CHANDIGARH, May 17: The Department of Company Affairs (DCA), Government of India, has recommended action against directors of the Rs 1,300-crore Golden Forests Limited, a Chandigarh-based plantation company, under Sections 370, 372, 209 and 211 of the Companies Act, the last two being serious offences.The DCA has directed the Registrar of Companies (ROC), Jalandhar, under whose jurisdiction the company comes, to initiate action for registration of cases and prosecution of directors of the company for various offences.The offences include "misleading" the investors, "diversion" of funds by Golden Forests Limited to its sister companies and some other "grave irregularities".
Section 370 of the Companies Act relates to inter-corporate loans and Section 372 to inter-corporate investments while Sections 209 and 211 relate to maintenance of account books. Under the last two sections, there is a provision for imposition of fine or imprisonment up to six months or both.When contacted, A.L. Syal, legal adviser of Golden Forests and father of R.K. Syal, chairman of the company, said that they had got no information about the Department of Company Affairs taking action against them. They had received no notice from the ROC, he added.
S.B. Mathur, Director (Investigation and Inspection), DCA, who was here in connection with a regional conference of the Northern India Regional Council of the Institute of Company Secretaries of India, told Newsline yesterday that the DCA had gone into the affairs of Golden Forests. During the inspection carried out under Section 209-A of the Companies Act, it was found that "Golden Forests collected huge funds assuring substantial returns to investors which were much higher than normally available". However, the company subsequently "diverted funds to firms and sister companies of the group and even to employees in the form of provision of conveyance for them".
The "so-called loan", Mathur said, was extended "interest- free and had not been recovered". He said that with this, the company had landed itself in a "situation from where this much return was not possible". The Reserve Bank of India too had gone into the issue and sent its report to the Securities and Exchange Board of India (SEBI).
Meanwhile, the company went to the court. The present recommendations of DCA had nothing to do with the SEBI case, Mathur said, and added that the Companies Act was separate and action under it was "simultaneous" and independent of SEBI.
The Monopolies and Restrictive Trade Practices Director General (Investigation and Registration) too was "pursuing" the matter against Golden Forests Limited. The action was being considered under Section 36-A of the MRTP Act. Mathur, who has been a director with MRTP, said that action against Golden Forests entailed "penalty and prosecution" and the action by DCA and MRTP was "simultaneous", "independent", and "separate" from what SEBI was doing.
