New Delhi: The ministry of corporate affairs, or MCA, has ordered an inspection of the books of accounts of two front companies associated with former Jharkhand chief minister Madhu Koda, according to two officials at the ministry. Some other companies linked to Koda or his associates are also being watched by the ministry.
Koda is in jail, facing trial for allegedly diverting state funds to some overseas companies, mainly in West Asia. The independent legislator was chief minister of Jharkhand between 2006 and 2008.
MCA’s regional director for western India has been ordered by the ministry to conduct an inspection of two companies, Natraj Financial and Services Ltd and Luxury Exports Pvt. Ltd, under section 209 of the Companies Act, said a senior MCA official who didn’t want to be identified given the sensitive nature of the case.
The official said some other front companies such as Balaji Bullion were being closely watched..
“If need be the ministry may also order an inspection of this and some other companies,” added the official cited above.
In October 2009, Koda was charged with laundering money estimated at over Rs4,000 crore. Nationwide raids by the Enforcement Directorate (ED) revealed assets allegedly worth one-fifth of the annual budget of the state he once governed.
Under section 209 of the Companies Act, the government orders inspection of books of accounts and relevant documents. Company executives are required to cooperate with officials carrying out the inspection and produce documents that are sought.
Fresh trouble: Former Jharkhand chief minister Madhu Koda is facing trial for allegedly diverting state funds to some overseas companies. PTI
“The idea is to find out whether there has been a violation of the Companies Act. The case may be referred to Serious Fraud Investigation Office (SFIO) if the ministry finds grave violation of the Companies Act,” added the second official.
Though SFIO does not have prosecuting powers it can recommend a case for prosecution to the courts and other prosecuting bodies.
Natraj Financial, with authorized capital of Rs15 crore, has been promoted by Koda’s close associates Manoj Punamiya, Binod Kumar Sinha and Jay Narayan Choudhary, according to information accessed through MCA’s website. Luxury Exports has been promoted by Punamiya and Hastimal Nathumal Khandelwal.
Both the companies are registered in Mumbai. Balance sheets of both companies have been updated for 2009, according to the MCA website.
Punamiya and Arvind Vyas, another aide of Koda, were arrested on 11 August by ED, which investigates foreign exchange violations, PTI reported. On 12 August, they were sent to 14 days’ judicial remand by the Prevention of Money Laundering Act court in Ranchi.
ED’s special prosecutor S.R. Das said the two accused had acquired Rs700-800 crore through hawala transaction and bought several properties in foreign countries.
Punamiya is also the chief executive officer of Balaji Bullion.
Corporate lawyer Akil Hirani, managing partner at Majmudar and Co., said MCA has the powers to seek detailed inspections of the books of companies that it deemed to be of dubious background.
“And sometimes it (MCA) may come up with startling revelations,” he said. “Although I can’t comment as to what will happen in this case, such inspections have helped solve economic offences in the past.”