9911796707
TMI Blog1998 (6) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... e third respondent was incorporated on 4-2-1987 and commenced business on 27-3-1987. The Company was initially classified as an invest- ment company and was reclassified as a residuary non-banking company on 12-8-1992. The Company recorded a spurt in deposits since 1992-93. It appears that following the receipt of several complaints regarding the conduct of affairs of the third respondent, the RBI conducted an inspec- tion in 1994 with reference to the position of the Company on 31-3-1994. It is alleged that the inspection revealed an extremely unsatisfactory financial position, violation of the directives of the RBI and poor manage- ment and that the net owned funds of the third Respondent Company were negative to the extent of Rs. 1, 341 lakhs; value of assets was estimated at Rs. 425 lakhs and that there was an accumulated loss of Rs. 1,354 lakhs and the realisable value of the assets was estimated at Rs. 425 lakhs as against defunct liability of Rs. 1845 lakhs. 4. The RBI issued a prohibitory order on 3-3-1995 restraining the third respondent from accepting deposits from the public. The directive issued by the RBI was challenged before the Nagpur Bench of this Court in Writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other companies detailed below: 1. Tejaswini Investments Ltd. Mhatre Towers, Dombivli. 2. Sahyadri Investments Ltd. At Post Tal. Mangaon. Distt. Raigad. 3. Prajapati Finvest Ltd. (address not known) 4. Yuva Housing Development 10-145 Narayanpeth, Shahu Corner, Ichalkaranji. 5. Tejaswini Investments Ltd. Dombivli, Distt. Thane. 6. Silver Investments Finance (India) Ltd., Vasai, Distt. Thane. 7. Bharari Savings Invest. Ltd., Shivashanti Apartment, Badlapur. 8. Sakshi Investments Ltd., Khandva, Madhya Pradesh. 9. Shivan Savings Invest. (I) Ltd., Pune (address not known) 10. Sugandh Savings Inv. (P.) Ltd., Thane (address not known) 11. Shubham Saving Invest. Ltd. or Shubham Investment Ltd. address not known. ( v )The Reserve Bank Report further disclosed about the setting up of the associated Companies for the purpose of siphoning off of funds. A. Silver Investment and Finance India Ltd (SIFIL), Vasaigaon, Thane. The captioned Company is promoted by the Senior Personnel con-nected with Sanjeevani Savings and Investment (India) Ltd. (SSIL). It is being run from the premises belonging to and with the help of employees of SSIL (Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion amounting to Rs. 0.52 lakh and maturity payments amounting to Rs. 0.59 lakh. ( vi )The third respondent Company had substantial real estate situated at Bombay, Thane, Pune, Nasik, Aurangabad, Akola, Mahad and Ahmedabad. A list of properties is stated to have been compiled from replies furnished by 3 local directors. It is disclosed that for most of the properties documentation was not complete, the properties were repeatedly mortgaged or are in the possession of the new Companies. ( vii )A list of investments furnished by one of the directors revealed investments to the tune of Rs. 152 lakhs. Many of the investments have been realised or are encumbered. Further, many investments are stated to be in the names of various officials. One of the directors, Shri Vairale is stated to have informed the inspection team that original certificates in respect of investments of about Rs. 2 crores are missing. Some of the Bank accounts are also reported to be in the personal names of various functionaries. ( viii )Examination of the books of the Molkarpur branch of the third respondent revealed that the branch was accepting deposits in the name of the third respondent till October, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies are siphoned off either to sister Companies or firms of the directors or their relatives. 9. In the case of Delhi Development Authority v. Skipper Construction (P.) Ltd. 1996 AIR SCW 2401, the Apex Court has referred to the discussion on the topic of corporate veil in Palmer's Company Law and has quoted with approval the observations that Courts have shown themselves willing to lifting the veil where the device of incorporation is used for some illegal or improper purpose. The Court has also considered the concept of corporate entity and held that where the corporate character is employed for the purpose of committing illegality or for defrauding others, the Court would ignore the entity with regard to corporate Company and its association of men and women and will do justice between the real persons. After discussing other authorities, the Court has observed that the concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people and held as follows : "Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the Court would ignor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 'for any other purpose' and 'any other purpose' would include a purpose for the protection of public interest. 12. In this view of the matter the following orders are passed : ( a )The Commissioner of Police, Mumbai shall appoint the Deputy Commissioner of Police, Economic Offence Wing, to inquire into the affairs and functioning of the 3rd respondent; ( b )The Deputy Commissioner of Police is directed to hold the necessary inquiry to find out the whereabouts of the property of the third respondent Company, both movable and immovable; ( c )The respondent Nos. 4 to 18 are directed forthwith to state on oath in an affidavit the following : ( i )The list with details of their movable and immovable properties and all assets and the location thereof; ( ii ) The list of their bank accounts and the particulars thereof, including the names and addresses of the Banks and the amounts therein. ( d )The respondent Nos. 4 to 18 are directed to furnish a list of group companies and indicate the amounts/assets, whether movable or immovable, transferred from the respondent No. 3 to its group companies or any other companies in which the respondent Nos. 4 to 18 are directors or s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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