Firoz.T.Totanawala The Bangalore Metro Reporter THE SBM STAMP PAPER SCAM- 3 THE SHOCKING WHITE COLLAR SCAM BY A BANK & REGISTRATION DEPARTMENT!

By Firoz.T.Totanawala

The Bangalore Metro Reporter

THE SBM STAMP PAPER SCAM-3 

THE SHOCKING WHITE COLLAR SCAM BY A BANK & REGISTRATION DEPARTMENT!

Most of us are shocked and frustrated over the Kareem Telgi Stamp Paper scam and consider it a black spot on the Registration Department. But, you will be more astonished over this SBM Stamp paper scam which we bring to you in series and details. We call it a white collar scam because; this has been done in the broad day-light under the very noses of the ‘babus’ with the connivance of the relevant Bank. This would bow the heads in shame for the failure of introducing an effective and a fool-proof alternative system of revenue collection despite the Government having several efficient administrative officers in its corridor. Indeed, the Kareem Telgi Scam appears quite small compared to the scam our elected authorities have operated. There are multiple blunders accrued in this scam and most importantly it is by our own authorized officials, who are liable for safeguarding the public treasury. Here it is unfolded in detail for you. 

THE 3rd BLUNDER- SBM STARTS THE STAMP PAPER BUSINESS WITHOUT MoU OR GOVERNMENT ORDER BUT MERELY ON A PROPOSAL LETTER FROM THE DEPARTMENT. 

 In our last issues, we revealed that the State Bank of Mysore had no written agreement with the Government to print and sell Stamp Papers of various denominations on its own. Further, while it did print it, the stamp papers of SBM had its own different designs with lapses in the security features as prescribed by the government. But then, on what basis did the SBM start printing and selling its own denomination wise stamp papers? 

 With regard to the payment of Stamp duty, the Demand Draft had become compulsory. Other banks including the Co-op Banks, used to issue DDs for stamp duty payment. This was a multi crore business and SBM wanted a clear monopoly over it to earn crores through commissions etc.

Therefore, SBM put forth a proposal before IGR offering to issue ‘Receipts’ in place of DDs for stamp duty payments, at half the rate of commission charged for DDs. As per this proposal, the SBM and in case there was no SBM branch in a particular zone, the SBH or SBI would collect the stamp duty through Receipts. For payment, the parties were required to bring in a calculation sheet from the concerned SRO indicating the amount of stamp duty and Registration fee and the Receipt issued by the branch would be the conclusive proof for payment of stamp duty. At the end of the day, the branch had to send the daily scroll of collections made to the SRO for reconciliation of accounts. 

 By this proposal, the SBM wanted to monopolise the DD business. Who will go to other banks and purchase the DDs at regular commission when they could pay the stamp duty through ‘Receipts’ which charges only 50% of the regular DD commission? The IGR readily agreed with the proposal, but as the stamp duty collections were over Rs. 3000 crores, the IGR had to ink MoU with the SBM specifying the terms and conditions and the operational details. Once the MoU was signed, the government had to issue the necessary Government Order. 

 But no such thing happened. Once the IGR, orally agreed to the proposal, the SBM without waiting for MoU or the Government Order, went ahead and started the Receipt business. Its designated branches started collecting stamp duty through Receipts. Not just that, but shockingly, the SBM branches simply refused to send the daily scroll to the designated Sub Registrar offices as proposed in its proposal. There was no reconciliation and the department too could not discipline the Banks as they had no MoU with them. On the face of it, the ‘Receipt’ business of SBM was highly illegal and unauthorised. 

 Then came the biggest fraud of SBM Stamp papers, which started at the same time. The SBM had put forth a proposal to IGR to allow them to print, pre-printed document sheets of various denominations to tide over the difficulty of the people who were facing hardship in getting small amounts franked or certified. Even though it was nothing but a stamp paper, it was called the document sheet as mere mention of stamp papers was perhaps allergic to the government. 

 IGR, ignorant of the law of the land, readily agreed to this proposal. He sent a letter to the SBM on 26-3-2003 stipulating terms and conditions and wanted the Bank to convey its acceptance so that MoU can be entered with the Bank followed by the necessary government order. 

The conditions were: 

 (a) The SBM should certify on the document sheet (sold by the Department Employees Co-op society) and certify the payment of stamp duty for unregisterable articles. 

(b) The government will pay one percent commission to the Bank for the amount credited to the treasury through certification on document sheets. 

(c) These pre-printed denominations had to be used only for unregisterable articles like Affidavits, agreements, indemnity bonds etc. 

(d) And MoU will be entered with the Bank after the Bank agrees to the above conditions. 

 From the above, it is clear to anybody with a common sense that the letter by the IGR was only a proposal to the Bank expecting the Bank’s communication to express their acceptance of the conditions at the earliest so that a MoU can be signed. 

 But, after getting the IGR’s proposal letter, the SBM’s top brass ignored to convey their acceptance of the terms and conditions and sign the MoU. They simply construed the proposal letter itself as permission from the government and straight away started the stamp paper business. They got the pre-printed denomination wise stamp papers in private printing presses and started selling the stamp papers of Rs.10, 20, 50, 100 and even 500 through their branches. People who faced hardships getting the stamps franked or certified at the SR offices, queued up before the SBM Branches, where the Bank displayed ‘Stamp Papers Sold’ banners. Interestingly, IGR turned the other way when the SBM, SBI and SBH started selling the stamp papers which are just like the banned stamp papers. Apparently, the stamp papers made a back door entry through SBM stamp papers. And mind it; there is not a shred of evidence of the government permission. 

 Despite knowing that the entire business was illegal, no IGR or Revenue Secretary or even the Finance Secretary thought it fit to put a stop to this fraud and file criminal cases against the Bank officials. In fact, in 2007, the then IGR permitted the Bank to print more papers when the Bank submitted that its stock was emptying! Arguably, the IGR has no power or authority to permit such stamp paper business. It is the domain of the central government and state governments have no powers in this regard. 

Unmindful of the consequences, the SBM and its associate Banks continued the illegal stamp paper business. Interestingly, the Sub Registrars refused the SBM stamp papers for registration. They collected the stamp duty as usual and treated the SBM stamp papers as plain sheet. 

 To simply put, the Bank had indulged in the stamp paper business illegally, without a MOU with the government or a Government Order, but merely on a proposal letter. Further, in the due process, it also violated the stipulated conditions of its own submitted proposal. It printed crores of pre-printed denomination wise stamp papers and even blank stamp papers in private printing press, and there is no proper accounting, let alone reconciliation. The entire fraud can be allegedly worse than Telgi. Moreover, while Telgi is a criminal, the SBM officials are respectable and highly paid officials. 

 As far as, the department officials are concerned, the successive IGRs, Revenue Secretaries and even Finance Secretaries allowed the fraud to go unchecked. 

 (To be continued)