Panel alleges Vatsa swindled Rs 200 cr

The Serious Frauds Investigation Office (SFIO) has submitted its report on Vatsa Corporation to ministry of Company Affairs, alleging mismanagement of Rs 200 crore and also criminal offence under Section 420 of the Indian Penal Code.

The corporation started with a very small share capital but went up to a paid-up capital of Rs 5,000 crore and authorised capital of Rs 50,000 crore.

The investigations were conducted to find out how the corporation could increase its capital to this magnitude.

The office has found the corporation guilty of several other violations of the Companies Act, 1956 such as Section 205 relating to establishment and transfer of fund to the Investor and Education Fund.

The investigation report has said the corporation fraudulently induced people to invest money and asked for a penalty under Section 68 of the Act, which prescribes imprisonment for a term extending to five years or a maximum fine of Rs 1 lakh.

The corporation also failed to distribute dividend within 30 days of the date of declaration as required by the law, with the office recommending penalty under Section 207 of the Act.

The section prescribes imprisonment up to 3 years and a fine of Rs 1,000 for every day for which the default continues.

The office has also found the corporation guilty of mis-statement in prospectus and suggested action under Section 63 of the Act that specifies criminal liability of imprisonment upto two years or a fine extending to Rs 50,000 for the offence.

The corporation has been held guilty of several other procedural violations such as inviting deposits without issuing advertisement, not specifying all the information required under the act in the memorandum and altering the memorandum without a special resolution and confirmation by the Company Law Board.

The government had ordered investigation against the Mumbai-based company six months back. The case was entrusted with SFIO, which submitted its report last month.

The corporation had highest number of investor complaints registered against it for three consecutive years from 1999 to 2001.

The corporation has several subsidiaries in the field of hotels, medicines, agro-products, construction etc.

According to the company's annual report, its net worth increased by a whopping 37,880 per cent in just five years from Rs 21 crore in 1993-94 to Rs 7,976 crore in 1998-99. Equity capital also jumped from just 9.8 crore in 1993-95 to Rs 7,590 crore in 2000-01.