Liquidation Order
1. M/s Helios & Matheson Information
Technology Limited [for short, 'the Company'] having its Registered Office at
Mahindra World City carrying on the business of developing, producing and
selling computer, communication software, hardware and other related products
for clients in India and carrying on the business of providing training,
technical, manpower and other consultancy related to information technology to
both Indian and overseas clients, has the authorized share capital of Rs.
50,00,00,000/- consisting of 4,00,00,000 equity share of Rs.10/-.
2. From the materials available on record, it is
seen that the Company had engaged the services of financial brokers such as Bajaj Capital, Mahavir Group, Almondz
Global Securities Limited, Western Securities for mobilising fixed deposits
from the public on commission basis. In such transaction, the Company,
through its agents as well as directly from the public, had received a total
amount of Rs.55,25,70,000/- as deposits from 6540 depositors all over the country.
3. While
so, lot of complaints started pouring in regarding non-refund of the moneys
invested by the depositors. Despite the statutory notice issued by the
depositors and issuance of notice under the provisions of the Negotiable
Instruments Act demanding payment, the amounts remain unpaid. Hence, some of
the aggrieved depositors have approached this Court with the present petitions
invoking Section 433 (e) and 434(1)(a) read with Section 433(f) of the
Companies Act, 1956 for ordering winding up of the Company and for appointment
of Official Liquidator to take charge of the assets thereof.
4. Pending proceedings, on 01.4.2015, Economic
Offences Wing – II, Chennai, registered a case against the Company in Crime No.
5 of 2015 under Section 5 of the TNPID Act and 420 IPC. On investigation, the
authorities, finding that the Company failed to honour the promises made to the
depositors and defaulted without repaying the deposit amount and interest and
also finding that it has liabilities with Banks and depositors to the tune of Rs.245,02,03,434.82,
froze the accounts of the Company. The authorities also found that the company
is having business with a turnover
of Rs.448.95 Crores.
5. In such circumstance, the Company filed
petition under Section 482 Cr.P.C. in Criminal Original Petition No. 11760 of
2015 seeking for a direction to the authorities to de-freeze its accounts with various
Banks and also the accounts of the other petitioners and in such proceeding,
the said petition was clubbed with the main Company Petitions.
6. On
27.4.2015, this Court directed the respondent Company to submit a statement or
scheme of repayment for the depositors. Accordingly, the respondent filed a
memo on 29.4.2015 along with a repayment scheme to show the bona fide in settling all legitimate
dues of stakeholders and also to show that it has never been its intention to
defraud any person. Significantly, the said Scheme was subsequently revised by
the respondent Company by its affidavit dated 25.7.2015 in line with the new
provisions of the Companies Act, 2013.
7. Meanwhile,
the Company filed an application being C.A. No. 561 of 2015 seeking to accept
the schedule of re-payment under a Scheme drawn by them and this Court, by
order dated 03.6.2015, directed for publication in All India Edition of Times
with regard to the Scheme besides directing the Company to furnish copy of the
Scheme to the depositors on request. In view of the above proposal made by the
Company for settling the depositors, this Court also directed the Police to
proceed with further investigation into the complaints without affecting the
personal liberty of the individuals and adjourned the case to 13.7.2015.
Pending, another application was taken out by the Company in C.A. No. 624 of
2015 seeking for a direction to the Crime Branch, EOW – I, Division – VII of
State of Maharashtra, not to harass its directors and to abide by and follow
the directions of this Court in
the earlier order. Considering the facts and
circumstances of the case and taking into consideration the fact that the
earlier order passed on 03.6.2015, restrained the Police from proceeding
against the personal liberty of the individuals of the Company, this Court,
vide order dated 23.6.2015, clarified that the said order does not confine to Tamil
Nadu alone but it applies throughout the State wherever the depositors make a
complaint.
8. In the interregnum, the Company invoked writ
jurisdiction under Article 226 of the Constitution of India in W.P. No. 14664
of 2015 for declaration that registration of the above FIR was without jurisdiction
and the same was dismissed by order dated 06.8.2015. The challenge made in W.A.
No. 1227 of 2015 before the Division Bench also met the same fate on 28.8.2015.
9. When
the matter stood thus, serendipitously, even before the Hon'ble Supreme Court,
the Company in liquidation had obtained an order of protection on 24.9.2015 in
Special Leave to Appeal (Crl.) No. 7961 of 2015 by making a statement to the
effect that it is working out for a scheme to revive the Company to its
original shape. Again, the respondent tried its luck before the Hon'ble Supreme
Court in Criminal Appeal No. 1270 of 2015 wherein, Their Lordships, on 01.10.2015,
passed a conditional order to the effect that a sum of Rs.10 Crores should be
deposited within four weeks and the balance amount of Rs. 38 Crores within one
year from the date of order, in equal installments failing which proceedings
could be revived for taking coercive action. By virtue of the said order, with
a view to enable the investors to deposit money, certain accounts of the
Company in liquidation, were directed to be de-freezed by this Court vide order
dated 09.10.2015, with further observation that weekly statement of account
should be furnished. Again, the matter was called in the Hon'ble Supreme Court
on 30.10.2015 and because the Company had not yet met the deadline as mandated
by its earlier order, the Criminal Appeal itself was dismissed.
10. Since
the above direction of the Hon'ble Supreme Court dated 01.10.2015 was not
complied with, this Court, after hearing the Company Petitions extensively,
reserved orders on 30.10.2015. Thereafter, it is only at the instance of the
respondent company, based on the letter dated 04.11.2015 circulated by the
learned counsel, the matter was posted for clarification on 06.11.2015. On that
day, learned counsel for the respondent Company, besides expressing hope in
honouring the debts, with a view to show his bona
fide, produced two Demand Drafts for a sum of Rs.5
Crores and Rs.50 Lakhs, which are lying in the credit of C.P. Nos. 143 to 145
of 2015 and the matter stood adjourned to 20.11.2015 for further clarification.
After payment of the said amount of Rs.5,50,00,000/- as against the conditional
order to deposit Rs. 10 Crores, the respondent Company, somehow or other,
managed to drag on the matter. In fact, learned counsel for the respondent
company repeatedly requested for time representing across the bar that the
Management is willing to settle the dues of the depositors but the promises
made were not kept up by paying the amounts as per the earlier direction.
11. While
so, on 18.12.2015, the respondent Company has filed a memo stating that
properties, which are secured assets, standing in the names of the wives of the
Directors were sold by them and the proceeds, after settlement with the
concerned Banks, were deposited to this Court.
12. Simultaneously,
the Investigating Officer, viz., the Deputy Superintendent of Police, EOW – II,
has filed Status Report on 18.12.2015 to the effect that the respondent Company
received a sum of Rs.55,25,70,000/- as deposit from 6540 depositors all over
India of which, 1046 depositors have lodged complaints against the Company before
EOW to the tune of Rs.46,04,42,000/- throughout the country and the interest
defaulted by the company is totally to the tune of Rs.72,81,667/- to the
depositors. It is further stated in the report that by virtue of the orders of
this Court dated 03.6.2015 and 23.6.2015 in C.A. No. 561 of 2015 not to arrest
the Directors, some of the Directors, who are A.4 to A.6, have not appeared for
interrogation and not co-operated for investigation. For effective
investigation to protect the interest of the depositors, the Investigating
Officer also sought for setting aside the above orders dated 03.6.2015 and 23.6.2015
passed in C.A. No. 561 of 2015.
13. At
this juncture, this Court finds it necessary to mention that during the course
of proceedings, the learned counsel for the respondent Company also submitted
that the Management could generate funds from the subsidiary Company
functioning in New York but not even a whisper is made regarding the details of
the same. The respondent Company, on more than one occasion, though promised to
repay the depositors in a phased manner, has not so far disclosed the full
details regarding the source of funds for such repayment. Nor the whereabouts
of the deposits received is exposed. On
the other hand, the respondent only attempted to deviate and confuse the entire
issue by submitting a revised scheme, which is clearly unworkable. The attitude
of the respondent Company by repeatedly making representations and requesting
time before this Court as well as the Hon'ble Supreme Court reveals that the Management
has acted in a surreptitious manner so as to purchase breathing time to sell
the properties. It is also pertinent to note that the respondent Company,
undaunted by the pendency of several proceedings before various Courts across
the country, has gone to the extent of selling the properties clandestinely
subsequent to the orders, ie., on 24.11.2015 and 06.11.2015. The said act of
selling the properties shows that the respondent Company has no respect for the
Court orders and it is not only flagrant violation of the orders of this Court
but is also contumacious. At the worst, they ought to have deposited the entire
amount to the credit of the petition. The reason given by the learned counsel
that the said properties were secured assets, does not seem to be genuine. No
one can be allowed to play hide and seek with the Court.
14. Paragraphs
4 and 5 of the Status Report filed by the Investigation Officer speak about the
sale of the two properties and disbursement of the sale proceeds. It is seen
that the property standing in the name of Tmt. Annapurna, W/o A-2 G.
Muralikrishna, was sold for Rs. 11 Crores whereas a sum of Rs. 1 Crore only was
paid to the credit of this case. The break-up of the disbursement would show that
a sum of Rs. 1,45,00,000/- was paid towards Advance Tax and it has been shown
as if some repayment of loans was paid for which no proof is produced.
Likewise, the other property belonging to one Tmt. Padmaja, W/o A-7 V.
Ramachandran, has been sold for Rs.15 Crores of which, an amount of Rs. 5
Crores alone was paid to the credit of the petition. In that sale also, a sum
of Rs.1,50,00,000/- has been paid towards Advance Tax. In both the sales, an
amount of Rs. 14 Lakhs and Rs. 54 Lakhs respectively is shown as balance and
the same stands undisputed.
15. It
cannot be denied that payment of Advance Tax is statutory. But, in the
circumstances of the given case, this Court is of the opinion that the payment
of Advance Tax of Rs. 2,95,00,000/- could have been deferred. Further more, the
balance amount of Rs.68 Lakhs has not been brought to the knowledge of this
Court by the respondent. Going by the records, it is seen that had the above amount
of Rs. 3,63,00,000/- been pumped in, some of the depositors could have been
cleared. Therefore, it is clear that there is no bona fide in the attitude of
the respondent.
16. The
failure of the respondent Company to refund the deposits made with them, has,
indeed, led to public outcry against the scam on account of the huge amount
that was collected by the respondent by defrauding a very large section of the
public. From the status report, it is clear that the problem is extremely
complex. But inspite of long rope given to them, the company in liquidation, though
consistently defending to be a growing concern, has not arrived at any
settlement.
17. Therefore,
it is construed from the available facts and circumstances and the documents
produced before this Court that the respondent Company has become commercially
insolvent and it is unable to clear its dues to the petitioners herein and
other depositors. Obviously, in the considered opinion of this Court, the
Company has siphoned off the funds and it appears that the respondent company
is unreliable and it cannot be believed any further.
18. Insofar
as the appointment of Official Liquidator is concerned, indisputably, it is
clear that the Company does not own any tangible assets and even the
intellectual properties such as books and papers, have already been taken by the
EOW. However, it is seen that despite several coercive proceedings, the Company
has been functioning and the employees are said to be paid by their clients. But
the continuous assurances by the respondent Company before the Court of law is
a clear indication that the Management continues to indulge in prevarication
and is using technical jargons to defeat the rights of the depositors.
Therefore, to meet the ends of justice, this Court is of the view that it is
inevitable to appoint Official Liquidator to take over the affairs of the
respondent Company so that monies which are truly realizable are not frittered
away by further siphoning of the funds.
19. In
view of the veracity involved in the case, I am of the opinion that the
petitioners have made out a prima facie case for admission of the Company Petitions. In such circumstance,
this Court is left with no other option but to pass the following common order
in all the above Company Petitions:-
Admit.
(i) Notice
on the Court Notice Board / Company.
(ii) Notice
to the respondent.
(iii) Notice
to the Registrar of Companies, Chennai
(iv) Affixture
of notice at the premises of the Registered Office of the respondent Company.
(v) The petitioners are directed to publish the
Company Petitions in the National Editions of “THE HINDU” and “NEW INDIAN EXPRESS”, and in the Central (Tamil Nadu) Government Gazette
fixing the date of hearing on 18.03.2016.
(vi) The petitioners are directed to publish the
Company Petitions giving at least 21 days clear advance notice.
(vii) The
Official Liquidator, High Court, Madras, is appointed as Provisional Liquidator
and is directed to take charge of the assets of the respondent Company. The
Ex-Directors of the respondent Company are directed to file their statement of affairs
before the Official Liquidator within a period of 21 days.
20. Promises
are like crying babies in a theater, they should be carried out at once. The
Scheme sought to be proposed, in the instant case, seems to be an eyewash and
the attempt of the respondent Company to conceal, swallow its words and representations
cannot be permitted since it is a deliberate attempt to hoodwink and bypass the
Court orders. This Court is also of the opinion that vast amount may have been
stashed away. Keeping in view the seriousness in the allegations and having
regard to the nature of fraud involved and the investigation, its slow pace so
far, and also the non-seriousness on the part of the respondent Company, this Court
is of the considered opinion that there is a need to entrust this matter to the
Serious Fraud Investigation.
21. Accordingly,
this Court suo motu directs the Ministry of Corporate Affairs to direct the Serious Fraud
Investigating Office to inquire into the affairs of the respondent Company and
the Serious Fraud Investigating Office is directed to file a report before this
Court on or before 18.3.2016.
22. Consequent
upon passing of such order as above in all the above Company Petitions, the
remaining applications pending in these petitions are closed.
C.P. Nos. 143 to 145 of 2015, 414 to 416 of 2015
So Now SFIO is investigating the fraud done by company
Official liquidator attached to High Court of Chennai appointed
Thanks & Regards
Dr. Zulfiqar Ali Khan, M.A., M.L.,M.Phil(Law),Ph.D
Advocate & Commissioner of Oaths
No. 462, Addl law Chambers
High Court of Madras
Chennai- 600 104
MB: 9884102961 / 9444412961
