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Pratap Ravindran

Poona , Nov. 27

THE assurance held out by the Union Finance Minister, Mr Jaswant Singh, that transactions conducted between 1998 and 2002 which may have involved the use of the fake stamp papers issued by A.K.L. Telgi will be deemed to be valid may allay widespread public fears about the legality of these transactions; but it also tacitly concedes the Government's inability to insulate itself from the revenue-related consequences of the scam without penalising innocent parties.

While the country will, almost certainly, migrate from an antiquated stamp paper system to a demat system, an affidavit filed by Mr Sanjay S. Barve, Additional Commissioner of Police, Economic Offences Wing, Mumbai, in response to an order issued by the Mumbai High Court in connection with the writ petition (865/of 2003) filed by Mr Kishan Baburao Hazare (Anna Hazare) against Maharashtra and others, sheds light on the loopholes in the existing regimen which were so artfully exploited by Telgi.

In the status report tendered by Mr Barve as part of his affidavit, the 51 cases registered in Mumbai City since 1991 involving the use of fake stamps/other revenue collection instruments, have been divided into three categories:

The cases directly involving Telgi as an accused; — Cases in which links with Telgi and his manufacturing/sales are obvious or possible due to the commonality of the persons/associates arrested as accused or on account of the similarities in the material (stamps) used; and — Other cases in which different groups/operatives are involved.

According to Mr Barve, a study of the Telgi cases reveals that, in the initial phase of his operations (1994-1998), the `syndicate' led by him, in all probability, used chemically washed stamps. "This was possible because there is no system of branding/cancellation along with the perforation of the stamps while effecting cancellation/defacement thereof. This loophole provided an opportunity for the re-circulation of used stamps by washing them in chemicals to remove the cancellation/defacement markings in ink." Further, the control mechanism for granting licences to vendors and the inspection of their work was also very lax, providing an opportunity to unscrupulous vendors to sell special adhesive stamps which they were not authorized to sell.

And then again, the receipts issued by the Central Stamps Office against the sale of stamps and other value instruments do not have security features, "thereby, making it easy for the criminal nexus to replicate such receipts and pass them on as genuine to unsuspecting or, betimes, conniving clients." Mr Barve, in his status report to the Mumbai High Court, has gone on to point out that the stamps printed by India Security Press (ISP) at Nashik do not carry any markings of the States in which they are to be sold nor any serial/batch number as in the case of currency notes — except for instruments with a value of Rs 25,000.

In a significant paragraph, he has noted: "As an integral part of my efforts towards the compilation of the status report, I tried to understand the functioning of the Central Stamps Office by making several visits and by calling for the relevant data with regard to annual sales, indents made, the position of stocks held, cancellations of licenses for defaults, surprise checking/inspection systems for counters and vendors, and the disciplinary action taken against defaulting employees by the office.

"A discreet review of the above aspects leads me to believe that such a major and large-scale operation amounting to the usurpation and expropriation of the States' revenue cannot go un-noticed by the authorities concerned, especially when these authorities themselves have launched prosecution and conducted suo moto verifications of the major bulk users/purchasers of stamps.

"As per the conditions of the licence issued to them, the stamp vendors were not entitled to sell special adhesive stamps and major/institutional bulk users are believed to have known this position. In spite of this fact, major institutional bulk purchasers from the private and public sectors alike have utilised the services of agents like Telgi in the name of and under the garb of expediency.

"The complicity angle at ISP, Nashik, and the involvement of the employees of the Central Stamps Office as well as the officers/employees of bulk purchasers in private and public sector undertakings which have come to light during the investigation by the police need further probing."

Mr Barve, in his report, has stressed the need for an assessment of the damage caused to the revenue of the States by taking a macro view of the collection system.

"As an illustrative example, the Government revenue, through share-transfer stamps in any financial year, has to be 0.5 per cent of the net volume of the actually transferred/sold shares traded through the mechanism of the stock exchanges. By arriving at the figure of the States' share as a percentage of the gross volume of transactions, a near correct estimation of Government receivables through these revenue instruments can be worked out. If this figure is compared with the sale of share-transfer stamps during a specific financial year, a clear and telling picture with regard to the loss to the Government can certainly be delineated.

"Similar exercises are possible, though laborious, with regard to losses on account of revenue instruments like court fees/imprest court fee stamps, foreign bill-of-exchange stamps and insurance stamps. However, such a line of investigation has not been followed. Nor has the Superintendent of Stamps undertaken any measures to ascertain the revenue loss to the government by backtracking, collecting, comparing and collating relevant data. This, in fact, should have been the crux and kernel of the investigation."

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