee's sluggish pace, systematic mismanagement of depositors' accounts and total failure to safeguard corporate assets. Its principal mandate was to identify, value and attract prospective investors for timely disposal and monetisation, and its performance fell substantially short. In a decade it issued public advertisements on only two occasions, and even then the response reached only about a quarter of the expected depositors, leaving nearly three-quarters unreached. Administering assets worth approximately Rs 600 crore, it disbursed around Rs 55.45 crore, leaving over 90 per cent of the corpus undistributed alongside large scrutiny backlogs. Instead of liquidating, it permitted funds to be generated from the proceeds of crime through illegal management contracts executed by a group subsidiary. The consequence of that inertia, the Bench recorded, is that the value of movable property under administration has depreciated to almost nil and most of the immovable properties have fallen into severely dilapidated condition.
The State, for its part, told the Court that twenty-one Rose Valley hotels remain saleable for the recovery of depositors' money, that the Committee should continue until those sales conclude with all proceeds deposited directly with it, and that the Committee should then be merged with the One-Man Committee, whose expenses the State exchequer has borne since 2022.
Order
The Bench requested the State of West Bengal to direct the Deputy Director, Director of Economic Offences to become an integral part of the Committee's functioning, maintaining continuous oversight and extending all necessary assistance, in line with the earlier directions of 14 December 2017.
The Committee was granted a final extended period of five months, as sought by Senior Counsel Mr Bachawat on its behalf, to complete the sale of attached movable and immovable properties and the disbursement of proceeds to eligible claimants. Before that exercise concludes, the entire depositor fund of Rs 550 crore held in the depositors' account must be fully disbursed against the 32,43,220 pending claims by 15 November 2026. Monthly compliance reports are to be filed, the first on 17 November 2026, so that judicial monitoring continues until the work is finished. On expiry of the extended timeline on 28 February 2027, any residual assets, undistributed funds or unresolved administrative matters will stand automatically transferred to the One-Man Committee.
After those five months the Asset Disposal Committee is to be merged with the Justice S. P. Talukdar Committee, which is already managing depositor claims across 103 chit fund companies. Post-merger, the standard operating procedure that Committee follows for those 103 companies will apply automatically to the Rose Valley Group, and it is to file a comprehensive status report once the formalities are complete. The State authorities must extend full cooperation and take prompt initiatives through the merger with the sole objective of refunding depositors expeditiously.
The Enforcement Directorate, as a key statutory stakeholder, must extend complete cooperation, and was further directed to attach any other properties not yet attached as identified in the fraud investigators' report, and to file a fresh report on 19 November 2026. The Serious Fraud Investigation Office was directed to complete its forensic audit of all Rose Valley Group companies by 31 December 2026 and file its final report thereafter.
The writ petition of Mahijas Infra was disposed of in those terms, and the remaining matters in the batch were listed for 1 October 2026.