Ramoji Rao’s death no shield for Margadarshi Financiers: Supreme Court

The Supreme Court noted that even after the death of a promoter, their assets remain attachable and can be distributed among affected depositors.

Hyderabad: The Supreme Court has issued notices to the Telangana and Andhra Pradesh governments, the Reserve Bank of India (RBI) and Margadarshi Financiers over the alleged misappropriation of public deposits, making clear that the death of Margadarshi Chit Fund Private Limited (MCFPL) chairman Cherukuri Ramoji Rao would not exempt the entity from liability if found guilty.

The bench, comprising Justices MM Sundresh and NK Singh, adjourned the next hearing to July 15.

The case centres on allegations that Margadarshi Financiers diverted public investments in its chit funds for personal use, in gross violation of RBI guidelines and chit fund regulations. The allegations first surfaced in 2022, following which the Andhra Pradesh government attached hundreds of crores worth of the firm’s assets in 2023 under the AP Protection of Depositors of Financial Establishments Act. 

The AP Crime Investigation Department (CID) had also taken up a probe and summoned the accused for questioning.

The matter reached the Supreme Court after former MP and Congress leader Undavalli Arun Kumar filed a special leave petition challenging a Telangana High Court verdict that had quashed legal proceedings against Margadarshi Financiers in August 2025. The apex court took strong exception to the High Court’s decision to dismiss the case while the investigation was still at an early stage.

Senior Counsel Mukul Rohatgi, appearing for the respondents, argued that since Ramoji Rao was no longer alive, the case ought to be closed, adding that all dues to depositors had already been cleared – a claim he said would be submitted to the court by way of affidavit. The bench, however, was unmoved, observing that the case was not simply about individual liability but involved serious allegations of statutory violations in the handling of public money. 

It further noted that even after the death of a promoter, their assets remain attachable and can be distributed among affected depositors.

The petitioner has alleged that Margadarshi Financiers, an unincorporated entity, collected public deposits in violation of sections 45S and 58B(5A) of the RBI Act over several years, with the total amount misappropriated potentially running into thousands of crores.