The Mumbai bench of NCLT has thrown out the findings made by law firm Vaish Associates on former CG Power Chairman Gautam Thapar, citing them as “bogus”.
Justice Rajesh Sharma and B P Mohan ruled that the tribunal will not rely upon any report but only an independent audit. “While SEBI, SFIO and other agencies may want to believe on a bogus report,” the judges stated. They also questioned why the government machinery is being used in a corporate battle.
The issue on hand is relating to a report that was prepared by Delhi-based law firm Vaish, which conducted an investigation on “alleged” financial misappropriation by carrying out transactions clandestinely. This eventually led to the sacking of Thapar, as chairman of the company.
There is no question of Vaish report being termed as independent as it was commissioned by the company Board, the bench noted. What this means is that the investigation has to be independent and not on the behest of the company.
Thapar’s legal counsel also argued before the bench that Vaish did not question Chief Executive Officer K N Neelkant or CFO VR Venkatesh. “Even legal heads were not questioned, then what is the veracity of this,” the legal counsel argued.
Its new chairman Ashish Kumar Guha in the firm’s 2018-19 annual report said CG Power has been impacted by several irregular transactions and a detailed investigation concluded that there were “large and significant malfeasance.”
However, Thapar and others have claimed that SEBI’s order was based on the findings of the Vaish Associates report, which was commissioned by the company Board and is biased, heavily disclaimed and designed to manipulate the CG share price and oust (Thapar) as Chairman.
This is not the second time that the Mumbai bench has ruled in favour of Thapar. On December 16, NCLT said that the books of CG Power should not be opened as the case is under investigation. Vaish report cannot be trusted as CG Power had appointed it and therefore not independent. Further, the accounts cannot be opened as per Vaish report due to the fact that SEBI has already appointed an agency which should be allowed to conclude its work, it had stated in its previous ruling.