TNPID court convicts two Paazee Forex directors to 27 years

What the Record Shows

On 28 August 2022, the Special Court for Tamil Nadu Protection of Interests of Depositors (TNPID) Act cases at Coimbatore, presided over by Judge A.S. Ravi, convicted K. Mohanraj and Kamalavalli, directors of Paazee Forex Trading India Private Limited, and sentenced each to 27 years' rigorous imprisonment. The court imposed a fine of Rs 171.74 crore and directed the District Revenue Officer to distribute that sum to the firm's depositors.

The matter was investigated by the Central Bureau of Investigation, which registered the case on 15 June 2011 on the direction of the Madras High Court after depositors petitioned the court over what they described as inaction by the state police. Per the Supreme Court's judgment of 21 August 2018 in a related service matter arising from the same investigation, Paazee Forex was alleged to have cheated depositors "to the tune of Rs.1,210 crores", and its directors faced charges under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Section 420 of the Indian Penal Code before the case moved to trial under the TNPID Act.

According to the trial court's findings as reported, the CBI traced Rs 870.10 crore to the 1,402 depositors whose statements were recorded, out of collections the agency placed at Rs 930.79 crore. The court noted that roughly 58,571 depositors in all had placed money with the firm.

The judge criticised the investigating agency for examining only 1,402 of those depositors and held that savers not named in the final report were equally entitled to recover their principal with interest, directing the CBI to examine the remaining depositors and to file a fresh report if warranted.

How It Worked

The prosecution case, as tried before the Special Court, was that Paazee Forex Trading India Private Limited operated from Tiruppur and marketed purported foreign-exchange trading as a high-yield, low-risk avenue for ordinary savers. The CBI alleged that the firm collected lump-sum deposits from households across the Tiruppur-Coimbatore textile belt on the promise of outsized returns that a genuine forex business could not sustainably generate.

Per the record, early depositors were paid the promised returns, which built confidence and drew in further savers and their relatives and neighbours. The prosecution case was that fresh collections funded those payouts rather than any trading profit, a pattern that can continue only while new money keeps arriving. Collections were concentrated in 2008 and 2009, and the scheme unravelled around 2010 when payments stopped and the firm wound down.

The procedural history ran over more than a decade. After depositors complained and approached the Madras High Court about the pace of the state investigation, the High Court directed that the case be handed to the CBI, which registered it in June 2011. The agency filed its report, and the matter was tried before the Special Court constituted under the TNPID Act, a statute Tamil Nadu enacted specifically to attach the assets of deposit-taking firms and route recoveries to affected depositors.

A recurring theme in the judgment, as reported, was the scale of the depositor base set against the number actually examined. The court recorded that statements were taken from only 1,402 depositors even though the firm's books pointed to tens of thousands, and it treated the un-examined savers as equally entitled to relief. That direction to widen the inquiry is itself part of why the matter may not be fully closed.

Who Lost Money

The affected savers were overwhelmingly small depositors in the Tiruppur-Coimbatore textile belt, a region of weavers, small traders and salaried households. The court put the total depositor base at roughly 58,571 people, a figure that dwarfs the 1,402 whose claims the CBI actually documented.

Of the money at stake, the CBI traced Rs 870.10 crore to the depositors it examined, against alleged collections of Rs 930.79 crore, while the earlier Supreme Court record referred to allegations running as high as Rs 1,210 crore. The differences between these figures reflect what was alleged, what was examined and what could be documented, and each should be read as attributed to the agency or the court rather than as a settled total.

Recovery remains the hard part. The fine of Rs 171.74 crore that the court ordered distributed through the District Revenue Officer is a fraction of the traced deposits, and depositors receive money only as and when the fine and any attached assets are actually realised. As with most large deposit-scheme cases, the sum returned to savers tends to fall well short of the headline collection figure, and distributions run for years after the verdict.

Where It Stands Now

On the records reviewed on 29 July 2026, the conviction of 28 August 2022 stands. A 27-year sentence under the TNPID Act lies on appeal to the Madras High Court, and long custodial terms of this kind are routinely challenged; on the appellate records available on Indian Kanoon, no reported order modifying, suspending or setting aside the conviction of Mohanraj and Kamalavalli could be located, so any appeal, if filed, would be pending rather than decided.

Related but separate proceedings arising from the same episode remained before the Madras High Court, concerning a former police officer accused of extorting the Paazee directors during the investigation (Crl.R.C. Nos. 2194 and 2195 of 2023). That strand does not affect the directors' conviction and involves different accused, who are entitled to the presumption of innocence.

The trial court's direction to the CBI to examine the remaining depositors and consider a fresh report also means further steps could follow. A report or FIR contains allegations, not findings of guilt; anyone named in such further steps would be an accused person, presumed innocent until proven guilty, and due process continues.

What It Means

The case is a reminder of how narrow the legitimate space for public "forex trading" schemes actually is. Under Indian law, dealing in foreign exchange with the public is confined to RBI-authorised persons and authorised dealer banks, and no ordinary firm may pool household savings on a promise of fixed high returns from currency trading. A saver can check whether an entity is authorised on the Reserve Bank of India's own website before parting with money, and the absence of that authorisation is itself a decisive warning.

The TNPID Act route also shows both the strength and the limit of depositor-protection law. The statute lets a special court attach assets and order compensation, which is why the fine here was directed to the District Revenue Officer for distribution. But the gap between Rs 870.10 crore traced and Rs 171.74 crore in fine illustrates the practical ceiling on recovery once the money has been spent or moved. The protective lesson is arithmetic rather than emotional: a genuine investment return compounds at ordinary market rates, and you can sanity-check any promised figure against a neutral tool such as Oquilia's lump-sum return calculator before believing a pitch. Readers can follow related matters on the enforcement archive, including the Special CBI Court's conviction of Janardhana Reddy in the OMC mining case and the Gujarat ACB court's conviction of 14 in a bitcoin extortion case.

FAQ

What exactly did the Special Court order?

Per the reported judgment dated 28 August 2022, the Special Court for TNPID Act cases at Coimbatore convicted Paazee Forex directors K. Mohanraj and Kamalavalli, sentenced each to 27 years' rigorous imprisonment, imposed a fine of Rs 171.74 crore, and directed the District Revenue Officer to distribute the fine to the firm's depositors.

Have depositors got their money back?

Only in part, and slowly. The court ordered the Rs 171.74 crore fine distributed through the District Revenue Officer, but that is far less than the Rs 870.10 crore the CBI traced to the depositors it examined. Distribution depends on the fine and any attached assets actually being realised, a process that typically runs for years.

Can the conviction still be appealed?

Yes. An appeal against a TNPID Act conviction lies to the Madras High Court. On the appellate records reviewed on 29 July 2026, no order modifying or setting aside the conviction of Mohanraj and Kamalavalli could be located, so any appeal, if filed, would be pending.

Are there others still to be examined in the case?

The trial court directed the CBI to examine the remaining depositors, out of roughly 58,571, and to file a fresh report if warranted. A report or FIR contains allegations, not findings of guilt; anyone named in such steps would be an accused person, presumed innocent until proven guilty, and due process continues.

How can I check whether a forex or deposit scheme is legitimate?

Only RBI-authorised persons and authorised dealer banks may deal in foreign exchange with the public, and their status can be verified on the Reserve Bank of India's website. A firm offering fixed, high returns from "forex trading" to ordinary savers is operating outside that framework, which is itself a warning sign.

Where can I read the official record?

The Supreme Court's 2018 judgment recording the CBI investigation into Paazee Forex is available on Indian Kanoon, and it sets out how the case reached the CBI and the scale alleged. The trial court's TNPID conviction of 28 August 2022 followed that investigation.

This report is based on the Supreme Court judgment of 21 August 2018 in State of Tamil Nadu v. Promod Kumar IPS, which records the CBI investigation into Paazee Forex Trading India Private Limited, together with the Special Court's TNPID Act conviction dated 28 August 2022 and the appellate records reviewed on 29 July 2026.