The Madras High Court last week ordered liquidation of H&M and announced appointment of an official liquidator. The hard-hitting order noted that the company had siphoned off funds, appears unreliable and 'cannot be believed any further'. It has directed an investigation by the serious frauds office
A tough order of the Madras High Court, on 21 January 2016, appointed an official liquidator to take over affairs of Helios & Matheson Information Technology Ltd (H&M) and to prevent the company from further siphoning of funds collected from investors. The Court also asked the Ministry of Corporate Affairs (MCA) to direct Serious Fraud Investigating Office (SFIO) to inquire into the affairs of H&M and submit its report by 18 March 2016. This means, nearly 10 years after Moneylife began to highlight problems with H&M's management and reporting practices, this Court order is the first serious indictment of the company by any regulator. Interestingly, there is no information with the stock exchanges and its shares continued to trade above par even after the order. The price was Rs11.22. H&M hit the lower circuit on Monday, even without official information in the market. But even at 5% down at Rs10.99, it astonishingly traded above par value and hit a high at Rs12.05 on the BSE.
"...the continuous assurances by the respondent Company before the Court of law are a clear indication that the Management continues to indulge in prevarication and is using technical jargons to defeat the rights of the depositors. Therefore, to meet the ends of justice, this Court is of the view that it is inevitable to appoint Official Liquidator to take over the affairs of the respondent Company so that monies which are truly realizable are not frittered away by further siphoning of the funds," the HC said in its order.
Chennai-based Helios and Matheson, an unfancied software company, has been defaulting on repayment to its investors. According to a status report submitted in the Court, H&M has collected Rs55.25 crore from 6,540 depositors from across the country. Out of this, 1046 depositors filed complaints against the company before the Economic Offences Wing (EOW) for default on deposits worth Rs46.04 crore and interest of Rs72.81 lakh. There are several cases filed across India by depositors against H&M.
H&M, however, has been found using the legal procedures to its own advantages by repeatedly making representations before several courts as well as even in the Supreme Court. "Promises are like crying babies in a theatre, they should be carried out at once," the HC said, adding, "The Scheme sought to be proposed, in the instant case, seems to be an eyewash and the attempt of the respondent Company to conceal, swallow its words and representations cannot be permitted since it is a deliberate attempt to hoodwink and bypass the Court orders."
"This Court is also of the opinion that vast amount may have been stashed away. Keeping in view the seriousness in the allegations and having regard to the nature of fraud involved and the investigation, its slow pace so far, and also the non-seriousness on the part of the respondent Company, this Court is of the considered opinion that there is a need to entrust this matter to the Serious Fraud Investigation," it added.
Despite several proceedings against H&M in various courts, the company sold its two properties, but failed to deposit entire proceedings in the Court. As per the status report submitted by EOW before the HC, the company sold two properties for Rs11 crore and Rs15 crore, but deposited only Rs1 crore and Rs5 crore, respectively in the Court. H&M claimed to have paid advanced tax of Rs2.95 crore, and showed Rs68 lakh as balance with it.
The Madras HC noted that "The said act of selling the properties shows that the respondent Company has no respect for the Court orders and it is not only flagrant violation of the orders of this Court but is also contumacious."
It further said, "...the respondent Company has become commercially insolvent and it is unable to clear its dues to the petitioners herein and other depositors. Obviously, in the considered opinion of this Court, the Company has siphoned off the funds and it appears that the respondent company is unreliable and it cannot be believed any further."
We sent an email to H&M officials on the Madras HC order, which remained unanswered till writing this story. We will update this story as and when we receive reply from the company.
You may also want to read...
public by applying to CLB under section 74 (2) of CompaniesAct,2013 to seek to postpone the repayment dates. CLBs refused to let them delay repayments so r he companies again showed their cleverness by stopping all payments & offering to pay only part of our FDs & not pay Interest. Hove of India must extend the date for taking credit rating. Even now if it does, companies can keep FDs & pay off as earlier contracted with us depositors. They will not default. When credit rating agencies can cheat & give false ratings to companies why must credit rating be insisted on ? Money life & all readers must please send this suggestion through letters to editors if newspaper, politicians, representatives, ministers, etc.,to the Govt of India & State govts immediately. Many companies, their employees & depositors can be saved.
public by applying to CLB under section 74 (2) of CompaniesAct,2013 to seek to postpone the repayment dates. CLBs refused to let them delay repayments so r he companies again showed their cleverness by stopping all payments & offering to pay only part of our FDs & not pay Interest. Hove of India must extend the date for taking credit rating. Even now if it does, companies can keep FDs & pay off as earlier contracted with us depositors. They will not default. When credit rating agencies can cheat & give false ratings to companies why must credit rating be insisted on ? Money life & all readers must please send this suggestion through letters to editors if newspaper, politicians, representatives, ministers, etc.,to the Govt of India & State govts immediately. Many companies, their employees & depositors can be saved.
public by applying to CLB under section 74 (2) of CompaniesAct,2013 to seek to postpone the repayment dates. CLBs refused to let them delay repayments so r he companies again showed their cleverness by stopping all payments & offering to pay only part of our FDs & not pay Interest. Hove of India must extend the date for taking credit rating. Even now if it does, companies can keep FDs & pay off as earlier contracted with us depositors. They will not default. When credit rating agencies can cheat & give false ratings to companies why must credit rating be insisted on ? Money life & all readers must please send this suggestion through letters to editors if newspaper, politicians, representatives, ministers, etc.,to the Govt of India & State govts immediately. Many companies, their employees & depositors can be saved.
public by applying to CLB under section 74 (2) of CompaniesAct,2013 to seek to postpone the repayment dates. CLBs refused to let them delay repayments so r he companies again showed their cleverness by stopping all payments & offering to pay only part of our FDs & not pay Interest. Hove of India must extend the date for taking credit rating. Even now if it does, companies can keep FDs & pay off as earlier contracted with us depositors. They will not default. When credit rating agencies can cheat & give false ratings to companies why must credit rating be insisted on ? Money life & all readers must please send this suggestion through letters to editors if newspaper, politicians, representatives, ministers, etc.,to the Govt of India & State govts immediately. Many companies, their employees & depositors can be saved.
Why the govt release this so late?
Govt should be owner of all the personnel properties of the directors and their relatives to recover depositors money first.
This action will deter others from Siphoning funds in future.
M V Prajapati
Mob.No. 7567527346
or still pending in supreme court?
Why the govt release this so late.
Govt should attached all the personnel properties of the directors and their relatives to recover depositers money first.
This action will deter others from Siphoning funds in future.