CBI registers case of cheating against Muthiah, Irani

The Central Bureau of Investigation (CBI) has registered a case of cheating against

A C Muthiah and Farouk Irani, former chairman and managing director, respectively, of First Leasing Company, along with others, upon a complaint by IDBI Bank. In the complaint, the bank said the alleged cheating by falsification of accounts during 2005-2013 caused a loss of Rs 274 crore.

CBI said it has registered a case under various sections of the Indian Penal Code related to criminal conspiracy, cheating, and forgery against the above two besides a former senior vice-president and former chief financial officer of the bank, as well as two Chennai-based firms of chartered accountants. These persons were

The investigating agency said searches were at eight places on Friday — seven in Chennai and one in Hyderabad — in the offices and residences of the accused, which “led to recovery of incriminating documents”.  

Muthiah told Business Standard no incriminating documents were recovered from him. “CBI came with a search warrant and they were here for 30-40 minutes. There was no incriminating evidence because I only acted as the chairman of the company. I was not executive chairman.”

He said he was acting as a chairman, while the others were running the company. He added First Leasing Company was wound up almost three years ago and it is currently under an official liquidator.

In July 2014, the Madras High Court had allowed an application of ICICI Bank to appoint a provisional liquidator for the crisis-ridden First Leasing Company of India Ltd.

According to earlier reports, the Reserve Bank of India had on September 13, 2013 barred the company from doing any business until further orders in public interest, pointing out that the firm had been falsifying its books of accounts and other financial statements to portray positive net worth.

Following the RBI action, Irani, a promoter and shareholder in the company, submitted his resignation from the post of managing director on October 21, 2013, which was accepted by the Board on October 25 the same year. On November 1, 2013,  chairman Muthiah, also a promoter share holder, resigned.

The company was incorporated by Muthiah, former chairman of Southern Petrochemical Industries and former president of Board of Control for Cricket in India, on September 10, 1973 with Irani, who is the pioneer of corporate leasing services in India, as managing director.

Apart from the RBI’s forensic expert, the Board of Directors has also appointed former CBI director R K Raghavan to conduct a forensic audit to find out diversion of funds. The company was also trying to bring restructure the organisation.