GIFT-City Gujarat Needs SFIO Probe Like IL&FS, says Petitioner in Fresh Application

Dr DC Anjaria, independent director and former audit committee chairman of Gujarat International Finance Tec-City—GIFT City, had filed a fresh civil application demanding investigation of GIFT-City by Serious Fraud Investigation Office (SFIO), as has been ordered by the NCLT (National Consumer Law Tribunal) with respect to the beleaguered parent—Infrastructure Leasing & Financial Services (IL&FS).

Dr Anjaria's original petition had alleged that this Rs70,000-crore GIFT-City project had virtually been gifted away to the private sector partner, IL&FS, leading to massive losses to the government and the people. He also alleged falsification in accounts, and incorrect recording of audit committee meeting at GIFT-City. The new application has also added names of fresh respondents, including a former Whole Time Member of SEBI (Securities & Exchange Board of India).

In his civil application to the 2016 Writ petition No 260 of 2015 (PIL) filed last week, Dr Anjaria says, "...in view of findings of regional director, ministry of corporate affairs (MCA), Mumbai, that affairs of IL&FS and its group companies are carried out prejudicial to public interest, the affairs of GIFT-City are also required to be investigated by SFIO for two reasons.

"Firstly, IL&FS has a 50% stake in GIFT-City and there it is part of the one of the group companies of IL&FS. Secondly, three senior directors on the board of GIFT-City are also part of board of directors removed by the National Company Law Tribunal (NCLT) at Mumbai. They are Hari Sankaran, K Ramchand and Arun Saha. The presence of these three persons on the board of GIFT-City is apparently inimical to the public interest,” Dr Anjaria added.

He has also alleged that there was falsification of accounts by not recognising income against the guidance note issued by Institute of Chartered Accounts of India (ICAI) and falsification and incorrect recording of minutes of the audit committee meeting presided by him.

Dr Anjaria, who originally designed the concept of GIFT City, alleges that Prof JR Varma of IIM-Ahmedabad (former whole-time member of SEBI) was appointed as independent director and as chairman of the audit committee after he was relived of his position as chairman of the audit committee. Dr Anjaria ceased to be independent director on the GIFT-City board six months later. Prof Varma is accused of having approved of the minutes of the meeting, held six months earlier and presided over by Dr Anjaria, that too when he was not even a member of the Gift-City board at that time and had not attended the meeting. He further says that the minutes were approved, despite his notice to Prof Varma, making him party to what is alleged to be “falsification and incorrect recording of the minutes book.”

"Ramakant Jha, the then chief executive of GIFT-City connived with Dipesh Shah, Head (IFSC & Strategy), GIFT-City and compliance officer for falsification and incorrect minutes," Dr Anjaria alleges.

He says Haribhakti and Co, chartered accountant, did not recognise income from sale of development rights in spite of a guidance note issued by ICAI. Dr Anjaria says in the application, that it was incumbent upon Haribhakti and Co., as a member of ICAI to report non-compliance with guidance note by GIFT-City. The chartered accountant firm failed to discharge its duty and thus needs to be added as party respondent in the petition, he says.

Taking cognizance of the massive financial debacle at IL&FS, Dr Anjaria, in a separate petition says these developments will "affect goodwill of GIFT-City project, which, in turn, will discourage international finance players and bring a great disgrace to the entire country where an IFSC of would class standards is envisaged."

According the petition, out of four erstwhile directors of IL&FS, who are facing a lookout notice, two of them, Hari Sankaran and K Ramchand, are presently serving on the board of GIFT-City. "Apart from this, Ramesh C Bawa, who is also facing lookout notice, was also on the board of GIFT-City as representative of IL&FS. In view of this, there is palpable apprehension that these three persons would have also mismanaged affairs of GIFT-City and there is it is necessary to issue notice to IL&FS and it should answer charge against it," the petition says.

Earlier, GIFT-City has failed to respond to our queries regarding Dr Anjaria’s petition and instead published an advertorial in the form of an interview in the Business Standard. The paper later published a rebuttal by Dr Anjaria.

Moneylife has written to Prof JR Varma and the Gift-City management for their comments. This article will be updated with their response as and when we receive it.

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