New Delhi, Dec 16: The finance ministry is reported to have found preliminary information of irregularities in JCT Ltd's financial dealings with its subsidiaries. The MM Thapar's flagship has apparently lent over Rs 200 crore in loans and advances mainly to two trading subsidiaries - Chohal Investments and Poly Investments - without any overt stipulation for recovery of interest and principal.

At a meeting on Tuesday between revenue secretary NK Singh and director of the economic intelligence bureau (EIB) in the finance ministry, it was decided to crack the whip on the group on the basis of information culled out by the bureau.

The Income-tax department has been told to initiate necessary investigations, based on inputs given by the EIB. The feasibility of filing notices on tax-violation aspects, especially with regard to the huge losses run up by the subsidiaries, is being explored.

JCT's joint managing director Samir Thapar said the company was "in the clear with respect to the loans". He also said he had not been intimated about the finance ministry's position on the issue.

In a parallel move, the revenue department has written to the Securities and Exchange Board of India (Sebi) to investigate violations, if any, of the Securities Contract Regulation Act and other guidelines with respect to intra-group financial transactions.In the light of the department's letter, North Block sources claimed an independent scrutiny by the market regulator may be on the cards.

The revenue department has also written to the banking division in the finance ministry and the Reserve Bank of India for a detailed investigation into the circumstances under which the loans were given. The request will go to reinforce an ongoing investigation by the central Bank into JCT's loans imbroglio. The RBI has already questioned the financial institutions on how such huge loans were allowed to be made by JCT to its subsidiaries.

Meanwhile, the department of economic affairs has also been alerted to the goings on in JCT. Applications for future external commercial borrowings (ECBs) by the MM Thapar group, sanctions for which are given by the the DEA, will be scrutinised based on the findings of the revenue department, sources in the finance ministry said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.