KATHMANDU, April 16: The Supreme Court (SC) on Tuesday overturned the district court's decision in the widely discussed Unity Life International case-linked to a networking business from the early 2010s and sentenced the operators to prison while imposing fines, ensuring that victims will recover their money.
A division bench comprising Chief Justice Prakashman Singh Raut and Justice Til Prasad Shrestha concluded the case, which the SC had taken up in 2017.
The district court initially filed the case against Unity Life International, accusing the company of defrauding the public through a pyramid scheme. It sent some individuals associated with Unity Life into custody and acquitted others. The apex court later issued a single verdict covering all 16 cases related to Unity Life.
The SC has not yet released the full text of the verdict. SC Spokesperson Achyut Kharel stated that the court sentenced Unity Life International's operators-Kashi Ram Gurung, Bhim Bahadur Gurung, Indra Bahadur BK, Netra Rajbanshi, Krishna Bahadur Chhetri, Mahendra KC and Bishnu Bahadur Chhetri to two years and six months in prison each and imposed a fine of Rs 25,000 on each of them.
The SC waived Bishnu Bahadur Kshetri's sentence and fine as he had already passed away. It sentenced Unity Life's General Manager Shishir Yogi to one year in prison and fined him Rs 10,000. The court also handed Director Bishwanath Gautam a one-year prison term and a Rs 10,000 fine.
Because the case involved multiple charges, the SC decided to enforce only the longest sentence, following Section 36(1)(a) of the Criminal Offense (Sentencing and Execution Act, 2074 BS, according to SC spokesperson Achyut Kharel. He added that the court ordered authorities to issue a public notice within three months, as the exact amount of compensation remains undetermined.
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According to the verdict, the SC has ordered authorities to publish notices in national newspapers, calling on victims to submit claims with proof of their losses. "The court instructed them to publish the notice three times within three months and recover compensation from the company's assets," said SC Spokesperson Achyut Kharel. "It also assigned the Deputy Director of the Verdict Enforcement Directorate to facilitate the compensation process," he added.
The Unity Life International case arose after authorities accused the company of defrauding the public by collecting billions of rupees through an unauthorized, banking-like scheme. Unsatisfied with the rulings from various district courts, the parties appealed to the then appellate courts (now high courts), and ultimately to the SC.
Both the government and the defendants filed appeals at the SC. The Offices of the Government Attorney in Nepalgunj, Baglung, Biratnagar, and Patan submitted review petitions against the earlier decisions. The Supreme Court issued a joint verdict on all cases involving both the government and Unity Life's operators.
What Was the Unity Life Case?
The company initially registered as Insurance Unity Life International at the Office of the Company Registrar on March 1, 2006 AD. In Bhadra 2064 BS (August/September 2007), it changed its name to Unity Life Insurance and began engaging in unauthorized insurance activities and other illegal actions.
On March 12, 2011, victims filed a fraud case against Unity at the Lalitpur District Court, accusing the company of organized fraud. Investigations revealed that Unity had enrolled 368,710 members, both inside and outside Nepal.
Among them, 4,144 individuals filed complaints, accusing Unity of defrauding them under the guise of networking. In response, the government attorney charged 112 individuals with fraud. Of these, 81 were absconding, while 31 were brought to court with charges.
Unity opened branch offices in Sunsari, Kaski, Baglung, Chitwan, and Rupandehi, where it collected money from the public. The company raised funds by establishing 22 different companies and organizations, including hospitals, shopping centers, travel agencies, real estate, departmental stores, advertising agencies, dairy industries, and hydropower companies, all under the pretext of investments. Although the company ran a networking business, it failed to obtain the necessary approvals. Investigations revealed that several key officials of the company had been involved in contracts, land buying and selling, and other related activities.
From the fiscal year 2005/6 to 2009/10 BS, Unity enrolled 368,000 members and raised Rs 3.83 billion. Investigators found that the company distributed Rs 1.83 billion as commission from the collected funds.
The operators registered 37 organizations for investment purposes. Investigations revealed that Unity had invested Rs 1.15 billion in real estate and held Rs 412.8 million in bank deposits. Before the case was filed, Unity had Rs 412.8 million in various banks under its name.
Declared as organized crime
In the Unity case, authorities filed three separate cases in court regarding unauthorized transactions, fraud, and tax evasion. A total of 4,140 individuals filed complaints, accusing Unity Life of fraud. On April 1, 2014, the Lalitpur District Court declared Unity's activities as "organized crime." The court sentenced Unity's chairman, Kashiraj Gurung, and 11 other directors to three years in prison each, imposed a fine of Rs 12.75 million, and ordered them to pay the equivalent amount as compensation.
After the district court found the defendants guilty, nine of them appealed in December 2014. Dissatisfied with the district court's ruling, Unity Life's operators took their case to the Appellate Court in Patan. In November 2017, the Patan Court acquitted all 12 defendants. The government, unhappy with this decision, filed an appeal at the Supreme Court. The Supreme Court then found some individuals guilty while acquitting others.
The Patan Court had defined the fraud as organized crime. It ruled that the money of shareholders who had not filed complaints should also be refunded. Additionally, the court ordered compensation for innocent defendants who had been held in custody pending trial but were later acquitted. The Supreme Court ruling mandated penalties for the key planners and individuals involved in Unity's operations, and it ordered the collection of fines and compensation from the guilty parties.