Dead Man Named As Md In Fraud Issue

Investigations by stock exchanges and the police have revealed a glaring instance of public issue fraud involving Karan Finance limited, which is listed on Delhi Stock Exchange and Bombay Stock Exchange.

The company came out with a public issue in 1995 giving the name of a dead person as the chairman and managing director. Six other people, named along with Rathi has having incorporated the company, deny any involvement with it. The address of the registered office given in the public offer document is still a vacant plot of land.

The company' public issue -- which was at par for Rs 10 a share aggregating to Rs 75 lakh -- names one Harpal Rathi as the chairman & managing director. However, according to an FIR lodged at the Guhanapur police station in Sonipat District of Haryana, Rathi died in a car accident over a year ago in February 1994.

 

The other six people supposed to have incorporated the company have sometime ago written to the Reserve Bank of India that they have nothing to do with Karan Finance and somebody has been using their names.

The address of the registered office given in the public issue -- Q-309, South City, Gurgaon -- is till date a vacant piece of land. Karan Fin had claimed that 10 people were working at the "registered office". Unitech Ltd, the developer of South City, has confirmed that the plot is still vacant.

Furthermore, the accounts of Karan Fin have been audited by R K Sharma & Co, chartered accountants, New Delhi, with R K Sharma as the proprietor. However, DSE's enquires with the Institute of Chartered Accountants of India reveal that no such firm with R K Sharma as the proprietor exists.

Karan Fin -- incorporated in 1990 -- issued a notice in the middle of 1997 convening its annual general meeting on July 28, 1997, at its "registered office". This notice, too, is signed by Rathi.

The National Stock Exchange, say sources, has alerted the Securities & Exchange Board of India, Reserve Bank of Indias Ltd, a broker at the exchange.

NSE had given Maxwell bad deliveries worth over Rs 1 crore for rectification. However, the broking firm is alleged to have resold the shares instead of rectifying them. The matter is now open before the Delhi High Court.

Incidentally, Maxwell Securities promoter director Tarun Goyal is closely associated with Karan Fin. NSE requested DSE for certain details on Karan Fin and subsequently requested investigation against the company.