CLB decision on Usha Group fraud soon

The Company Law Board (CLB) is shortly expected to decide on IFCI Ltd's petition seeking an investigation into the Usha Group for allegedly defrauding lenders.

The case, filed in 2003, alleges siphoning off Rs 450 crore using a web of 250 companies during 1997-2000. CLB today asked both the parties to make written submission while reserving its judgement.

While hearing the final arguments for the case, KC Ganjwal, member, CLB, said: "We want to know how you (Usha Group) have defrauded the lenders? What has the company done with the money?"

The promoters are alleged to have siphoned off the money lent for various projects through a complex network of companies which raised fake bills against which payments were made.

Listening to the arguments of the lawyer representing the Usha Group, Ganjwal retorted: "Are you arguing that people, if they siphon off money, should not be investigated?"

The defence lawyer argued that investigations could not be ordered as that would mean IFCI would be utilising the government machinery to collect evidence. He further argued that the Central Bureau of Investigation (CBI) had already seized all the books and therefore investigations could not be done.

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

The case has been filed against Usha India. 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.

The case names Vinay Rai, chairman of Usha India, Anil Rai, vice-chairman along with two executives of IFCI as respondents.