Lok Sabha Question No. 518 (UNSTARRED), answered on 2016-11-18
Subject: Investigation against Companies
Ministry: CORPORATE AFFAIRS
Asked by: V. SATHYABAMA

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

UNSTARRED QUESTION NO. 518 ANSWERED ON FRIDAY, THE 18 TH  NOVEMBER, 2016 [KARTIKA 27, 1938 (SAKA)]

## INVESTIGATION AGAINST COMPANIES

## QUESTION

518.  SHRIMATI V. SATHYA BAMA:

Will the Minister of CORPORATE AFFAIRS

be pleased to state:

- (a) whether the Government has ordered any investigation into the affairs of companies found to be involved in Chit Fund/ MLM/ Ponzi activities;
- (b) if so, the details and the current status thereof, State-wise; and
- (c) the steps taken by the Government for providing new provisions in the Companies Act, 1956 or 2013 relating to Chit Funds or 'Chit Fund Companies' and to expedite the process of investigations?

## ANSWER

THE MINISTER OF STATE IN THE            (SHRI ARJUN RAM MEGHWAL) MINISTRY OF CORPORATE AFFAIRS

(a) to (c):  There are no provisions in the Companies Act, 1956 or 2013 relating  to  Chit  Funds  or  'Chit  Fund  companies'.  Provisions  to  this effect are contained in the Chit Funds Act, 1982 which is a Central Act administered by the Ministry of Finance (Department of Financial Services)  but  its  implementation  vests  in  the  State  Governments concerned who register entities running Chit Funds and regulate their affairs  and  proceed  against  violators  including  companies  running Chit Funds without such registrations.  The Central Government has however, inter- alia, investigated affairs of 185 companies falling into the category of so called Chit Funds/MLM/Ponzi activities for violation of  the  Companies  Act  through  Serious  Fraud  Investigation  Office (SFIO) during the last three years and current year.  A list containing State-wise  details  of  companies  where  investigations  have  been ordered through SFIO and their status is enclosed as Annexure-I.

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## Annexure-I

## ANNEXURE REFERRED TO IN REPLY TO PART (a) to (c) OF THE UNSTARRED QUESTION NO. 518 FOR ANSWER IN LOK SABHA ON 18.11.2016.

## State-wise and year-wise details of chit fund/MLM companies ordered for investigation during the last three years and current year (upto 31.10.2016)

## 2013-14

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

## 2014-15

| S. No.   | State       |   No. of Companies ordered for Investigation | Completed Investigations   |
|----------|-------------|----------------------------------------------|----------------------------|
| 1        | West Bengal |                                           29 | 29                         |
| 2        | Jharkhand   |                                           02 | 02                         |
| 3        | Bihar       |                                           02 | 02                         |
| 4        | Orissa      |                                           18 | -                          |
|          | Total       |                                           51 | 33                         |

## 2015-16

| S. No.   | State       |   No. of Companies ordered for Investigation | Completed Investigations   |
|----------|-------------|----------------------------------------------|----------------------------|
| 1        | West Bengal |                                           26 | 10                         |
| 2        | Orissa      |                                           08 | -                          |
| 3        | Maharashtra |                                           05 | -                          |
| 4        | Punjab      |                                           01 | -                          |
| 5        | Rajasthan   |                                           01 | -                          |
| 6        | Assam       |                                           06 | -                          |
|          | Total       |                                           47 | 10                         |

## 2016-17

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

| 4   | Assam   |   03 |   - |
|-----|---------|------|-----|
|     | Total   |   24 |  01 |

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