[6] The company first came to the attention of authorities in 2015 because of the large discounts that IMA Jewels was giving on purchases of gold in its stores, but nothing was done because of a legal loophole and inaction by investors.
[5] However, the latter was unable to take action for two reasons: first, the Karnataka Protection of Interest of Depositors in Financial Establishments Act (PIDFE) only allowed action to protect depositors, and an Islamic banking company is structured so that people paying money to it are legally partners in the business and not investors making deposits; and second, no-one actually complained whilst the company was still paying them.
[5] On 16 November 2018, the Assistant Commissioner of Bangalore North Sub-Division issued a forfeiture notice against IMA, which Mansoor dismissed in a public statement posted on Facebook.
[1][18] In the following month, December, Mansoor Khan contended in a formal reply to investigators that the company did not accept deposits from investors, but dealt in precious stones and metals; that it did not require licence from the RBI or the Securities and Exchange Board of India (SEBI); that lack of depositors meant that the PIDFE Act did not apply; and that the company was a Limited Liability Partnership with partners not depositors.
The court directed prison officials to ensure that Khan be provided medical treatment and that in the event of an emergency, he be taken to Sri Jayadeva Institute of Cardiovascular Sciences and Research and not Victoria Hospital.The accused, through his advocate, also submitted that he was facing threat to his life and requested security cover.
The court directed the Prisons Department to provide security cover and not allow any visitors during his stay in the prison.SIT officials said they are gathering more evidence to question Khan and are also giving him time to get treated for his ailments.
[27][8] It had been partly administered by the company per an agreement with the Karnataka government made in 2015, with the state providing just 15 teachers and IMA paying for 90, at a cost of ₹36 lakh (US$42,000) per annum.
[27] Eleven days after IMA closed, the 92 staff that it (by then) employed stopped turning up to work,[28] prompting the government to transfer state teachers from other schools in order to make up.
[28] The hospital reported that it did not have funds to pay for the ₹20 lakh (US$23,000) worth of pharmaceutical supplies that had been delivered to it on credit, and that it was operating with a skeleton of its normal staff of 100 people.
[33] At the associated Frontline Pharma chain of pharmacies, stock bought on credit was boxed up and sent back to its suppliers and the company was shut down, as it had no money to continue operating.
[35][36] The collapse also affected the Bangalore and Hubli edition of The Siasat Daily, a franchise operated under the banner of the main paper, whose printing IMA had been financing since 2017.