A C Muthiah resigns from the board of First Leasing

This follows the resignation of its managing director Farouk Irani after a fallout over the company's balance sheet and audit report

After the resignation of its managing director Farouk Irani after a fallout over the company's balance sheet and audit report, First Leasing Company of India Ltd's Chairman A C Muthiah has resigned from the Board of Directors. This was announced in the company to Bombay Stock Exchange today.

The announcement today said, "Justice S Mohan, Former Judge, Supreme Court of India has been elected Chairman of the Board of Directors of the Company in place of A C Muthiah who has resigned from the Board of Directors". The development was in the meeting of the Board of Directors of the Company held today.

A C Muthiah was not available over phone for comment.

The company was incorporated by A C Muthiah, as the First Leasing Company of India Ltd on September 10, 1973 with Farouk Irani, who is pioneer of Corporate Leasing Services in India, as Managing Director.

Justice Mohan was appointed as the additional director (Non-Executive & Independent) on the board of the company on October 25, 2013. On the same day, the company also said that the Board of Directors has accepted resignation of Farouk Irani,  though it would not in any way absolve him of his duties and accountability to the company, stakeholders and Statutory Authorites.

The Reserve Bank of India (RBI) has also appointed a Special Auditor to carry out the Special Audit of the Book of Accounts and transactions of First Leasing Company of India from the year ended March 31, 2010.

The present issues with the company came out in public after the RBI directed the company not to transact any business or incur any further liabilities in the light of the findings of the inspection of the books of accounts and other records as on March 31, 2013, in September, this year. It has restricted the company from declaring or distributing dividend. It also restrained the company from creating any liabilities. The company cannot sell, transfer, create charge or mortgage or deal in its property or assets without RBI’s permission, according to the direction.

Later, a report came out stating that Irani has admitted that there is a gap of around Rs 1,000 crore in the company's balance sheet and the company announced that it has decided to take up the matter immediately on receipt of the final report of the special audit under process and Irani was asked to expedite the report. The same communication with the exchange said that a preliminary report of the special audit was placed before the Board and Irani and the Chief Financial Officer was asked to give their response expeditiously to facilitate the finalistion of the report at an early date.

After this, Irani issued a letter withdrawing the Board's communication and Board responded by cancelling the Managing Director's letter stating that it was not authorised by the Board of Directors.

Irani conveyed his plan to submit resignation following this and his resignation was accepted by the Board, it announced on October 25, 2013.