HC grants bail to finance company directors

By Our Special Correspondent

CHENNAI, OCT. 21. Three persons arrested in connection with M/s Synergy Financial Exchange Ltd. (SFEL) case, have been granted bail by the Madras High Court.

Passing orders on the bail applications from Mr. Y.G. Rajendra, Mr. V. Venkatesh and Mr. S. Venkataraman, arrested following complaints of default in repayment, Mr. Justice I. David Christian directed the release of the three on their executing a bond for Rs. 1 lakh with two sureties for Rs. 50,000 each before the XI Metropolitan Magistrate, Saidapet, Chennai. All of them should report before the DSP, Economic Offences Wing at 10 a.m. every day until further orders.

Two depositors, who had invested Rs. 30 lakhs, had filed complaints that despite the deposits becoming mature, the company had not repaid the money. Cases were registered against the company.

Mr. Venkataraman was the promoter-director of SFEL, a financing and hire purchase/leasing company, since 1990. Mr. Rajendra and Mr. Venkatesh joined in 1992-93, as full-time directors. In 1998, the company was unable to repay matured deposits to hundreds of investors. An enquiry by a special officer, appointed by the RBI and the Company Law Board, revealed irregularities by some in the management.

Hearing in separate petitions showed that while SFEL was unable to repay the Rs. 15 crores owed to depositors, it had lent Rs. 9 crores to M/s Srivari Investments in 1999, as acknowledged in the balance sheet. Srivari Investments was floated by Mr. Venkataraman, who had started more companies to which funds had allegedly been diverted from SFEL. While the company was being wound up, the Court appointed an Official Liquidator to take over SFEL to collect the amounts due from third parties. Referring to allegations that the accused had colluded and diverted funds to enrich themselves unlawfully, the Court stated that it needed detailed investigation.

Mr. Venkataraman was arrested in September 2000 and interrogated. Mr. Rajendra and Mr. Venkatesh got themselves admitted in a hospital, while in remand.

The Judge noted that the three did not have access to the company's assets. As the records had been handed over to the Official Liquidator, they were not in a position to tamper with the evidence.

Mr. Justice David Christian said after release on bail, they should report daily before the Investigating Officer. Their presence could be used by the Official Liquidator to prepare a list of persons to whom vehicles and machinery had been given on hire purchase or lease and from whom money was due. This would help the investigators and the liquidator collect the dues to finally repay the depositors.

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