Lok Sabha Question No. 647 (UNSTARRED), answered on 2016-11-18
Subject: Frauds/Irregularities by Companies
Ministry: CORPORATE AFFAIRS
Asked by: BHAVANA GAWALI (PATIL), PR. SENTHILNATHAN, KRUPAL BALAJI TUMANE, V. SATHYABAMA, NARANBHAI KACHHADIA, POONAM  MAHAJAN

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

UNSTARRED QUESTION NO. 647 ANSWERED ON FRIDAY, THE 18TH NOVEMBER, 2016 [KARTIKA 27, 1938 (SAKA)]

## FRAUDS/IRREGULARITIES BY COMPANIES

## QUESTION

647.   SHRIMATI BHAVANA PUNDALIKRAO GAWALI PATIL:

SHRI PR. SENTHILNATHAN: SHRI KRUPAL BALAJI TUMANE: SHRIMATI V. SATHYA BAMA: SHRI NARANBHAI KACHHADIYA: SHRIMATI POONAM MAHAJAN:

Will the Minister of CORPORATE AFFAIRS

ea=h be pleased to state:

- (a) whether cases related to corporate frauds have come to the light in the country in recent years, if so, the details of such cases reported during each of the last three years and the current year along with the action taken thereon;
- (b) whether the Government has ordered investigation into the affairs of some companies through Serious Fraud Investigation Office (SFIO) during the said period;
- (c) if so, the details and present status thereof along with the number of cases disposed off by the SFIO and the success/ conviction rate therein, company/ case-wise;
- (d) the total amount restored and given back to the affected customers during the said period;
- (e) the expenditure incurred in the functioning of SFIO during the said period along with the measures taken by the Government to expedite the investigation process; and
- (f) the  further  measures  taken  by  the  Government  to  strengthen  the SFIO,  new  vigilance  system  and  amendment  in  relevant  laws  to  check frauds/ irregularities by the companies?

## ANSWER

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

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(a) & (b) Year-wise  details  of  the  investigations  ordered  through  the Serious Fraud Investigation Office (SFIO) during the last three years and the current year, are at Annexure -I.

Contd. ….. 2/-

- (c)     During the last three years and in the current year, SFIO has filed 258 prosecutions in various Courts.  In this period, 163 number of cases have been  disposed  off  by  the  courts,  of  which  there  has  been  successful conviction  in  77  cases  wherein  punishment  including  imprisonment  to directors as well as of fines have been imposed.

(d) The mandate under the Companies Act, is to conduct investigation, find out the violations of Companies Act, 1956 and take penal action for appropriate punishment provided under the Companies Act, 1956.

## (e) Details of expenditure incurred on the functioning of SFIO during the last three years and the current year are as under:

| Year                |   Amount (in crore) |
|---------------------|---------------------|
| 2013-14             |                9.25 |
| 2014-15             |                9.84 |
| 2015-16             |               10.18 |
| 2016-17 (till date) |                8.91 |

- (f) The Government has taken various measures to strengthen the SFIO to check fraud/ irregularities by companies, including:
- (i) the term 'Fraud' has been defined in the Companies Act, 2013;
- (ii) Statutory status to the Serious Fraud Investigation Office (SFIO);
- (iii) Increasing application of technology for early detection of frauds through data mining and Forensic Audit, etc.

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Annexure-I

ANNEXURE REFERRED TO IN REPLY TO PART (a) & (b) OF THE 18.11.2016.

UNSTARRED QUESTION NO. 647 FOR ANSWER IN LOK SABHA ON Details of cases referred to SFIO during the last three years and the current year

| Year                |   Investigations referred to SFIO |   Investigations completed |   Investigations under progress |   Investigations Quashed/ stayed by Courts |
|---------------------|-----------------------------------|----------------------------|---------------------------------|--------------------------------------------|
| 2013-14             |                                83 |                         78 |                              04 |                                         01 |
| 2014-15             |                                71 |                         49 |                              19 |                                         03 |
| 2015-16             |                               184 |                         11 |                             172 |                                         01 |
| 2016-17 (till date) |                                52 |                         01 |                              50 |                                         01 |
| Total               |                               390 |                        139 |                             245 |                                         06 |

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