| Gavaskar: In trouble
Ahmedabad, July 15: Cricket legend Sunil Gavaskar has been sucked into a scandal involving a “vanished company” — a venture that raises money from the public and fades away without paying any return.
A criminal case has been registered against Gavaskar and four others accusing them of defrauding investors by paying no dividend after raising Rs 4.65 crore through a public issue to float a leather and sports shoes company in 1992.
The complaint was registered with police by the assistant registrar of companies, P.G. Meena, when many shareholders cried foul after the capital markets watchdog, Sebi, declared the company, Topline Shoes, as “vanished”.
Gavaskar and the rest of the accused were directors of the company, which has an office in Vadodara. Induction of celebrities on company boards is a time-tested strategy used by promoters to win investors’ trust.
When the Gavaskar residence in Mumbai was contacted, Manohar Keshav, Gavaskar’s father, took the call. “This is all news to me,” he said. He added that he could comment only after going through the details of the FIR.
However, Manohar Keshav added: “If you ask me, Sunil has not done anything in his entire life which is illegal.”
Gavaskar’s father lives in Pune but was in Mumbai today to attend a physiotherapy session. Gavaskar is in Sri Lanka in connection with the Asia Cup, which begins tomorrow.
This is the second time one of India’s greatest cricketers has been embroiled in a controversy involving money. About Rs 7 lakh in Indian and foreign currencies had tumbled out of Gavaskar’s locker in Bombay Gymkhana in 1999.
The case in Vadodara has been registered under Sections 420, 406 and 409 of the IPC which deal with criminal breach of trust and cheating. The maximum punishment in cases under these sections is life imprisonment.
The public issue of 46.5 lakh shares of Rs 10 each opened on July 10, 1992, and closed on July 20, raising Rs 4.65 crore and the amount was never refunded to investors, the police said.
Vadodara police commissioner Sudhir Sinha said the funds raised from the public were not used to meet the ends mentioned in the prospectus.
The police said they would initiate investigations after studying the documents provided by the registrar of companies.
Sebi has listed Topline Shoes as one of the 229 firms that have vanished in the country. Sebi officials in Mumbai recalled that there were 103 complaints registered against Topline — mostly about non-receipt of share certificates — and it was ranked 28 on the watchdog’s rogue list.
Topline’s key promoter, H.M.G. Murthy, was considered a successful exporter and a good credit risk by his bankers. But he ran into trouble when two public sector banks stopped all disbursements without any explanation. Five years later, Murthy is still battling recovery proceedings started by the banks.
In the Topline controversy, one of the banks filed cases with the CBI and the CID against the company. But the firm was exonerated in both cases.
On finding that Topline had disappeared soon after raising public funds, the investors lodged a complaint with Sebi against its promoters. Sebi directed the department of company affairs and the regional registrar of companies, Ahmedabad, to take action.
A case was filed against the promoters in a Vadodara court, which issued a showcause notice to the directors in June 2002. A reply never came.
When some investors again approached Sebi recently, it advised that a case be filed against the accused to expedite the legal proceedings. The assistant registrar of companies then lodged the FIR against Gavaskar and the others.