Richa Mishra

New Delhi , July 22

THE little master Sunil Gavaskar could be pushed on the back-foot this time. The Ministry of Company Affairs is closely monitoring the case of the vanishing footwear company Top Line Shoes Ltd, where Gavaskar's name figures in a police complaint filed by the Registrar of Companies (RoC), Ahmedabad, against the company.

The Ministry has sought details on the matter from the RoC. "A celebrity has to be extra cautious, as it is his or her name that plays a major role in luring the investors to put their money in the company," the Minister for Company Affairs, Mr Prem Chand Gupta, said.

Elaborating further, the Minister told Business Line that, "once a person becomes a signatory to the prospectus and the money has been raised using his name, then even if the individual resigns, he cannot be absolved of his responsibility."

In fact, the Ministry has been working closely with other regulatory authorities in trying to trace such companies, which have vanished after raising money from the market.

Meanwhile, the RoC has already initiated action against the company and its six directors for disappearing after raising Rs 4.65 crore through a public issue.

It had named Sunil Gavaskar as one of the six directors. Sources close to the cricketing legend told Business Line that Gavaskar was not even an executive director in the company. However, they confirmed that he was invited to join the board of the company.

Sources said that it was not the promoters who had siphoned off the money, but the company was let down by the banks, who did not sanction money.

The names of some of the other directors are Mr M.M.G. Moorthy, Mr H.M.B. Moorthy, and Mr Vinod Mistry. The company had floated the IPO of 46.5 lakh shares at the rate of Rs 10 each in 1992.

The RoC has filed the complaint for violations of Sections 62, 63, 68 and 628 of the Companies Act. Section 62 provides for civil liability for mis-statement in prospectus.

As per the Section, where a prospectus invites persons to subscribe for shares in or debentures of a company, the following persons, including a director of the company at the issue of the prospectus, would be liable to pay compensation to every person who subscribes for any share or debentures on the faith of the prospectus for any loss or damage he may have sustained by reason of any untrue statement included therein.

While Section 63 provides for criminal liability for mis-statement in prospectus and Section 68 stipulates penalty for fraudulently inducing persons to invest money.

Section 628 prescribes for penalty for false statements.

According to sources, the shareholders have also complained to the capital market regulator, the Securities and Exchange Board of India.

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