G GOVINDUSAMY Vs. P N L NIDHI LIMITED

JUDGEMENT

(1.) THE petitioners constituting 115 members of M/s. PNL Nidhi Limited, ("the Company") have invoked the jurisdiction of Section 408 of the Companies Act, 1956 ("the Act") for a direction to the Central Government to appoint such number of directors as the Company Law Board may specify, in order to prevent the prejudices being suffered by the Company, its shareholders and the public at large, on account of the gross acts of mismanagement on the part of the respondents, by mobilisation of huge deposits contrary to the directives issued by the Reserve Bank of India and the guidelines of the Ministry of Corporate Affairs, non-repayment of deposits, mis-appropriation and defalcation of monies, fraudulent acquisition of properties, unlawful investments in other companies in control of the respondents 5 & 6, depletion of resources of the Company, falsification of the books of account, non-compliance with the statutory requirements, etc.

(2.) Shri R. Yashod Vardhan, learned Counsel, while initiating his arguments, in support of the petitioners submitted:

(3.) THE directors indulged in gross manipulation of accounts in order to cover up the fraudulent activities committed by them. THE interest receivable as reflected in the balance sheet for the year 2002-2003 is Rs. 46,07,38,073/- as against the loans outstanding against movables and immovable shown to be at Rs. 13,76,10,587/- which is quite unlikely. THE auditors report forming part of the balance sheet for the year 2002-2003 states that the income on interest during the relevant year accounted for Rs. 10.20 crores. THE advance for purchase of assets has been shown at Rs. 9,41,45,000/- during the financial year 2002-2003, but no assets are shown as purchased by the Company. While the Company accepted deposits in excess of Rs. 67 crores, the balance sheet for the year ended 31.03.2003 discloses assets with very least amount. THE criminal proceedings initiated against the directors leading to the arrest of directors show the irregularities in the affairs of the Company. THE Income tax Authorities have issued a notice of demand for Rs. 5 crores towards arrears of tax payable by the Company, by treating the major portion of the interest receivable as income of the relevant year.