The Chennai bench of the National Company Law Tribunal (NCLT) has ordered the central government to investigate the affairs of Puducherry-based liquor-maker Ravi Kumar Distilleries (RKDL), in light of accusations of IPO fund misuse by the promoter and counter charge of siphoning of funds by the book running lead manager of the issue, who became shareholder of the company later.
The tribunal has directed the Centre to appoint inspectors to investigate into the affairs of RKDL, in order to bring out the true picture about the diversion of funds and the possible action based on their report.
Disposing of a petition filed by Comfort Intech, the lead manager of the IPO and three others against RKDL, its managing director Ravi Kumar and other directors, NCLT member (judicial) Justice CH Mohd Sharief Tariq said that both the parties have allegedly diverted the funds of RKDL to their associates and companies. Legal disputes between these parties are pending before the different judicial forums.
The main controversy involved in the petition was that RKDL and its MD have not utilised the proceeds of the IPO as per the terms and conditions mentioned in the prospectus. The MD along with others has diverted the IPO proceeds to other entities which are under his control to defraud the members/investors of the company, which is a public listed company, Comfort Intech alleged.
They alleged that there was a substantial impact of such diversion of funds on the profitability of the company.
On the other hand, Ravi Kumar and others alleged that Anil Agarwal, who manages Comfort Securities, had transferred a lot of money from RKDL’s account using the blank cheques signed by Kumar and were collected during the time of IPO, among other alleged fraudulent activities.
The tribunal observed that from the facts, it has become clear that both the petitioner and the respondents have allegedly diverted the funds of RKDL to their associates and companies.
It said there exist circumstances which prima facie suggest that the business of the company was being conducted with the intent to defraud its members and the amount collected through the IPO has been diverted to the associates and companies by Comfort Infotech and RKDL, which amounts to fraud played on the investors.
“It also points out that the management of RKDL along with its MD is guilty of fraud, misfeasance or other misconduct towards the company and its members. In the light of the circumstances, the tribunal is satisfied that it is necessary to order an investigation into the affairs of the company under the provisions of Section 213 (b) of the Companies Act, 2013,” the NCLT said.
The order said that the tribunal orders for conducting investigation into the affairs of RKDL for the purpose of bringing out the true picture diversion of funds and amount of the IPO of the company and to fix responsibility of the person in management and others responsible for misfeasance of the funds, and bring them to book and to recover the amount siphoned off in order to do substantial justice to the investors/shareholders of the company.