TaxTMI 
TaxTMI 
2016 (7) TMI 1617
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....ing Accounts, present. P.C. : 1. The Petitioner is a Trustee in respect of Foreign Currency Convertible Bonds of a value in excess of Rs. 1,000 Crores, due in 2013, issued by Geodesic Limited ('Geodesic'). The above Petition relates to failure on the part of Geodesic to redeem an amount of US Dollars 157,064,251 of the US Dollars 125,000,000 Zero Coupon Convertible Bonds, on the maturity date i.e. 18th January, 2013, which failure is more particularly set out in the Company Petition, and the documents annexed thereto. 2. The Petitioner being the Trustee for the bond-holders, had filed the present Company Petition. The Petitioner filed Company Application (L) No. 645 of 2013 and moved this Court by way of a precipe on 12th December, 2013 seeking interim reliefs. On 12th December, 2013, the Counsel appearing for Geodesic made a statement, which was by consent, corrected on 19th December, 2013 and which reads as under : ". ..... 2. .... "3. The learned counsel for the respondent on instructions states that the monies in the accounts of overseas subsidiaries of the respondent Company (being above Rs. 1,000 crores) is still being kept in deposit. In case the order pass....
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....y 2014. Given the dire financial straits in which this respondent company seems now to flounder, the affidavit raises distressing questions. Who is this Audrain Commercial Corp of Belize? Why was it thought to be worthy of such a loan and at this rate of interest in 2012? The second sentence of paragraph 6 only exacerbates matters: "6. ... Say that the said loan was given in respect of certain projects which may generate business worth approximately 5060 million US$ and this was purely by way of a strategic investment made by Emiloto". 4. There are so many problems with this statement that it is hard to know where to begin. Which projects these might be we are not told. Has any business at all been generated, and if so in what volumes? This, too, is left to our imagination. This socalled strategic investment must surely have been known to the deponent of this affidavit as also the person who gave instructions on 3rd April 2014. Yet, this Court was told that the amount was in an investment account with HSBC Zurich. 5. This is not the first time that this has happened. The order of 19th December 2013, annexed at Exhibit "2" to Company Application (L) No. 153 of 2013, too sho....
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....d out to be incorrect. 12. The Company must be held to its word, not once but twice given to this Court. It cannot be permitted to play ducks and drakes with the Court in this manner. Nor it can be allowed to do so with its bondholders. ... 14. I must, in fairness, note Mr. Khandeparkar's submission that compliance with the deposit order will not be possible without affecting the rights of other creditors (he mentions Axis Bank). To my mind, that is wholly irrelevant. I am not concerned here with these other creditors. Nor can that be a valid consideration. This is a situation of the respondent company's own making. The order I have made may seem drastic, but I believe that is necessary for two reasons. The first, of course, is to protect the interests of bondholders. But that could and might have been achieved in other, less stringent terms, had the company been more straightforward with this court. The second reason is, I believe, one of paramount importance and that is to ensure the sanctity and integrity of orders of this court, and of statements made to and recorded by it in those orders. Our orders will be respected. They will be treated with sanctity. Statements mad....
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....hree overseas subsidiaries viz. GTSL, Zomo and Emiloto, at the earliest. However, the Director of the Geodesic failed to give inspection / documents as agreed and it was obvious that Geodesic had intentionally given a wrong impression to the Court, that the information sought by Grant Thornton was available at its Registered Office, and thereafter stated that the said information was not available at the Registered Office of Geodesic. 8. In the light of all that had transpired, and after going through the documents and correspondence placed on record, this Court by its Order dated 27th June, 2014 was constrained to note the dishonesty of Geodesic and its Directors, as also their failure to comply with the earlier Orders of the Court. This Court thus, recorded as under : "The claim of the Petitioner in the above Company Petition against the Respondent is in excess of Rs. 1000 Crores. Mr. Dwarkadas, the Learned Senior Advocate appearing for the Petitioner has taken me through all the orders passed by this Court till date. From the said orders, more particularly the order passed by this Court (Coram : G.S.Patel, J.) dated 7th April, 2014, it is clear that the Directors of the Co....
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....irectors of Geodesic breached all promises / undertakings given by them to the Court. 12. In the course of these proceedings, the Court repeatedly observed that various documents which show the trail of the monies which are claimed to have been invested by the overseas subsidiaries, have been suppressed from this Court. 13. On 5th May, 2015, Avista filed a Report, on the basis of inspection of documents and electronic records collected / recovered from the SEEPZ Office of Geodesic. In the said Report, a reference was made to various documents signed by one Mr. Dinesh Jajodia in his capacity as a Director of one Yvette Investments Limited ('Yvette') to whom a loan of US $ 7 million appears to have been given by one Enterprise Emerging Markets Fund ('EEMF'), in which Geodesic Technology Solutions Limited (GTS) is claimed to have invested. The said Report along with documents produced, reveal that Mr. Dinesh Jajodia claimed to be the beneficial owner of Geodesic and Zomo Technologies Limited (Zomo) and appeared to be deeply involved in the transactions pertaining to GTSL and Zomo, as set out in the Report. Mr. Dinesh Jajodia was therefore asked to remain present before the Court....
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.... as may be required by SEBI. The Advocates for the Petitioner shall forthwith communicate this order to SEBI. (ii) This above order does not in any manner prevent Avista from continuing its own independent enquiry, and does not in any manner modify or alter the earlier orders passed by this Court or the undertakings given by Geodesic/its Directors to this Court from time to time. (iii) The Official Liquidator is directed to forward a copy of this order to the Institute of Chartered Accountants of India, along with the documents taken on record and marked X-2 (colly) X-3 (colly) and X-4 (colly) respectively. The Institute of Chartered Accountants of India is at liberty to institute appropriate action, as it may deem fit against Mr. Dinesh Jajodia, in accordance with law. (iv) The Petitioner/ICICI Bank Ltd./Avista are individually entitled to furnish to Geodesic and/or Mr. Prashant Mulekar and/or Mr. Kiran Kulkarni and/or Mr. Pankaj Kumar a list of interrogatories. Geodesic and/or Mr. Prashant Mulekar, Mr. Kiran Kulkarni and/or Mr. Pankaj Kumar undertake to this Court that they will duly answer the interrogatories and submit their responses within 2 weeks of receiving the sa....
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....irst Proviso to Section 2(1) of the Prevention of Money Laundering Act, 2002 and stated that the Enforcement Directorate is willing to investigate and take action, if after the investigation, an FIR is filed by the EOW. 19. On 20th August, 2015, pursuant to the directions issued by this Court, SEBI too filed its Affidavit inter alia stating that the Directors of the Respondent Company failed and neglected to furnish complete details pertaining to utilization of the proceeds raised from the issuance of Foreign Currency Convertible Bonds ('FCCB'), which led SEBI to form a prima facie conclusion that the Respondent Company did not have sufficient funds to buy back its Shares and / or issue dividend to its Shareholders. In this regard, SEBI reached a prima facie conclusion that the Respondent Company made fraudulent announcements to its Shareholders with an intention of manipulating the price of the scrip of the Respondent Company, which is listed on the Bombay Stock Exchange and the National Stock Exchange. SEBI further stated that a complaint ought to be filed with the Economic Offences Wing, State Police (EOW) to have the matter specially investigated with regard to the utilization ....
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....ioner of Police (EOW), M. Khanna Road, Crawford Market, Dhobi Talao, Fort, Mumbai - 400 001 shall submit a compliance report to this Court in a sealed cover within six weeks from the date of this order. It goes without saying that the EOW is at liberty to take assistance from all concerned authorities, banks, other institutions and parties which shall render full cooperation. The EOW is also at liberty to approach this Court for any directions/orders required to give effect to this Court." 22. Pursuant thereto, the Joint Commissioner of Police, Economic Offences Wing (E.O.W.), Mumbai has filed his Affidavit before this Court dated 22nd December, 2015. Paragraphs 15, 16 and 17 of the said Affidavit are relevant and reproduced hereunder : "15. I say that prima facie it is evident the said 3 Directors of the Respondent hatched a criminal conspiracy with the said Dinesh Jajodia, the purported Tax Consultant of the Respondent to cause wrongful gain for themselves and wrongful loss to the shareholders and the FCCB holders, siphoned off funds of the shareholders to the tune of Rs. 250 crores by showing bogus purchases of software and failed to redeem Foreign Currency Convertible Bon....
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....c offence having deep-rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as a grave offence affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country." (emphasis supplied) 26. In view thereof, a request was made to the Joint Director, Enforcement Directorate and the Joint Commissioner, EOW to remain present on 14th July, 2016 at 11.00 a.m. when the matter was placed in Chambers. 27. Today, this Court in Chamber, initially in the presence of all Advocates explained the importance of the role of these responsible high ranking officers, in a matter of this magnitude, which, borrowing the words of the Hon'ble Supreme Court, needs to be viewed seriously, and is considered as a grave offence, affecting the economy of the country as a whole, thereby posing a serious threat to the financial health of the country. This Court also pointed out to the Officers (of the ED & EOW) that though the Court appreciates the efforts made by the Agencies headed by them in tracing the funds, the creditors of the Company have till date been unable to even see a ray of hope as far....