8 Provisions & Contingencies
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made .
Contingencies
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the
Company or a present obligation that is not recognized because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is
a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize
a contingent liability but discloses its existence in the financial statements.
9 Earnings per share (EPS)
The earnings considered in ascertaining the Company’s EPS is the net profit after tax. The number of shares
used in computing basic EPS is the weighted average number of shares outstanding during the period.
17 The Company Law Board on 23rd December, 2008 on the application by the SFIO passed an ex-parte order
to restrain the Directors of the Company to function as directors.
The Company challenged this order before the Bombay High Court on the ground that CLB passed ex-parte
order and that sections 388, 237, 401 are not applicable to the Company. However, the High Court directed the
Company to file the application before CLB. Accordingly, the Company approached the CLB for the
modification/alteration to the said order such that the Board be allowed to comply with the statutory
requirements. CLB allowed the said application and passed an order dated 20.07.2010 allowing the Board to
hold meetings to comply with statutory requirements, though the matter is pending at CLB for final disposal.
18 (a) Income-tax department had carried out search and seizure operations at the office premises of
the Company on March 23, 2001. The Department has assessed the total undisclosed income
for the block period ended on 23rd March, 2001, at Rs. 991.8 crores by treating the clients’
sales as Company’s income. The total demand raised is Rs. 680.85 crores. The Company has
disputed the demand in appeal before the appellate authorities with no success. The Company
then preferred an appeal to the Bombay High Court which has been admitted. The Company is
legally advised that they have a good chance to succeed and accordingly, no provision is required.
(b) Consequent to the dismissal of the aforesaid appeal by the Tribunal, the Assessing Officer levied
penalty of Rs 672.45 crores for concealment of income which is confirmed by the Tribunal and
the Company has preferred an appeal to the Bombay High Court. The appeal has since been
admitted and is pending disposal before the High Court. This demand being consequential to the
quantum appeal mentioned in (a) above, no provision is made in the Accounts.
settlement of all their dues to the Company. Since CCL had failed to make payment as prescribed
in the Award for the 1st instalment due on 30th June 2002 due to attachment of its property by
Debt Recovery Tribunal and Income-tax Department, the Company rescheduled the instalment
payment in a manner that the payment shall commence from 30th December 2005. CCL has
informed the Company that the DRT has not yet vacated the attachment on its property and
accordingly, they will not be able to commence payment to the Company as per the agreed
schedule and requested the Company for more time to make the payment. The amount receivable
from CCL on 31.03.2024 is Rs 67.54 crores (after writing-off Rs 0.15 crores in the current year (Rs. 0.15
crores in the previous year)). CCL is under liquidation and hence, the Company intended to lodge a
claim of its receivables before the liquidator. However, on pursuing for recovery of the said demand
from the erstwhile management of CCL, the Company is hopeful of recovering the full amount from
them and accordingly, no claim has been lodged with the Liquidator.
21 The Economic Offence Wing (EOW) of the Central Bureau of Investigation (CBI), Mumbai have filed
a compliant in the City Sessions Court vide case number 53/2006 against the Company and its
Directors for alleged commission of various offences relating to cheating and forgery under Indian
Penal Code and P.C. Act 1988. The Company does not envisage any liability therefrom.
22 The Company had given post dated cheques aggregating Rs 5.45 crores to M/s. Ashok Mittal &
Company as advance towards intended purchase from them. M/s. Ashok Mittal & Company
presented the cheques without finalisation of any transaction. The Company accordingly, instructed their
Bankers for stop payment and the same were dishonoured. The party filed Criminal Complaint u/s. 138
of the Negotiable Instrument Act, with Additional Chief Metropolitan Magistrate, Mumbai on
17.01.2001 and the same was re-notified on 22.08.2002. The Additional Chief Metropolitan Magistrate
Court by its order dated June 21, 2007 convicted the Company u/s 138 of the Negotiable Instrument
Act and levied a fine of Rs. 9 crores. The Court also convicted Mr. Jatin Sarvaiya, Managing Director,
of the Company and sentenced him to imprisonment of one year alongwith a fine of Rs 6 crores. The
Company has filed a petition before the Sessions Court against this order. The Court of Sessions
for Greater Bombay dismissed the appeal with following modifications by its order dated June 08, 2018. The
Court convicted the Company and Mr Jatin Sarvaiya, then Managing Director, of the Company u/s 138 of the
Negotiable Instruments Act and sentenced to pay fine of Rs. 7 crores (instead of Rs. 9 crores) jointly and
severally. The Court also sentenced Mr Jatin Sarvaiya to imprisonment for 3 months (instead of 4 months) in
case of default of payment of fine of Rs. 7 Crores. The Court has deleted/set aside the Order regarding
compensation of Rs. 6 crores imposed on Mr. Jatin Sarvaiya which is mentioned in clause 2 of the
operative order. The Company has filed an appeal before the Bombay High Court against this order,
which is pending disposal.
23 The Punjab National bank (PNB) (erstwhile Oriental Bank of Commerce (OBC)) has filed an application
with the Debt Recovery Tribunal (‘DRT’), on 06.08.2003 for recovery of loan of Rs 46.76 crores. OBC
has stopped providing for the interest on the aforesaid loan with effect from 1st April, 2003; the Company
has not provided for interest from 1st April, 2011. OBC has also filed an application with the DRT for
recovery of Rs 3.15 crores being amount paid by them to The National Stock Exchange of India Limited
on invocation of bank guarantee given by them. The DRT has passed an interim order imposing a temporary
injunction from transferring/selling /creating any third party rights, disposing off or dealing with any selling/creating
any third party rights, disposing off or dealing with any of the Company’s assets by the Company.
24 In view of huge income-tax demands outstanding, the TRO has issued notices u/s. 226(3) of the
Income-tax Act, 1961 to certain debtors, banks and associate concerns of the Company restraining
them from making payments to the Company and requiring them to make payment to the Income-tax
Department. As per the information available with the Company, the TRO has collected Rs 3.50
crores from banks and debtors of the Company and adjusted the income-tax refunds aggregating Rs 16.40
crores against disputed outstanding income-tax demands. The exact amount collected by the TRO from
debtors and others is not available and hence, entries for the same have not been made in the accounts.
25 The Company has to receive Rs 3.56 crores from Panther Investrade Ltd (PIL) included under the
head “Long-term Loans and Advances”. Notwithstanding the financial and legal matters involving PIL,
the Company is hopeful of recovering the debt and no provision is presently considered necessary.
26 Balances of Sundry Debtors, Loans and Advances, Secured Loans and Sundry Creditors are subject to
confirmation / reconciliation, and consequential adjustments, if any.
27 The deposits with The National Stock Exchange of India Limited (NSE), fixed deposit with ICICI bank and
HDFC bank and accrued interest thereon are subject to reconciliation, and consequential adjustments.
32 The Company mainly operated as a broker on National Stock Exchange of India Limited before being
declared defaulter on May 3, 2002. The assets and liabilities of the Company mainly belonged to
broking business only. During the year no broking business was carried out. Therefore, there are no
segment wise details to be reported.
33 During the year ended 31st March, 2023, the Custodian (appointed by the Government of India under Special
Court, Trial of Offences Relating to Transactions in Securities (TORTS) Act, 1992), via letter dated February 27,
2023, stated that pursuant to order dated 29.04.2022 of Hon'ble Special Court in Misc. Application No. 21 of
2007 - Custodian V/s Ketan V. Parekh & Ors. read with Hon'ble Special Court dated 16th December, 2022 passed
in Custodian Report No 11 of 2022, Messrs Borkar & Muzumdar, Chartered Accountants, Mumbai have been
appointed to conduct a full-scale enquiry into the affairs of Notified Parties and their relationship with Respondents;
the Company is one of the Respondents.
However, the Hon'ble Supreme Court has directed the Custodian not to take any precipitate action against the
Company.
41 Additional disclosures as required under schedule III of the Companies Act 2013.
(a) The Company does not hold any title deeds of immovable properties as at 31 st March, 2024
(b) During the year the Company has not granted loans or advances to promoters, directors, KMP's and
related parties that are repayable on demand or without specifying any terms or period of repayment.
(c) The Company does not have any asset as capital working progress as at 31st March, 2023
(d) The Company does not have any intangible asset under development as at 31st March, 2023
(e) No proceedings have been initiated or pending against the Company under the Benami Transactions (Prohibition)
Act, 1988.
(f) During the year the Company has not been declared as a willful defaulter by any bank or financial
institution or any other lender.(Refer note no.23)
(g) During the year the Company does not have any transaction with any of the Companies struck-off under
Section 248 of the Companies Act 2013 or Section 560 of the Companies Act 1956 and therefore, there
are no outstanding balances.
(h) There are no charges or satisfaction which are yet to be registered with ROC beyond statutory period.
(i) The provisions of clause (87) of section 2 of the Act read with the Companies (Restriction on number of
Layers) Rules, 2017 are not applicable to the Company as per Section 2(45) of the Companies Act,2013.
(j) During the year the Company has not advanced or loaned or invested funds to any other person(s) or
entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the Company (ultimate beneficiaries) or
(ii) provide any guarantee, security or the like on behalf of ultimate beneficiaries.
(k) The Company does not have any transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessment under the Income-tax Act, 1961.
(l) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
(m) There were no scheme of Arrangements approved by the competent authority during the financial year in
terms of section 230 to 237 of the Companies Act, 2013.
42 (a) Previous year’s figures have been regrouped, re-arranged and / or recast, wherever considered
necessary to correspond with current year’s classification / disclosures.
(b) Figures have been rounded-off to the nearest rupee.
For and on behalf of the board of directors
Rekha Sarvaiya Nagesh Kutaphale
(DIN 00046128) (DIN 00245782)
Director Director
Mumbai, 29th May, 2024
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