Published>Thu, May 20 10 02:48 AM
In the first-of-its-kind action against any IPL team, the corporate affairs ministry is mulling a thorough investigation into the ownership pattern and sources of funding of the Preity Zinta-Ness Wadia promoted KPH Dream Cricket Pvt Ltd, which owns the Kings XI Punjab team. The move follows preliminary findings that the company has defaulted on tax payments and flouted norms for transfer of shares.
The investigation has been recommended by the registrar of companies (RoC), Chandigarh under Section 235 of the Companies Act, 1956. The RoC has the right to conduct a detailed scan of a company's books of accounts, a power that has seldom been used.
The RoC, in a letter to the ministry dated May 12, a copy of which is with FE, has clearly outlined that the company has not regularly deposited undisputed statutory dues of Income Tax and professional tax with the appropriate authorities under RBI's Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations 2000.
"In respect of undisputed statutory dues of Income Tax and professional tax, the same have not been regularly deposited with the appropriate authorities and there has been serious delay in a large number of cases," the RoC letter stated.The RoC has also found violation of the Franchisee Agreement of IPL, which prohibits any transfer of shares during the first three years of the term of the agreement. In the examination of the KPH Dream Cricket's books, RoC found that on May 8, 2008, a little-known entity called Acee Enterprises had transferred about 9,500 shares to Windy Investment Pvt Ltd and Dabur Investment Corporation Ltd.
Based on these findings, the RoC declared: "It is therefore, recommended that an inspection under Section 209A of the Companies Act, 1956 or an investigation under Section 235 of the Companies Act 1956 may be ordered by the ministry to know the real ownership of the company and sources of funds invested in the company."
Sangram Patnaik, managing partner of the Delhi-based law firm Patnaik & Associates said that in only one out of hundred cases does the ministry order an investigation. "Investigation is ordered in the rarest of rare cases...say one in a hundred cases," he said.
Meanwhile, RoC Pune has found responses from Rendezvous Sports World which successfully bid for the Kochi IPL team unsatisfactory. It has sought ministry approval to seek more details from the company. The list includes: a certified copy of the Memorandum of Association/Articles of Association, whether any MoU/agreement has been signed for the issuance of sweat equity and duly signed by a statutory auditor, details of payment made by the company to the consortium and the details of the share transfer.
Following the spat between the former minister of state for external affairs Shashi Tharoor and now suspended IPL commissioner, Lalit Modi over Tharoor's friend Sunanda Pushkar's sweat equity stake in the Kochi IPL, corporate affairs ministry had directed the RoC to conduct a detailed probe of the promoter companies of the IPL teams. RoC had written to all the franchisees last month seeking a list of details that ranged from ownership patterns of the company to sources of funds.
Source: Web Search
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