During a recent hearing on a plea filed by Trinamool Congress (TMC) leader Saket Gokhale, the Gujarat High Court expressed apprehensions about the lack of regulation surrounding crowdfunding in India. The case revolves around allegations that Gokhale misused funds raised through crowdfunding and cash transfers, prompting the Court to question the legal framework governing such activities.
Justice Hasmukh Suthar, presiding over the case, highlighted the novelty of crowdfunding in India and raised doubts about existing regulations or legal recognition for it. He noted that while some regulations by the Securities and Exchange Board of India (SEBI) exist for investment in start-up firms and crowdfunding, they may not cover individual initiatives adequately.
The Court's concern stemmed from the potential chaos that could arise from unregulated crowdfunding practices. Justice Suthar emphasized the need for clarity and regulations to prevent misuse of funds and maintain transparency in such fundraising endeavors.
Advocate Somnath Vatsa, representing Gokhale, defended his client, stating that the funds were raised through online campaigns for sustaining purposes, with donations made voluntarily. Vatsa argued that there was no fraudulent intent involved in Gokhale's fundraising activities.
However, Special Public Prosecutor Mitesh Amin countered this argument, alleging that Gokhale misused a significant portion of the funds for personal purposes, including investing in shares and purchasing air tickets. Amin raised concerns about the discrepancy between the stated purpose of the funds, such as filing queries under the Right to Information Act (RTI), and their actual utilization.
The case also involves allegations of violations under the Prevention of Money Laundering Act (PMLA), further complicating the legal proceedings. Amin contended that allowing Gokhale's plea to quash the FIR would undermine the ongoing PMLA investigation.
The High Court, while acknowledging the complexity of the case, scheduled the next hearing for May 1 to deliberate further on the matter. The outcome of this case could potentially shape the regulatory landscape surrounding crowdfunding in India and address concerns regarding its misuse and accountability.
Author: Anushka Taraniya
News Writer, MIT ADT University
