Why Robert Vadra firms do not feature in Modi govt's shell company cleanup

The answer lies in the government's own rules notified in December 2016

A look at the so-called shell companies whose registration has been cancelled by the Narendra Modi government at the Centre shows that none of these were related to Robert Vadra, either directly or indirectly. The alleged shell companies that dealt with Vadra and were probed by the Enforcement Directorate for alleged money laundering were also not on the list of struck-off firms.

While this may be far from political amnesty, the reason might lie in the government’s own rules amending the Companies Act (2013) notified by the government in December 2016. In a notification dated December 26, 2016, the government had excluded companies that were under investigation from being removed from the company registrar’s list. The notification said the registrar could not remove companies “where inspection or investigation was ordered and being carried out or actions on such order were yet to be taken”.

In addition, the rules notified by the Modi administration also excluded companies where investigations were completed but “prosecutions arising out of such inspection or investigation are pending in court”.

A look at Vadra’s companies shows that most of those that did not show any business activity since incorporation were dissolved by Vadra himself. This process was started in 2014. While those that filed returns regularly were converted into limited liability partnerships (LLPs). India’s corporate laws are less stringent when it comes to penalising LLPs that fail to submit their financial returns on time.

Besides, the government’s new rules introduced in December last year were applicable to firms registered under the Companies Act, 2013. They do not apply to LLPs, which are governed under the Limited Liability Partnership Act, 2008. However, after the massive exercise of de-registering so-called shell companies, the Modi government has indicated that it will de-register LLPs that have failed to adhere to regulations. It is unclear if the government’s list of LLPs under scanner includes those owned by Vadra. Companies that were converted into LLPs by Vadra include Sky Light Hospitality, Real Earth Estates, Blue Breeze Trading, Lambodar Art Enterprises and North India IT Parks.

Vadra, by the virtue of dissolving his own inactive companies, also avoided the ignominy of being targeted in the Modi government’s clean-up exercise. The companies dissolved by Vadra include Lifeline Agrotech, Best Seasons Agro, Greenwave Agro, Rightline Agriculture, Future Infra Agro and Primetime Agro.