Rules out involvement of nominee and independent directors.
The Employees’ Provident Fund Office (EPFO) may question ICICI Venture, which owns 23 per cent in Subhiksha Trading Services, over the retailer’s Provident Fund (PF) dues, adding a new twist to the tussle between the private equity fund and founder and Managing Director R Subramanian over who controls the firm.
Each insists the other is in charge of the cash-strapped retailer, which owes PF dues of Rs 1.76 crore for the June-September 2008 period and is currently under a debt restructuring exercise by its lenders. Earlier this month, two ICICI Venture representatives resigned from Subhiskha’s board.
ICICI Venture has said, though it controls the company’s board, day-to-day operations are run by Subramanian, who has a 59 per cent shareholding and is named managing director in the shareholder agreement. Subramanian claims the board is in full control of the company and is also responsible for the financials of the company.
The EPFO has completed the first set of enquiries, including verifying documents, interviewing company representatives and employees. A senior EPFO official in Chennai said although Subramanian said he did not control the company, “if he proves with necessary documents to substantiate his claims, ICICI Venture will also be questioned”.
Responding to this, Vikram Trivedi, managing partner, Manilal Kher Ambalal & Co Advocates, Solicitors & Notary, who represented former Subhiksha directors (including the nominee directors of ICICI Venture), said the Regional Provident Fund Commissioner has dropped proceedings against all the former directors, including the nominee directors of ICICI Venture, on the ground that the day-to-day functioning of Subhiksha was Subramanian’s responsibility.
Trivedi pointed to the EPFO’s order dated February 19, 2009, which said, “the specific personal responsibility or involvement of the nominee and independent directors is found not established. Accordingly, the nominee directors and the independent directors other than Subramanian are found not personally liable for the current period of default on the part of establishment.”
Responding to this, the EPFO official said that in the same order it has been said that “the financial responsibilities of the investors and bankers continue as per law”. However, the ICICI Venture spokesperson said this will not be applicable for PF payments.
The EPFO, meanwhile, has given Subhiksha 15 days to pay the PF dues. A fresh enquiry on PF outstanding from October 2008 would also be launched, the official said.
Responding to emailed queries on PF dues, Subramanian said he has offered to cover the entire amount from his personal account “which may be allowed to be adjusted and treated as paid on behalf of the company towards part-payment of the arrears and the request is being processed by the EPFO”.
According to EPFO sources, around Rs 70 lakh is available in Subramanian’s personal account.
The EPFO order concluded by saying, “R Subramanian, MD, is advised to remit the entire contributions from June 2008 onwards immediately without any further delay”.
Also read:
Feb 19: Subramanian in control: Investors
