Ackruti to face action for company law violations

Ackruti to face action for company law violations

New Delhi: The government is likely to initiate prosecution against Mumbai-based realty firm Ackruti City Ltd in a case involving loans given to other companies, an official of the corporate affairs ministry said.

The proposed prosecution revolves around violations of Section 295 of the Companies Act, 1956, the official said on condition of anonymity.

Section 295 deals with loans given to directors and other companies. It is alleged that Ackruti City gave loans to other companies in which its directors were interested, without seeking the required approvals from the central government.

Ackruti City could not be reached for comments on the matter.

The allegations follow an inspection report of the Registrar of Companies (RoC), an arm of the corporate affairs ministry that oversees registered companies in India. The ministry had ordered an inspection into Ackruti’s books of accounts in February. The inspection was based on the RoC’s preliminary findings that there were prima facie violations in Ackruti’s balance sheets till the period to March 2008.

The RoC’s inspection revealed that Ackruti violated Section 295 on eight separate counts. The ministry is of the view that the company be prosecuted on four of these instances, said people familiar with the matter, who declined to be named.