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
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
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
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
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
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
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.
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