In a delayed move, the Government is likely to empower Company Law Board to order ‘unconditional’ attachment of properties of defaulting non-banking finance companies (NBFCs) in a bid to ensure investor protection against vanishing companies. But investors said the new initiative is tantamount to shutting the stable doors after the horses have fled.The government plan was disclosed in the Action Taken Report (ATR) on the findings of Joint Parliamentary Committee, which probed the stock scam of 2002. ‘A provision has been made in the Financial Companies Regulation Bill, 2000 (at present under the consideration of the Parliamentary Standing Committee of Finance) empowering the CLB to issue orders of unconditional attachment of whole or any portion of the assets of the NBFC, as specified by the aggrieved depositor,’ the report said.However, aggrieved investors say this move has come very late as a host of finance companies have collapsed in the last five years. ‘‘Investors have lost over Rs 2,500 crore in nearly two dozen finance companies like Prudential Capital Market, DSJ Finance, CRB, Helios, JVG Finance and Kuber. These companies have downed shutters without repaying the investors money,’’ said an investor who lost money in Prudential.Several companies like Lloyds Finance, DCM Financial, MGF, Mafatlal Finance, Sanmac Motor Financial, Jenson & Nicholson, MCC Finance, Kirloskar Finance, Alpic Finance and CFL have defaulted on repayment.The ATR said the CLB would have powers to appoint a receiver for recovering the unpaid deposit from the defaulting NBFC. As per the existing structure, CLB is the quasi-judicial body which is responsible for redressing the complaints of investors in finance companies.In case of disobedience, the CLB may order the attachment of properties and assets of the guilty, ‘besides ordering such person to be detained in the civil person’. However, investors are not convinced. ‘‘CLB was unable to give justice to investors within the existing framework. CLB’s western region has been functioning without a judge for the last several months,’’ said an investor who lost money in Roofit Industries.JPC had wanted Securities and Exchange Board of India, Department of Company Affairs, CLB and RBI to work ‘seriously’ towards ensuring that investors get their money back, and take ‘all necessary steps, including attachment of properties and assets of directors of vanishing companies’.
