The Fixed Deposit Brokers Association (FDBA) has sought the intervention of the ministry of finance on the resignation of D Hirawat as chairman of Global Finance Corporations (GFC) which has left depositors in a lurch.
FDBA has written a letter to the secretary, company law board, department of company affairs, ministry of finance on June 20, raising the issue of Hirawat's resignation. The association questioned as to how a director could resign at a time when the promoters and other directors were untraceable. It has also asked if any other director had been appointed in place of Hirawats.
Following the resignation, Hirawat and his wife Jayshree Hirawat have washed hands of responsibility towards meeting GFC's fixed deposits liabilities.
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Hirawat was functioning as vice-chairman and Jayshree as whole-time director of the company in a professional capacity.
Speaking to Business Standard, Jayshree Hirawat said, "I feel morally responsible and sympathise with the depositors. However, there is nothing we can do as we have resigned from the board of directors. Moreover, we were never involved with the fund-based activities of GFC.
This is the responsibility of the promoters R K Jain and V K Bhansali." Although the Hirawats claim that they were not involved in the fixed deposit business of GFC, brokers claim he had held several meetings with brokers assuring them that the fixed deposit liabilities would be met with.
Jayshree Hirawat resigned from the company board in October 1996 at the AGM of the company. Hirawat's decision to resign was conveyed to the board on May 12.There was no board meeting.
GFC had issued an unsigned press release on May 18, stating that due to adverse publicity and freezing of assets the company had been forced to default on their deposits.
The press note, never published, assured depositors that it had concrete plans to meet the current liabilities and that the company has enough liabilities to meet its depositors. GFC has a fixed deposit corpus of Rs 6 crore out of which Rs 4.5 crore was mobilised from Mumbai.
Jayshree Hirawat said that the all the liabilities of the company could be met if a proper liquidator had been appointed. However, FDBA approached the RBI executive director, C Rangarajan, on June 7, asking for the appointment of a mediator or custodian, as a liquidator would take too much time. In response, the RBI froze the assets of the company.
The apex bank had asked Hirawat to come forward with concrete plans as to how depositors will be repaid, a cash flow statement, and proof of his capacity as official company spokesperson.
Sources said, RBI also told Hirawat that he could go to court and lift the freeze on the assets if his company was not connected with CRB as Daewoo Securities was. However, Hirawat feels that this is the responsibility of the promoters. According to the Hirawats, the promoters R K Jain, and V K Bhansali are in Mumbai.
The Hirawats were contacted over telephone by Jain and Bhansali on Monday calling Hirawat to Mumbai. He arrived in Mumbai yesterday and is expected to meet RBI officials and brokers today.
Officially the company is still operational. However, according to Jayshree Hirawat, GFC is closed as the RBI has frozen its accounts. "Even salary cheques have stopped and we have no stake in CRN and CRB. The Hirawats, who were with the GFC since 1994, are presently unemployed. They are not willing to come to Mumbai unless a proper agenda is charted out.
The association questioned as to how a director could resign at a time when the promoters and other directors were untraceable.