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Nine phantom firms in east face prosecution

New Delhi, Aug. 22: The hunt has begun for nine boomtown rats in Bengal, Bihar and Jharkhand who raised funds from the market in the glory days of the nineties and skedaddled leaving investors in a lurch.

The department of company affairs (DCA) has started prosecution of the companies that include S.K. Kothari-promoted Kiev Finance, Sandip Kedia-owned Esskay Telecom, and D.P. Gupta-managed Ambuja Zinc (which bears no relation to the Gujarat Ambuja group) which have been charged with embezzling shareholder funds.

Five of these companies are from Bihar and Jharkhand and four from West Bengal. The four companies in West Bengal include Kiev Finance, Esskay Telecom, Ambuja Zinc, Commitment Finance Limited and Oriental Remedies & Herbals Ltd.

These companies feature on the list of 229 vanishing companies that was drawn up by the Securities and Exchange Board of India (Sebi) last year.

The defaulters named in the case of Commitment Finance Ltd are Rajendra Kumar Kishanpuria, Manoj Kumar Modi and Laxmi Narayan Aggarwal. The defaulters in Oriental Remedies & Herbals Ltd are Piyush Aggarwal and his wife, Nagarmal Aggarwal, and S. Talwar.

The prosecution against Ambuja Zinc Ltd was filed on July 17 this year. For Kiev Finance Limited as well as Esskay Limited the date is June 18 this year.

Kiev Finance has been charged with lower utilisation of funds than the projected amount in the issue prospectus and an increased investment in leased and current assets which amounted to violations of sections 63, 68 and 628 of the Companies Act.

Esskay Telecom has been put in the dock for violations of the same sections. The gist of the violation against this company states that the company did not utilise the funds for the purpose for which it was raised and this has been specifically mentioned in the director’s report for the subsequent year. The names of the directors/ officers in default in the case of Esskay Telecom Limited, which has its registered office on Ganesh Chandra Avenue, Calcutta, are Sandeep Kedia, Dilip Kumar Aggarwal and Deepak Patwari.

The names of the directors/officers in default in the case of Kiev Finance Limited are S.K. Kothari and Nirmala Kothari whose address has been given as 23/24 Radha Bazaar Street, Calcutta and SN Saha who has his address at 58, Southern Avenue, Calcutta. The other directors/officers in default from this company have their addresses in Mumbai.

The cases for prosecution have been done in the office of the chief judicial magistrate. DCA had constituted seven task forces regionwise, including the four metros, to identify the vanishing companies. The regional directors/ registrar of companies were made convenors and there were representatives of Sebi and bourses as members.

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