Dabba traders had decided to float network in Dubai

By Dheeraj Fartode

Players of the Dabba trading have amassed huge money through illegal trading in last five years and they have decided to float the network in Dubai too. The sensational information seemed to have missed the alert eyes of Enforcement Directorate (ED) which has deputed its officials at Nagpur to act against money laundering.

ED and concern police stations were mute spectator about the money laundering happening in the city since last so many years as they purportedly had no primary intelligence about it. This has put a big question mark on the revenue intelligence agencies which seems to have glossed over such big racket operating without any fear since decades across the country. 

Sources informed that Ravi Agrawal had decided to multiply his wealth through the Dabba trading and Dubai was his destination to achieve the aim. As per Agrawal’s plan, the Dabba trading in the Dubai would be done on the foreign exchange.  But, the tough action by EoW Nagpur has shattered his dreams. 

City police took five months to act

The city police, which swooped against Dabba traders in a single day and broke the backbone of illegal trading network, took around five months to take the final action. The first complaint about the trading network was received by the police commissionerate on January 12, 2016. 

Interestingly, Kushal Kishor Laddhad, a Dabba trader, was the whistle-blower who revealed all links to the police to swoop against the illegal network which was operating in the city smoothly. 

Sources informed that Laddhad had submitted a complaint to police commissioner and followed up the complaint for four months demanding action. Dabba trading was so complex that many in the police administration could not understand the nitty-gritty and exact illegality involved in running of this unauthorized stock exchange bypassing regulator and hence, they had not initiated any action on first report. They contacted SEBI officials and after detailed discussion on the complaint and network and after understanding about technical aspects of trading, the top brass ordered action. 

Local police needs to gather intelligence 

A top official of SEBI informed The Hitavada that these activities can be discovered by the local police through the use of intelligence units. On receipt of firm evidence from police, SEBI, in addition to the action which the State Government takes, many also issue directions under Section 12 (A) of securities contracts (regulation) act, 1956 (SCAR) restraining any person from buying, selling or dealing into the securities market in any manner. The SEBI can initiate adjudication proceeding for envying of monetary penalty under Section 23 (1) (b) and (c) which may extend to rupees one crore under Section 23 (H) of SCAR. 

Ten years imprisonment and 

Rs 25 crore fine for Dabba trading 

In terms of Sections 23 (1) of SCAR, the Dabba trader can be prosecuted and on conviction, he or she can face imprisonment for a term which many extend to ten years or with fine up to Rs 25 crones or with both. 

As per section 25 of SCAR. offences punishable under Section 23 are cognizable offences within the meaning of code of Criminal Procedure, 1973 and as such can be investigated by state law enforcement agency also. Further, Section 26 of SCAR permits lodging of complaint of violation of the act by state authorities. 

Dabba trading threat for national economy

The Dabba trading is carried out in cash and hence encourage growth of black money. It creates parallel economy, risk of money laundering and criminal activities. The Dabba traders evade taxes hence state exchequer loses huge money. It is this money, which is normally finds its way in Hawala network and then transferred to tax free heavens or invested in benami transactions or used for all kind of wrong activities. According to sources, the Hawala operators, too have gone into hiding and in Nagpur the Hawala transactions have come to a standstill since Thursday.