Illegal payments to the extent of ₹135 crore to various political functionaries of Kerala State and certain other entities, including Exalogic Solutions Pvt. Ltd., a company owned by Veena T., daughter of Kerala Chief Minister Pinarayi Vijayan, by Cochin Minerals and Rutile Ltd (CMRL) necessitated a probe by the Serious Fraud Investigation Office (SFIO) in public interest, the Ministry of Corporate Affairs (MCA) told the High Court of Karnataka on Monday.
A statement in this regard was submitted before the court during the hearing on a petition filed by Exalogic, which has questioned the legality of the initiation of a probe by the SFIO under Section 212 of the Companies Act even before the conclusion of an ongoing probe into the affairs of the company under Section 210 of the Act through the Inspectors of the Registrar of Companies (RoC).
‘An offence of such scale and grave nature that directly affects public interest would definitely merit an investigation by the SFIO, which is a multidisciplinary agency,” it has been contended in the statement.
Order reserved
Justice M. Nagaprasanna, who heard the arguments by senior advocate Arvind P. Datar on behalf of the Exalogic and Additional Solicitor General of India Arvind Kamath on behalf of the MCA, reserved the order on the petition.
Further, the MCA has alleged in the statement that Exalogic has “not come to the court with clean hands” and has “tried to mislead the court by making various incorrect statements.”
Pointing out that the enquiry against Exalogic commenced based on a complaint received in November 2020, the MCA has stated that the first notice was issued to the company way back on January 29, 2022. So far, necessary documentation sought in respect of the “purported software services rendered by Exalogic to CMRL” for receipt of ₹1.7 crore was not forthcoming from the company.
Seamless access
The interim status report, dated January 30, 2024, submitted by the Inspector of RoC, has recommended an investigation by the SFIO, as the Inspectors of RoC have no power to access the income tax documents that are necessary for the probe from the Central Board of Direct Taxes (CBDT). The SFIO is a designated authority to seamlessly access the income tax documents, available with the CBDT, seized during the searches conducted by the I-T authorities on CMRL and other entities, the MCA has stated.
The MCA has also said that it has not granted sanction for prosecuting Exalogic and its directors even though the inquiring officer of the RoC has recommended in the report for grant of sanction for serious violations, including for violation of the Act on “disclosures on related party transactions.”
‘Dormant company’
Exalogic had suppressed the facts on inquiry being pending against it by making a “fraudulent declaration in the dormancy application stating that ‘no inquiry/investigation/inspection was pending” against the company as dormancy status cannot be obtained during pendency of such proceedings, the MCA stated, while pointing out that it had obtained the status of dormant company in December 2022.
Exalogic was a ‘one person company’ incorporated in the year 2014 with RoC, Bengaluru and represented by its director-shareholder, Ms. Veena, who is a qualified software engineer, it has been stated in the petition.
