INDIA BUSINESS WORLD SEPTEMBER (16^th - 30^th) 2007
The Month that was ...

CBI APPEALS AGAINST HC STAY IN CRB CASE

THE Central Bureau of Investigation (CBI) has moved the Supreme Court against the Delhi High Court order staying the criminal proceedings against CRB Capital Markets. The company, allegedly, duped 1.35 lakh small investors and financial institutions of Rs 1,200 crore about a decade back. A bench headed by Justice Ashok Bhan asked the agency to file an affidavit, stating why it had delayed filing the appeal against the High Court order.

The CBI said that the high court did not have the jurisdiction to stay criminal chargesheets filed under the Prevention of Corruption Act 1988 pending before the special Judge, Mumbai.

The agency complained that the high court had not only stayed the criminal proceedings, but had also approved the revival scheme of CRB Capital Markets. CBI, on the basis of complaints made by investors, had registered various cases against CRB chairman Chain Roop Bhansali, certain SBI officials and some others for duping the Bank of Baroda and State Bank of India of Rs 3.43 crore and Rs 57 crore, respectively, in 1997.

According to the investigating agency, CRB had issued warrants for huge amounts from these banks favouring its own associates who were ineligible for such fixed deposit repayment and brokerage warrants as they neither mobilised funds for the company nor maintained deposits with it. Such warrants were later encashed from SBI and BoB branches across the country, thus causing undue loss to the banks, it added. It may be noted that the apex court had last month allowed transfer of a trust petition filed by stock market regulator SEBI against CRB Capital Markets from Bombay High Court to Delhi High Court. The Delhi High Court is hearing various petitions, including an appeal filed by RBI against CRB Capital Markets' revival scheme.

CRB, while seeking transfer of the petition, had stated that "in order to adequately protect and harmonise the interest of CRB Capital Markets and its creditors", the trust petition should be transferred to Delhi High Court.

SEBI had moved the Bombay High Court alleging violations by CRB Mutual Fund - Arihant Manglam (Growth Scheme) - which had allegedly raised around Rs 229 crore. Besides, various deficiencies were found in the records of CRB Capital Markets and its group companies CRB Trustee Ltd and CRB Asset Management Company Ltd, the regulator had said. The Delhi High Court, while approving the revival scheme, had appointed its retired judge Justice C M Nayyar as an administrator for CRB. It had also directed RBI to defreeze all accounts of the company, its group firms and ex-directors.

Bhansali had floated the company in May 1985 and converted it into a non-banking financial company in October 1996. The CBI had registered cases against all the accused under Indian Penal Code and Prevention of Corruption Act.