SUPERINTENDENT OF POLICE Vs. BOBY VARGHESE

JUDGEMENT

(1.) St. Mary's Finance Ltd., a company incorporated under the Companies Act, (Nidhi Company), collected nearly Rs. 18 crores from thousands of depositors. When the money was not repaid, one of the creditors Sri. V. Sugandalal, filed CP 18/99 for winding up of the company. In the meantime the company filed MCA 6/99 under S.391(1) of the Companies Act for sanction of a scheme proposed by the company as it was totally against the interests of the depositors. Instead of passing an order of winding up, as it would cause hardship to the depositors / this court formulated a scheme for running the business without allowing to receive fresh deposits and appointed the provisional liquidator. Though the company challenged the above order by filing MFA 1250, 1265 and 1266 of 1999, all those appeals were dismissed. The company had diverted Rs.7.67 crores to another sister Company, M/s. St. Mary's Properties Ltd., by unlawful means and violating the provisions of law and the standing orders of Reserve Bank of India. The scheme formulated by this court was being defeated by the company especially by its managing director Sri. Bobby Varghese by all means. All directions issued by this court had been flouted in one way or other.

(2.) The statement of accounts furnished by the company itself revealed that there was gold security worth more than Rs.2 crores with the company as on 26.3.1999. The statement filed by the company on 3.7.2000 revealed receipt of money including interest and the release of gold for Rs. 1,29,20,039/-. Yet there was gold security worth more than Rs. 1 crore with the company. Repeated directions were given by this court to the company especially to its managing director to furnish the books of accounts, registers and the securities including the gold to the official liquidator who was already appointed as the provisional liquidator. Adv. Sri. Khalid also was appointed as the agent of the official liquidator for the proper working of the scheme formulated by this court. But the company did not furnish the registers, books of accounts and other documents and securities. When this court insisted, certain registers were produced before the official liquidator which were found to be forged and fabricated with false entries. On going through the accounts this court further found that in violation of the order passed by this court, the company had released nearly Rs.2.9 crores in discharge of certain liabilities to the creditors of his choice though there was a direction to retain the entire amount. The above discharge of the so - called liabilities was in violation of the order of this court.

(3.) This proper, relevant and genuine registers, books of accounts and other documents of the company were not in the registered office when it was searched by the official liquidator in the presence of respectable persons and the representatives of the company. The case put forward by the company at that time was that all the relevant registers and books of accounts were with the auditors and their lawyers. But those were not produced even after repeated directions. Later, the liquidator filed CA 382 / 99 seeking permission to approach the District Magistrate under S.456(1)(a) of the Companies Act for recovery of the registers, books of accounts and other records and documents. Though an order was passed on 1.12.1999, the above order was kept in abeyance for some time. Later, when the premises were searched, the documents, registers, books of accounts and all valuable securities were not there as those had already been removed and nothing could be recovered.