CLB orders probe into Manish Mehta firm

The company allegedly duped a British investor after receiving several crores of rupees, promising 10-12 times returns

Additional information indicating a settlement of the dispute/case, subsequent to the publication of this report, is available at the end of this article

The Mumbai bench of the Company Law Board (CLB) has directed the central government to investigate Jinbhuvish Power Generations. The company, promoted by a Nagpur-based businessman, Manish Mehta, allegedly duped a British investor after receiving several crores of rupees, promising “10-12 times returns”.

Mehta and his group companies, including Jinbhuvish, were in focus last year for their involvement in the Purti group of companies floated by then Bharatiya Janata Party President Nitin Gadkari.

The investor, Mohammed Hanif Ahmed Manjra, had routed these investments through his company, Red Apple General Trading. Jinbhuvish had announced the 1,260-Mw coal-based power project in January 2009. It was to be implemented in two phases, of 600 Mw and 660 Mw. The Rs 3,200-crore first phase was to have two units of 300 Mw each. According to the company’s website, 750 acres had been acquired.

However, the requisite share certificates were not issued to Red Apple in time. On enquiry, the investor realised the Rs 10 shares were allotted at a premium of Rs 105 each. Following the dispute, Red Apple filed complaints with the economic offences wing of the Maharashtra police and also moved the CLB.

The CLB bench has said the transaction appeared “extremely suspicious and doubtful”. According to the order, which came earlier this week, Red Apple’s investment of Rs 11.58 crore was transferred into the account of Jinbhuvish between March and November 2007. “Thereafter, the said funds were transferred in the account of Aamrupa Engineering and Mining and various group companies of R2 (Manish Mehta).”

The investment was clearly not spent, says the order, in the project of Jinbhuvish but was rotated among the group companies for their benefit. The bench found several transactions between Jinbhuvish, Aarya Powertech and Aamrupa Engineering. “The respondents have failed to submit any cogent explanation in this regard,” it said.

The order also hinted at violation of foreign investment guidelines. “Investments made by a foreign investor into an Indian company require prior permission and sanction from the competent authorities... nothing has been produced by the parties that they had obtained any prior permission or sanction as required under law for the investments in the company. This was the duty of the respondents but by not doing so, it can be inferred that they deliberately ignored the law,” it said.

The bench said Mehta incorporated various companies with similar names and business activities; he was a director in 36 companies. “The balance sheet of Parshwa Agrico,” a group company, “if looked into itemwise raise many questions to be answered.”

From perusal of the entire sequence, the bench said, it was established that Jinbhuvish operated with an intention to defraud Red Apple.

ADDITIONAL INFORMATION
In January 2015, Manish Mehta informed us of the subsequent developments in the matter which are as follows:
The parties had settled the matter, and the original petitioners filed an affidavit in Bombay high court confirming that they had withdrawn all allegations against the respondents; seeking that the company petition filed before the Company Law Board be dismissed as withdrawn, and requested the order dated June 7, 2013 be quashed and set aside. The Bombay high court disposed of the matter on February 25, 2014.