AC Muthiah to face trial in first leasing case
RBI has launched four prosecution before the ACMM against four accused for offences under section 58B (1) and 58 (B) of RBI Act.
Chennai: In a major setback to industrialist A.C.Muthiah, the Madras high court has declined to quash the criminal proceedings pending against him before the lower court in four cases relating to the alleged '274 crore fraud by First Leasing Company of India Ltd.
Dismissing the petitions filed by Muthiah to quash the proceedings pending before Additional Chief Metropolitan Magistrate/Economic Offences-II, Egmore, Justice P.N. Prakash said , “There are sufficient material in the complaint for the prosecution to proceed as against A.C. Muthiah and his plea that he cannot be vicariously held liable for the alleged offences committed by the company stands rejected”.
The Reserve Bank of India has launched four prosecution before the ACMM against four accused for offences under section 58B (1) and 58 (B) of RBI Act.
It was the RBI's case that First Leasing Company of India Ltd is a company incorporated under the Companies Act with Farouk Irani, A.C.Muthiah, Maharaj Jai Singh and A. Satish Kumar as its directors and had published financial statements for 2010, 2011, 2012 and 2013 containing false particulars and statements, to make it look as if the company was financially sound, on the strength of which huge loans were borrowed from various financial institutions.
Challenging the prosecution, Muthiah filed the present four petitions. The judge said a reading of the complaints show that serious irregularities have been committed by the company in presenting a rosy picture of its financial status, via the annual financial statements for making its creditors believe that the company was financially sound, but whereas, in reality it was found to be a smoke screen to cover up its financial hollowness. Thus, there were sufficient averments (affirmation or allegation) in the complaint for the prosecution to proceed.
The fact remains that Muthiah was the director of the company until his alleged resignation on November 1, 2013. There was a clear assertion in the complaint that the board of directors knew fully well about the malpractices in the accounting.