SFIO and Its Investigations in the last 3 Yrs

In last three year 37 cases referred to SFI and
investigation completed in only 9 cases


In all, 37 cases were referred to the Serious Fraud Investigation Office
(SFIO) during the last three years i.e. during the years 2006-07,
2007-08 and 2008-09. Out of these 37 cases, investigations
in respect of 9 cases have been completed.

Number of people in respect of other six companies will be
known only after launching prosecutions. In respect of the
remaining 28 cases, investigations are under progress.

An elaborate regulatory framework is in place to deal with such incidents.

This framework provides for statutory disclosures about the affairs

ofcompanies intended to inform the stakeholder the truth about the

state of affairs of companies. To facilitate making of such disclosures

by companies , and for stakeholders and regulatory agencies to easily

access and view them, Government has set up an electronic registry

with round the clock access through internet.

The Government has powers of inspection of the books of accounts

of companies and also to investigate their affairs, if need be, under the

Companies Act, 1956. In addition, the Act provides for appointment

of independent, statutory auditors to audit the accounts and report to

the shareholders. Such audited accounts are also displayed on the

electronic registry for general viewing.

While the reporting requirements are regulated under the

Companies Act, 1956, the conduct of auditors is regulated

under the Chartered Accountants Act, 1949. In addition,

for listed companies, compliance with these statutory requirements

is required to be certified by a company secretary in practice,

who in turn is regulatedunder the Company Secretaries Act, 1980.

Government has amended the Chartered Accountants Act, 1949

and the Company Secretaries Act, 1980 in 2006 to provide for

a more effective disciplinary mechanism to deal with cases

of misconduct by Chartered Accountants, Company Secretaries

respectively. In 2006,the Government has notified Accounting

Standards to enable accounts of companies to be drawn up and

disclosed on the basis of fair, transparent and internationally

accepted principles. Government proposes to re-introduceCompanies

Bill, 2008 as the Companies Bill, 2009 which seeks to make more

stringent provisions in cases of frauds by companies,

their directors and auditors, etc.

Morepen Laboratories Ltd. (MLL)
MLL created equity through fraudulently rotating funds siphoned

out of the company. Money was siphoned from the company to

promoters’ personalaccounts . Higher net worth of the company

was shown through rotation of funds, fictitious investments and

fictitious debtors. Company indulged in overvaluation of stocks to

book higher profits and obtained more loan from banks by hypothecation of stocks.

Shonkh Technologies Ltd.
The promoters in this case were found to have caused wrongful

loss to the company by allotting shares at arbitrary rates of premium

to Directors and their relatives. They were also found guilty of

falsification of accounts by creation of false equity through rotation

of cheques and by showing fictitious sales to inflate revenue and profit.

Shonkh Technologies International Ltd.
The Directors of the Company were found to have violated various

 provisions of Companies Act including preparation of

Annual Reports in a manner not reflecting true and fair view

of the operations of the Company.

JVG Hotels Limited, JVG Publications Ltd. , JVG Techno IndiaLtd. , JVG Holdings Ltd
These four companies are part of JVG Group of 13 companies referred to SFIO f

or Investigation. The main promoter is Shri Vijay Kumar Sharma.

There are allegations of siphoning off funds invested by the public in

 JVG Finance Limited, which was a non-banking finance company,

and some of thesecompanies were used for this purpose.

Leafin India Limited
The funds of the Company were siphoned off by creation of

lease agreements in respect of non-existent assets and lease

rentals were paid thereon. There was an attempt to defraud

the exchequer.

Stock Holding Corporation of India Limited (SHCIL)
There was fraudulent issue of shares of the company and books

of accounts were falsified. The management was found guilty

of the offence of criminal breach of trust in transferring tangible

assets of the company. The officials of the company intentionally

gave false evidence on oath during investigation.