Brother files fraud case against O S Kanwar

SIBLING FEUD IN APOLLO TYRES

Within months of the Bajaj siblings hitting the headlines, a battle in another corporate house has come to the fore with Narinder Jeet Kanwar approaching the Company Law Board (CLB) against his elder brother and Apollo Tyres chief O S Kanwar.

In a petition filed before the southern bench of the CLB in Chennai, Narinder Kanwar sought investigation into alleged manipulation, fraud and insider trading by his brother to acquire a controlling stake in the company, which is among the country's top three tyre producers.

"The affairs of the company are being conducted in a manner so as to deceive the shareholder and the funds of the company are being utilised for ulterior and illegal purposes to make investment in such a manner that the control of Apollo Tyres is concentrated in few hands, i.e. O S Kanwar and his family members," the petition alleged.

The petition, filed through senior advocates U K Chaudhary and Saurabh Kalia, accused O S Kanwar of "committing illegalities and fraud upon the shareholders and the company by indulging in insider trading through various companies who are the shareholders of Apollo Tyres without having any business".

The southern bench of the CLB, headed by its Vice-Chairman K K Balu, admitted the petition last week.

O S Kanwar has also filed an application before the board challenging the maintainability of the application through counsels N Bhalla and S Sarkar.

The board has directed other respondents in the case, including Apollo Tyres Chief Operating Officer Neeraj Kanwar and Director Raaj Kanwar "" O S Kanwar's sons "" to file their replies by January next year.

According to latest data on Apollo Tyres available with the stock exchanges, the promoters hold a 32.43 per cent share in the company and 67.57 per cent is widely held.

In his petition Narinder Kanwar, the third son of group founder the late Raunaq Singh, also requested the CLB to investigate the affairs of several "dummy" investment companies "" Raunaq Finance, Scared Heart Investment Company, Neeraj Consultants, Sunrays Properties and Investment, Omex Investment and Finance, Juhi Investment and Swarnganga Consultants.

Alleging lack of transparency in the management, Narinder Kanwar's petition said "the affairs of the company need to be investigated in order to expose the fraud and mismanagement of the company and know the real owners of these (investment) companies".

He also asked the board to pass directions to investigate the dealing of funds, assets and affairs of O S Kanwar and his family members while restraining them from making any further investment in any other company.

"It is submitted that a careful perusal of the balance sheet of the ...(investment companies) for the last 5-6 years will reveal that these companies, although they have very little reserves and surplus and profit or loss, have brought in unsecured loans to the tune of crores of rupees. It can be safely presumed that these unsecured loans must have been brought in by the interested directors of these companies to facilitate investment by these dummy companies in Apollo Tyres," the petition said.

These dummy companies were nothing but "the abuse of corporate veils as the companies derive income from suspicious sources and further give crores of rupees to various respondent companies in the form of unsecured loans who in turn use the said loans to acquire voluminous shares of Apollo Tyres," the petition added.