The department of company affairs (DCA) will go slow on ordering inspections of books of accounts of companies.
Besides a shortage of manpower, the department's inspection wing is also facing a lack of technical expertise in inspecting the books of accounts of companies and establish a connection or involvement in the scam that hit the stock markets earlier this year.
"Our officials are not trained for such work," a DCA official said. Top government officials told Business Standard that the department has just about 25 officials to inspect the books but has already ordered over 150 inspections under Section 209 of the Companies Act, 1956 this year alone.
Of these, 98 inspection orders relate to the stock scam for which the department is under tremendous pressure to submit reports to the Securities and Exchange Board of India (Sebi) and the joint Parliamentary committee.
"Unless its an urgent case pertaining to a Parliament question, etc, we will not be in a position to order any more inspections."
In fact, the department has asked several of its registrars of companies (RoCs) and regional directors to double up as inspectors in order to deal with the work pressure resulting from the numerous inspections ordered.
Preliminary reports on around 20 odd companies (of the 98) have so far not revealed any startling connections with the scam.
Only minor offences under the Companies Act, such as non-filing of essential documents with the RoC or non-appointment of company secretaries have been detected.
So far, the department has not been able to detect any objectional cross-company transfers. It has, hence, sought further details from the inspectors, said officials.
The DCA has written to Sebi only about one company, Tripoli, where it has detected heavy trading of shares during the stock scam period.
This, in itself, is not an offence under the Companies Act but may be worth investigating for the markets regulator, officials said.
Videocon books under DCA lens
The department of company affairs (DCA) is conducting a scrutiny of the books of accounts of the Videocon group.
On July 17, the Videocon group had received a letter from the department seeking lists of its shareholders, debenture holders and details of dividends distributed, senior company executives told Business Standard.
Top government officials confirmed that about six months ago, the inspection had been ordered under Section 209 of the Companies Act, 1956. The report from the field officers is expected shortly, they said without disclosing the basis of the inspection orders. They said the inspection had not been ordered in connection with the stock market scam. However, company executives maintain that the letter stated that the information was being sought for "statistical purposes".
"The department has not reverted back to us after we filed the answers to their queries," they said.