Date:29/09/2005 URL: http://www.thehindubusinessline.com/2005/09/29/stories/2005092902570300.htm

Back Mukta Arts moves HC against CLB order

Richa Mishra
Nithya Subramanian

New Delhi , Sept. 28

MUKTA Arts Ltd has approached the Bombay High Court against the Company Law Board (CLB) order, which allows the Government to further investigate into the affairs of the company regarding irregularities and violations of the Companies Act.

In its petition, the company has challenged whether the statement by the Government that Ketan Parekh Group of companies held certain shares of the company (without any concrete material to back the above fact) resulted in fraud. It also questioned whether this could be the basis for an order for investigation under the Act.

The company has further asked whether the CLB was justified in ordering investigation into the affairs of Mukta Arts, when the material placed before the board did not disclose any irregularities or any intention of the company to defraud its creditors or members or any manner oppressive to the members of the company.

Countering the allegation, Mukta Arts, in its appeal, has also questioned whether the CLB findings on the investment made by the company in the shares of certain listed companies without there being any material or other evidence to support or substantiate the same, was based upon extraneous and irrelevant considerations under the law.

The CLB had only recently said that the inspection conducted by the Ministry of Company Affairs had pointed to certain irregularities and violations of the Companies Act.

It is said that Mukta Arts had invested Rs 83.41 crore in the shares of certain companies, when entering the share market was not its main objective. The company has claimed that most investments have been made in the debt market.

Also, within two months, the authorised share capital of the company went up from Rs 50,000 to Rs 11 crore and thereafter to Rs 12 crore, the board had observed.

"The genesis of the huge investments made by the company in the share market, when it is not in that business, needed to be probed," the board said, adding that it was difficult to see from the documents placed on record whether there was any relationship in transactions with the Ketan Parekh Group (KPG) entities.