CLB to probe Usha group firms on IFCI petition

The Company Law Board (CLB) has ordered an investigation into the Usha group following a petition filed by the Industrial & Financial Corporation of India (IFCI) charging the management with fraud and siphoning off funds.

CLB in its order on Thursday has allowed the government to appoint inspectors who would submit their report.

In fresh submissions made before the CLB in February, IFCI alleged that the three group companies "" Usha (India), Malvika Steels and Koshika Telecom "" had siphoned off crores of rupees using a web of 250 companies which issued fake bills from 1997 to 2000.

IFCI also submitted that it had approached the Debt Recovery Tribunal. IFCI, which had disbursed Rs 924.38 crore to the three companies, had filed the case in 2003 for recovery of arrears.

During the course of the hearing, CLB came down heavily on the Usha group lawyer who pleaded that investigations could not be ordered as that would mean IFCI would be utilising the government machinery to collect evidence.

The defence lawyer had further argued that the Central Bureau of Investigation had already seized all the books and, therefore, investigations could not be done.

The defence argument that IFCI had nominees on the board did not cut any ice with the CLB after the petitioner pointed out that the period for which they were nominees were outside the period of fraud.

The case had been filed against Usha India. IFCI had sanctioned the loans as part of a consortium comprising IDBI, UTI, LIC and GIC.

In case of Malvika steel, a Usha group company, IFCI had in 2001 taken over the management and a receiver has been appointed.

The case had come to light when the income-tax department in 2001 swooped down on one Suresh Gupta who was supplying fake bills to various companies.

CBI has been investigating charges of criminal conspiracy against the group since 2001.