Lok Sabha Question No. 497 (STARRED), answered on 2017-04-07
Subject: Vanishing Companies
Ministry: CORPORATE AFFAIRS
Asked by: KULAMANI SAMAL

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA STARRED QUESTION NO. 497 ANSWERED ON FRIDAY, THE 07 TH  APRIL, 2017 [CHAITRA 17, 1939 (SAKA)]

VANISHING COMPANIES

## QUESTION

*497.   DR. KULAMANI SAMAL:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a)     whether the Government has any mechanism/provision in the existing  statutes  to  monitor  the  fraudulent  activities  of  various finance, plantation and other companies that have cheated the public worth thousands of crore of rupees over the past few years and have vanished;
- (b)     if so, the details thereof along with the number of companies inspected by the Government agencies during the last three years and the current year; and
- (c)            the  further  steps  taken/being  taken  by  the  Government  to prevent such fraudulent activities of the companies?

## ANSWER

THE MINISTER OF CORPORATE AFFAIRS                   (SHRI ARUN JAITLEY)

(a) to (c): A Statement is laid on the Table of the House. *****

## STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (c) OF THE STARRED QUESTION No. 497 FOR ANSWER IN LOK SABHA ON 07.04.2017

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- (a) & (b) Action  against  fraudulent  companies  including  finance and  plantation  companies  is  a  continuous  and  regular  process through  various  regulatory  authorities.  In  this  regard,  Government has identified 185 companies for investigation through the office of Serious Fraud and Investigation Office [SFIO] during the last three years. These include chit fund /Multi-Level Marketing/Ponzi activities in unauthorized collecting of funds from public.  A statement of such 185 companies is at Annexure -A.  Further, this Ministry also ordered for  inspection  of  Books  of  Account  and  records  of  301  companies under the Companies Act in the last three years as per Annexure-B.
- (c) Government  has  taken  a  number  of  measures  to  check recurrence of corporate frauds:
- (i) 'Fraud' as a substantive offence has been introduced in the Companies Act, 2013.
- (ii) Statutory status to the Serious Fraud Investigation Office has been granted under the said Act.
- (iii) Stricter norms of Corporate Governance and their implementation under the Companies Act, 2013.
- (iv) Increasing application of technology for early detection of frauds through data analysis, surveillance and usage of forensic tools, etc.

*******

## Annexure - A

## ANNEXURE REFERRED TO IN REPLY TO THE STARRED QUESTION NO. 497 FOR ANSWER IN LOK SABHA ON 07.04.2016

State-wise and year-wise details of investigations ordered during the last three years into the affairs of companies involved in chit fund/ ponzi/ MultiLevel Marketing activities

2013-14

| S. No.   | State         |   No. of Companies ordered for Investigation |
|----------|---------------|----------------------------------------------|
| 1        | West Bengal   |                                           57 |
| 2        | Assam         |                                           01 |
| 3        | Uttar Pradesh |                                           05 |
| Total    | Total         |                                           63 |

2014-15

| S. No.   | State       |   No. of Companies ordered for Investigation |
|----------|-------------|----------------------------------------------|
| 1        | West Bengal |                                           29 |
| 2        | Jharkhand   |                                           02 |
| 3        | Bihar       |                                           02 |
| 4        | Orissa      |                                           18 |
| Total    | Total       |                                           51 |

2015-16

| S. No.   | State       |   No. of Companies ordered for Investigation |
|----------|-------------|----------------------------------------------|
| 1        | West Bengal |                                           26 |
| 2        | Orissa      |                                           08 |
| 3        | Maharashtra |                                           05 |
| 4        | Punjab      |                                           01 |
| 5        | Rajasthan   |                                           01 |
| 6        | Assam       |                                           06 |
| Total    | Total       |                                           47 |

2016-17

|   S. No. | State       |   No. of Companies ordered for Investigation |
|----------|-------------|----------------------------------------------|
|        1 | Maharashtra |                                           01 |
|        2 | West Bengal |                                           19 |
|        3 | Orissa      |                                           01 |
|        4 | Assam       |                                           03 |

| Total   | 24   |
|---------|------|

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## Annexure-B

## ANNEXURE REFERRED TO IN REPLY TO THE STARRED QUESTION NO. 497 FOR ANSWER IN LOK SABHA ON 07.04.2017

## Year-wise details of inspections ordered during the last three years into the affairs of companies.

| Year    |   Number of Inspections Ordered. |
|---------|----------------------------------|
| 2014-15 |                               23 |
| 2015-16 |                              161 |
| 2016-17 |                              117 |
| Total   |                              301 |

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