Nation
Vijay Mallya arrested; gets bail
Liquor baron Vijay Mallya, wanted in India for defaulting on bank loans, was arrested in London on Tuesday. Mallya was taken into custody by Scotland Yard and could have been extradited to India. British authorities have informed the Central Bureau of Investigation (CBI) about the arrest, say news reports. However, within few hours after the arrest a local court granted him bail. After securing bail, Mallya tweeted, “Usual Indian media hype. Extradition hearing in the Court started today as expected.”
 
 
A Metropolitan Police statement from London said officers from the Extradition Unit arrested Mallya on an extradition warrant from India. "Mallya was arrested on behalf of the Indian authorities in relation to accusations of fraud," the statement said. 
 
The Westminster Magistrates' Court later gave him bail on a 650,000 pound bond. The next hearing of the case will be on 17th May.
 
Mallya fled to Britain in March 2016 after being pursued in courts by Indian banks seeking to recover Rs8,191 crore owed by his now defunct Kingfisher Airline.
 
The banks had been able to recover only Rs155 crore. Despite multiple injunctions, Mallya failed to appear before investigators -- and then flew out of India.
 
Earlier in February, India had handed over the request for extradition of Mallya as received from the CBI to the UK High Commission in New Delhi so that the liquor baron can face trial here.
 
Last week the Chief Metropolitan Magistrate from Delhi had issued an open-ended non-bailable warrant (NBW) against Mallya in case of alleged violation of foreign exchange rules. 
 
The Delhi Court was hearing final arguments in the 2000 case related to alleged violation by Mallya of the erstwhile Foreign Exchange Regulation Act (FERA) provision in arranging funds to advertise his company's liquor products abroad. On 4th October last year, the Enforcement Directorate had told the Court that Mallya can obtain emergency travel documents to return to India and face the FERA violation case.
 
Earlier in January 2017, market regulator Securities and Exchange Board of India (SEBI), had barred Mallya and six officials of United Spirits Ltd (USL) from trading in the securities market. They were "restrained from accessing the securities market and prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly" by SEBI.
 
In January this year, the Debt Recovery Tribunal (DRT) had ordered attachment and recovery of Mallya's properties for defaulting on bank loans by his defunct Kingfisher Airlines Ltd.
 
The Bengaluru bench of the Tribunal had said properties of Mallya and Kingfisher worth Rs6,203 crore plus interest at 11.5% from 26 July 2013 can be recovered by a consortium of banks led by State Bank of India (SBI).
 
"The Tribunal has allowed our petitions against Mallya's Kingfisher and issued an order to attach their properties for recovering the amount (Rs6,203 crore) with interest," counsel for the consortium had told reporters.
 

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COMMENTS

K V RAO

6 months ago

Legal clauses always protect offenders. Legal profession will always thrive thanks to very liberal bail clauses. Still Mallya comes under English jurisdiction. It is not known when Mallya can be extradited. In the mean time banks should arrange to auction properties &recover dues.

K V RAO

6 months ago

Legal clauses always protect offenders. Legal profession will always thrive thanks to very liberal bail clauses. Still Mallya comes under English jurisdiction. It is not known when Mallya can be extradited. In the mean time banks should arrange to auction properties &recover dues.

K V RAO

6 months ago

Legal clauses always protect offenders. Legal profession will always thrive thanks to very liberal bail clauses. Still Mallya comes under English jurisdiction. It is not known when Mallya can be extradited. In the mean time banks should arrange to auction properties &recover dues.

SuchindranathAiyerS

6 months ago

Mallya can easily prove that he will not get fair trial in India (nobody does) to avoid extradition.

This has already been established once in a British Crown Court in a preliminary jurisdictional case for a victim to prosecute the Taj Hotel Bombay and its owners the Tata Group in London for their negligence during the Pakistani invasion of Bombay.

In any case, how does bankruptcy imposed by Govt (Praful Patel's Air India) Policy amount to "willful default"? Only under Indian "Might is right" jurisprudence.

SuchindranathAiyerS

6 months ago

Mallya can easily prove that he will not get fair trial in India (nobody does). It has already been established once to prosecute the Taj Hotel Bombay and it owners the Tata Group in London for their negligence during the Pakistani invasion of Bombay. How does bankruptcy imposed by Govt (Praful Patel's Air India) Policy amount to "willful default"?

SRINIVAS SHENOY

6 months ago

I think now the government must act seriously to recover the bad loans from the defaulters, rather than penalising the hapless depositors, with various types of service charges.

Simple Indian

6 months ago

Unlike the legal system in India, the Courts in UK are not notorious for unbearably prolonged legal proceedings running into decades if not years. Hence, one can expect UK to decide this matter within a 'reasonable' time. However, if & when Vijay Mallya is extradited to India, it's anybody's guess how long our legal process will take to try him and make him clear his dues to Banks, just as the SC is doing with Subroto Roy of Sahara Group. Considering our snail-paced (no offense to snails) legal system, won't be surprising if Vijay Mallya's great-grandson ends up being forced to clear his dues sometime in the next century. LOL !

REPLY

Suketu Shah

In Reply to Simple Indian 6 months ago

I agree with you on UK legal proceedings being fast.However I think VM wl pay 1 day before extradition from foreign funds to avoid the humiliation of being brought as a prisoner from UK to India.

NCLT dismisses Mistry's waiver plea
Mumbai, An apex corporate tribunal on Monday dismissed a plea filed by Cyrus Mistry's investment companies to waive off a regulatory bar on them, so that they can continue their legal suit against the Tata Sons.
 
Besides, the main petition which was filed against Tata Sons was also rejected.
 
The National Company Law Tribunal (NCLT) here dismissed the plea filed by Mistry's investment companies -- Cyrus Investment and Sterling Investment Corp -- the order on which will be released on Friday, April 21. 
 
Under the current rules, only a shareholder with more than 10 per cent effective shareholding can file a minority interest petition with the NCLT.
 
However, the Companies Act empowers the NCLT to waive off this requirement for a petitioner to hold at least 10 per cent of the total issued share capital of the company to qualify for filing a minority interest petition.
 
The NCLT had ruled against the maintainability of the petition filed against Tata Sons, which cited governance lapses and compromise of minority shareholder interests after Mistry was ousted as Chairman of the holding company of the industrial conglomerate. 
 
On October 24 last year, Tata Sons' Board ousted Mistry as its Chairman and appointed Ratan Tata as Interim Chairman.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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3 lakh shell companies may soon vanish from Companies’ Register
The discussion on the existence of non-operative companies or shell companies is making the rounds of corporates, with special emphasis on government departments on curing the malady. 
 
With the widespread epidemic of non-operative and shell companies in the Indian corporate environment, the Registrar of Companies (RoC) has come up with a well thought out cure. We are waiting to see what will be the next step of the RoC against the response being submitted by the companies, which should more or less be over by the end of this month as the companies have been given just 15 days to respond to the show-cause notices (SCNs). In effect, the RoC has turned the tables in the game.  Better late than never.
 
The Finance Minister had clearly indicated that action will be initiated against companies which have been created for the purpose of circulating black money and are not carrying on any business. It now seems that RoCs all over the country have given the non-operative companies (NOC) an ultimatum to either make the compliances and start doing the business activity for which they were formed, or else pack up. 
 
The RoCs have published a list of NOCs under their jurisdiction which have failed to comply with the provisions of the Act. These NOCs have to either submit their reasons for such failure or get struck off from the Companies Register maintained by the RoCs.  
 
Provisions of law
 
248. (1) Where the Registrar has reasonable cause to believe that—
(a) a company has failed to commence its business within one year of its incorporation (Inserted by Companies (Amendment) Act,2015 and is effective from 29th May, 2015);
(b) [Omitted] (Omitted by Companies (Amendment) Act,2015 and is effective from 29th May, 2015). 
(c) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455,
 
he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice. 
 
(6) The Registrar, before passing an order under sub-section (5), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company:
 
Provided that notwithstanding the undertakings referred to in this sub-section, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies.
 
(7) The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved.
 
Bold step taken by the RoCs
 
Pursuant to the power given under this section, the RoCs have taken the bold step of sending out notices to such companies. Overall the number is over 2.54 lakh companies as per the list available. The list of ROCs of Kanpur, Uttarakhand and Kashmir are not available on the website. From the data provided, it appears that Mumbai has the highest number of NOCs, at 71,530, followed by Delhi (53,312) and Hyderabad (40,200). Bangalore, Chennai, Kolkata and Chandigarh also contribute to a massive number of NOCs, with 15-20,000 each. 
 
Of the total of over nine lakh of companies registered in India, around 30% are NOCs. The action initiated will drastically bring down the number of companies registered in India, but will however raise concerns over the sudden action of the RoCs. While the action, brought in so late, is still commendable, the moot question is why were these companies allowed to be kept in Register of Companies for so long? 
 
With the issue of the show-cause notices, companies are rushing to professionals to seek advice. If the companies accept their default and agree to being struck off the register, the directors shall be held liable for the non-compliances made so far. On the other hand, if someone wants to revive the company, the costs will he be huge, with no assurance on the prospects of the company.
 
Fate of creditors and stakeholders
 
What will be the fate of the creditors with this move by the government? What will be the consequences for the NOCs if their names are removed by the ROC from its records? 
However, if the companies are struck off what happens to the dues outstanding towards creditors, employees, labour, etc? The only way to claim the dues from the companies will be to revive the company u/s 252 (3) of the Act which reads as follows: 
 
“252 (3) If a company, or any member or creditor or workman thereof feels aggrieved by the company having its name struck off from the register of companies, the Tribunal on an application made by the company, member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub-section (5) of section 248 may, if satisfied that the company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored to the register of companies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the register of companies.”
 
This means that such aggrieved persons shall have 20 years to initiate action for recovery of their outstanding dues against the companies before the Tribunal. India is already burdened with pending litigation running into lakhs. Reviving a company in such a scenario will be a daunting task. However, the RoC, under sub-section (6) and (7) of Section 248, is entrusted with a responsibility of satisfying himself that the companies being struck off are making arrangements for realisation of the money due to them and for discharge of their liabilities. 
 
(Dheeraj Kumar Sharma works as Associate at Vinod Kothari & Company)
 

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COMMENTS

Lodha Sumatilal

2 weeks ago

But by taking such a mass scale decision the poor ill informed people may get ousted without hearing. So natural justice will not be followed

jayesh kothari

1 month ago

It is a good move as most of the companies were dormant without applying for the same and ROC staff being inactive for years with full payment of salary not done their part for so many yeas. Hope so the mission will now complete and foolproof.

My observation on ROC data of prior dormant company are now shown as a ACTIVE inspite of company not filling Retruns for over 10 years. Is it now open for filling forms for strike off ? Please throw some light if anyone has any idea !

Hemlata Mohan

6 months ago

There has to be a beginning somewhere--- this is one. Every action has some
unintended consequences- cant help that given the crooked Indian mind. But atleast this will clear the augean stables and hopefully new registrations will be more sanitized . Cynicismfor every action needs to be shaken off

Ramesh Bajaj

6 months ago

Some companies will take advantage and avoid payment to shareholders, who are not in a position to file cases and go to court.

REPLY

jayesh kothari

In Reply to Ramesh Bajaj 1 month ago

Money would be with the Bank and they can not operate unless they have taken it away before the action.....

Ramesh Bajaj

6 months ago

Some companies will take advantage and avoid payment to shareholders, who are not in a position to file cases and go to court.

REPLY

Ramesh Bajaj

In Reply to Ramesh Bajaj 6 months ago

ROC should call all concerned (I cases where complaints are pending / have been made, for a hearing face to face.

Ramesh Bajaj

In Reply to Ramesh Bajaj 6 months ago

In cases, where complaints have been made, it should be made mandatory for ROC to call even the CA and Company Secretary, along with complainant and officers of the company, including chairman and directors. There should compulsorily be a hearing face to face to arrive at a solution on basis of truth and not on basis of influence / connections.

SRINIVAS SHENOY

6 months ago

I feel that it is the right follow up action taken by the government. I hope the government succeeds in this mission to clear up the black money, with the minimum of inconvenience to the general public. It is always better late than never.

Rahul Pande

6 months ago

Be wary of such actions which are more for shadow boxing less of intent.

uttamkumar dubey

6 months ago

All such moves will aid more of blackmailing and circulation of blackmoney unless govt. resort to transparent approach .There has to be clearcut guidelines for the same.Simply blowing things in air won't do.

Simple Indian

6 months ago

Seems the RoCs staff just got a bonanza, an unofficial pay hike ! Most such shell companies operate in the unorganized sector which also employ over 80% of the workforce in India. So, such steps are just to harass entrepreneurs in the MSME sector or smaller entities who are known to fudge their books with connivance of their CAs/auditors and with the 'cooperation' of tax authorities.

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