RoC serves showcause to Dunlop

of the case," a senior RoC official said. The RoC Calcutta served the notice to Dunlop following a directive from the department of company affairs (DCA) under the union industry ministry to its regional office here.

The DCA, in a letter (No. 1/112/97-CL-II dated New Delhi, January 16, 1998) to its eastern regional director, has referred to an inspection report of Dunlop India Ltd and suggested that "actionmay be taken on the violations/ irregularities pointed out in the inspection report". The inspection was taken up under Section 209A of the act.

The letter has suggested action, including issuing showcause notices to the company and its directors and officials, and the filing of separate cases under each violation. The letter cites the inspection report’s finding that Dunlop appropriated Rs 2.24 crore out of the previous year’s profits and revaluation reserves to show the profit of Rs 8.85 crore reported for the year ended December 31, 1993. It made similar appropriations during 1994 and 1996. The letter says these actions were violations of Section 205(2A) of the Companies Act.

"A showcause notice may be issued to the Co and its directors and file prosecution for violation of section 205(A) and rules framed thereunder," the DCA’s letter says.

For the violation of Section 211 — which specifies that every balance sheet shall give a true and fair view of the state of affairs of the company the DCAletter cites certain amounts mentioned in paras 19 and 20 of the inspection report as doubtful recovery. As no proper provision has been provided in the books of accounts, to this extent it does not show "a true and fair view of the year ending June, 1992. The same section also covers Dunlop’s agreement with Falcon Tyres Ltd. The DCA’s letter notes that Dunlop has shown Rs 18.26 crore as sales in its books of accounts whereas the company is required to show a five per cent commission on the billing price for sales as the consigneed agent of Falcon Tyres.

The company has shown the increased sale in the annual accounts for the year ended March 31, 1996, and March 31, 1997, and it "did not show a true and fair view". The third alleged violation under Section 211 refers to the purchase and sale of software. The DCA has noted that Dunlop reported the purchase of software worth Rs 3 crore from SRG Finman India Ltd and the sale of the same to Shaw Wallace & Co Ltd, a group company, for Rs 30 crore. The payment isstated to have been received by Dunlop vide a cash receipt dated March 15, 1996, and the company claimed to have made a profit of Rs 27 crore on the sale. However, the DCA notes that the balancesheets for the years 1994-95 and 1995-96 do not reflect any such transaction.

The alleged violation of Section 372 refers to Dunlop’s acquisition of shares in Falcon Tyres adding up to about 56 per cent of the company’s paid- up equity. The DCA notes that this "requires prior approval of the central government…"

The DCA has also cited a violation of Section 205A of the Companies Act, noting that Dunlop delayed the transfer of unpaid dividend amount beyond the time stipulated under the section, as mentioned in para 29 of the inspection report.

For the Section 58A violation, the DCA cites an observation in the director’s report of th company for the year to March 31, 1997, to the effect that there were overdue deposits amounting to Rs 373.62 lakhs which were claimed but not paid. For the Section 418 violation,the DCA letter cites the auditors report for the year to March 31, 1997, that there had been delays in depositing the provident fund and ESI dues of employees with the proper authorities.