Corporate affairs ministry moves NCLT to reopen CG Power books for FY15-19

Industry:    2019-11-26

The Corporate Affairs Ministry on Friday approached the National Company Law Tribunal (NCLT) seeking to reopen the financial statements of CG Power & Industrial Solutions on the basis of the company’s announcement on the exchange about financial irregularities.

On Monday, the government moved the NCLT to reopen and recast accounts of CG Power for the past five years to ascertain the actual position of its accounts including receivables from the companies linked to erstwhile promoter Gautam Thapar.

“The central government is seeking to appoint an independent auditor to get a clear picture of the company’s finances,” argued Sanjay Shorey, director of legal prosecution at the Ministry of Corporate Affairs (MCA). “The matter has already been assigned to the Serious Fraud Investigation Office (SFIO) for further investigation.”

The counsel for the government further argued that one of the auditors of the company, Chaturvedi & Shah, had resigned from the company, that’s when the entire case became clearer and subsequently, the board took the decision to appoint a law firm to do a forensic investigation into the matter.

“There are prima facie instances of related-party transactions in a fraudulent manner and hence we are seeking the reopening of accounts under Section 130 of the Companies Act,” argued Shorey. The government is seeking the reopening of accounts beginning FY2015. This is the second firm after Infrastructure Leasing and Financial Services and two of its units where the central government is seeking such action.

Zal Andhyarujina, an advocate for the current board of CG Power, argued that Gautam Thapar has been removed from the board of the company, and along with the company, the Securities Exchange Board of India (Sebi) and lenders of the company are also investigating the affairs of the company.

After hearing from the counsel for the company and Thapar, the tribunal granted them one week to file their response in the case and subsequent three days for the MCA to file their rejoinder in the reply. The tribunal now will hear the matter on December 16.

Earlier, in an exchange filing, the company stated that a total of Rs 3,018.62 crore was receivable from “various promoter affiliated companies and connected parties.”

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