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Jai Corp Case: Complainant helms realty firms with no revenue but high reserves & surplus
The CBI Wednesday opposed a petition filed by Jai Corporation Ltd against an investigation by the central agency into allegations of serious financial irregularities by the Mumbai-based company led by Anand Jaikumar Jain. Seeking rejoinders from petitioner Jain and Jai Corp, which is involved in the manufacturing sector, the High Court posted the hearing after four weeks.
The hearing was held after the Supreme Court on March 17 disp-osed of an appeal by Jai Corp aga-inst a Bombay High Court order directing the CBI to form an SIT to probe the allegations of irregularities to the tune of Rs 3,000 crore.
The allegations against Jain stem from complaints first filed in 2021, and later in 2023, with the Economic Offence Wing (EoW) of Mumbai Police by Shoaib Sequeira, the founding member of NGO Protection of Rights Association (P.O.R.A) and a director in at least two real estate firms.
Set up in 2009, P.O.R.A was started by a group of seven persons who, according to its website, 'came in contact with each other due to personal and individual litigations wherein their rights and the rights of their family members were violated due to the misuse of power and high handedness of people in governance'.
It aims to 'educate and create awareness…about the various mechanisms/ methods by which corruption in governance can be exposed and curbed through citizen movements and social participation', apart from other objectives such as legal aid.
Registrar of Companies (RoC) records show Sequeira is one of the two directors at Sigrun Realties, a real-estate firm incorporated in December 2005, and its subsidiary First Virasat Realcon — the other director in both firms is listed as Naveen Dsouza.
But Sequeira is not a direct shareholder in either Sigrun Realties or First Virasat Realcon. Records list the major shareholders of Sigrun Realties as Stephen Dmello (73%) and Shivani Atri (24.51%). It lists the shareholders of First Virasat as Sigrun Realties (66.65%); Faizal Patel, UK (8.34%); Rakesh Soni, UK (6.45%); Anavarhushen Patel (6.45%); and, Siraj Vali Umerji Buma (6.45%).
Records show Sigrun Realties has a paid up capital of Rs 34 crore with reserves and surplus of over Rs 41 crore. They also show that the company has not generated any revenue over at least the past four financial years from FY'21 to Fy'24. During this period, its financial statements do not reveal any source of funds for the amount shown in reserves and surplus.
Records show First Virasat Realcon has a paid up capital of Rs 1.01 crore with reserves and surplus exceeding Rs 65 crore. It did not post any revenue over at least the past four financial years from FY'21 to Fy'24. RoC filings show the company had 'No employees other than directors'. They also do not reveal any source of funds for the amount listed in reserves and surplus.
The case in court
Legal representatives of Sequeira did not respond to requests for comment from The Indian Express.
It was in January 2021 that Sequeira approached the EOW in 'public interest', seeking a probe against Jain related to alleged fraud to the tune of Rs 3,000 crore through various means, such as misappropriation of public funds and defrauding of investors, among others. In the complaint, he also stated that he had come to know through news reports about SEBI action against two companies headed by Jain.
The EOW forwarded the complaint to SEBI. Citing lack of progress, Sequeira filed another complaint to the EOW in April 2023. The EOW forwarded the second complaint to the CBI. The central agency expressed its inability to conduct an investigation, stating that the allegations came under the jurisdiction of SEBI and Enforcement Directorate (ED).
In 2024, citing lack of progress once again, Sequeira approached the Bombay High Court. Sequeira told the High Court that in 2021, he learnt that SEBI had imposed fines of Rs 20 crore and Rs 10 crore on two companies, Mumbai SEZ Ltd and Navi Mumbai SEZ pvt Ltd, respectively, in which Jain was chairman, for alleged fraudulent futures trading in stocks of Reliance Petrochemicals Ltd (RPL).
In January this year, the High Court directed the CBI to form an SIT to probe into the complaints against Jain. The High Court observed that the case has 'national and international ramifications', and that 'agencies (including EOW and CBI) are passing the buck from each other'. How-ever, it also clarified: 'Transferring the investigation to SIT does not mean that we have ruled on the guilt of the person/ persons named as that is not the scope of the petition.'
In its order, the High Court also said 'it was pertinent to note that this is not the first case in public interest that the petitioner (Sequeira) has agitated'.
In 2005, Sequeira had raised the issue of alleged scams of nearly Rs 1 lakh crore in incentive schemes related to import and export policies. In 2006, he filed two PILs against Autoriders Finance Ltd alleging misappropriation of Rs 50 crore availed as loan from United Trust of India and misappropriation of Rs 76 crore as loan from a consortium of six banks. In April, 2009, the banks collectively recovered nearly Rs 14 crore from Autoriders Finance.
Following the Bombay High Court order in the Jain case, the CBI filed an FIR. On March 17, while refusing to interfere in the HC verdict, the Supreme Court said it admired and appreciated the courage with which the HC passed the order.
