NCLT Allows Plea To Reopen CG Power’s Accounts

The National Company Law Tribunal allowed the government’s plea to reopen accounts of CG Power and Industrial Solutions Ltd. to probe alleged fraud in the last five fiscals when the maker of power industry equipment was controlled by Avantha Group founder Gautam Thapar.The NCLT gave permission to review accounts for 2014-15 to 2018-19, according to an oral order by a bench comprising Judicial Member BP Mohan and Technical Member Rajesh Sharma. The tribunal also directed the Ministry of Corporate Affairs to initiate action against the company officials, past and present, if found guilty after the investigation.The ministry and the Serious Fraud Investigation Office, however, will have to conduct a separate investigation and not solely rely on the findings of an independent law firm, according to the order.The ministry had approached the NCLT to reopen the books citing alleged understatement of the liabilities, loans to related and unrelated parties and that its former employees had offered the power gear maker’s assets as collateral against loans without an authority. These were first flagged by an external investigation ordered by the company’s board after lenders took control from Thapar.Ministry’s ArgumentsTo reopen the books, the ministry said:The law says reopening of accounts and recasting of financial statements can be done against an application filed by any regulator or the Ministry of Corporate Affairs.CG Power’s board admitted that the financials were understated.Inspection report after an investigation by the regional director in September highlighted allegedly fraudulent transactions in CG Power. There was also a need for further investigation.Market regulator SEBI had taken cognizance of disclosures made by the board of the power equipment maker in its order against the promoters last year.The company had made a prima facie case for reopening of the accounts; the shareholding of promoters was totally diluted, which provided them no ground to challenge the application.The ministry moved the application seeking reopening of the books for the past five years and appointment of an independent auditor.Thapar’s CounterThapar opposed the reopening of accounts citing that the ministry relied on an external law firm’s report to initiate the proceedings. Reliance on a third-party report was not in accordance with law, his counsel had said.

NCLT Allows Plea To Reopen CG Power’s Accounts

The tribunal allowed the government’s plea to reopen accounts of CG Power and Industrial Solutions to probe alleged fraud.

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NCLT Allows Plea To Reopen CG Power’s Accounts

The tribunal allowed the government’s plea to reopen accounts of CG Power and Industrial Solutions to probe alleged fraud.

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