Arrangement Meeting Between Investors and Directors

City Limo scam: D-day for investors ends in chaos

15 Oct 2009

Mumbai: It was D-day for City Realcom investors, who came from all over the country to the Wilson High School compound near V P Road police station on Wednesday morning. Around 10,000 investors turned up, spilling over into adjoining lanes as well as nearby buildings, causing a massive traffic jam for hours in south Mumbai.

The investors, who had been looking forward to this meeting for over a month, were disappointed. “After three hours of discussion, we’re more confused than before,” an investor said.

The meeting was held following directions of the Bombay high court on an application by the company, which is part of the same group as City Limouzines, to restructure its debts. City Realcom had promised investors unbelievable returns, but cheques began bouncing in August.

At the meeting, the company’s advocate Nirmala Bhosle tried to calm investors and presented a proposal to return their principal along with 7% interest—a fraction of the 48% originally promised. Investors would receive this amount via 12 post-dated cheques three months from now, according to the proposal. Some investors were amenable to this but others, like Zulfiqar Khan from Chennai, insisted that payments already received as interest not be adjusted against the principal. Many investors supported him but the company did not agree.

Another investor suggested the company immediately pay the principal without interest, but the firm vetoed the idea. Some investors demanded a guarantee that the post-dated cheques wouldn’t bounce, to which the firm agreed. The company has to submit a report on the meeting’s outcome to the high court.

Bhosle blamed the Economic Offences Wing of the city police and Enforcement Directorate for the crisis. The two agencies said the company was trying to pass the buck for its own mistakes. Investors who had been asked to assemble at Wilson Gymkhana, Chowpatty turned up only to be redirected to Wilson School four kilometres away. The venue could not accommodate the attendees.

A leading advocate said, “There should have been a register of investors who attended. Or they should send their representative with a signed proxy form. The minutes of the meeting should be properly recorded,” he said.

Senior inspector of V P Road police station V Patil cancelled the two other meetings planned by the company. saying they were illegal. “This is no way to hold a meeting for an important discussion. The company still hasn’t cleared our doubts,” said investor Sneha Kokate angrily.

Meeting Cancelled

The police have denied the City Group permission to hold a meeting with City Limouzines’ creditors on Thursday, after the poorly planned meeting of sister firm City Realcom’s investors on Wednesday.

As per high court directives, City Realcom was to hold the meeting at Wilson High school. Senior inspector V Patil of V P Road police station told TOI, “They simply dropped a letter in our drop box and expected us to be prepared for 10,000 people.” He added, “This meeting was against the law. We will not allow such a meeting again.” The police said City Realcom waited until the last moment to inform them, causing a major traffic snarl in South Mumbai. Company officials said they would approach the court and seek permission to hold the meeting on another date.

Confusion Over Venue

A month ago, on the directions of the Bombay high court, the City Group decided to hold a meeting at Garware Club in the first week of October. It then shifted the date to October 14 for investors of City Realcom and October 15 for those of City Limouzines. As per the Bombay high court’s directions, the promoters advertised that the City Realcom meeting would be held at Wilson High School. Three days ago the firm’s representatives said it would be at Wilson Gymkhana, Chowpatty. On Wednesday morning when investors gathered at the Gymkhana, they were told the meeting would take place at the school after all. “We’re running from pillar to post. Our plight gets worse day by day,” said M Mukherjee, an investor who had come all the way from Kolkata.

City Limouzine spills onto street, five executives arrested

The City Limouzine executives seem to have a knack for getting into trouble. A meeting of its investors, organised by the company on Wednesday, led to a three-hour traffic chaos on VP Road as 10,000 investors gathered at the Wilson School premises.

The police registered a case against five company executives for not taking the required permissions to hold such a meeting. Starting around 11am, the meeting led to traffic jams on and around VP Road. The local police had to call in state reserve police force and home guards to control the crowd and the traffic. The cops also made announcements on megaphones, saying that the meeting was cancelled.

"No police permission was given for this meeting," said Sanjay Mohite, deputy commissioner of police, Zone II. "The organisers had applied for permission to conduct a meeting at Wilson School, but their application was rejected. Yet they went ahead with the meeting. We were shocked to see such a huge crowd," Mohite said.

The Wilson School ground, where the meeting was held, was so packed with investors that some had to find space atop trees, and the boundary walls to listen to the City Limouzine officials. The investors came from all over the country. The high court had directed the company to organise a meeting of its investors after it triggered a controversy by allegedly cheating several thousand investors.

"As per the HC directives, a meeting was organised by the company officials. But they did not follow proper procedures. A representative of the company should have discussed with the police about the meeting and about the expected crowd. A case was registered against five persons, including company lawyer Virendra Maurya, finance manager and other company representatives. They have been placed under arrest," senior inspector Vilas Patil of VP Road police station said. Another meeting, scheduled for 3 pm on Wednesday, was cancelled.

"Normally, it takes not more than three minutes to reach Sikka Nagar from CP Tank. But today, it took more than 20 minutes to travel the distance. I had to reach Harkishan Hospital, but got stuck in the jam. I have never seen such a huge crowd on this road," said Rajiv Joshi, a garment dealer.