Serious Fraud Investigation Office of union Ministry of Corporate Affairs has directed Registrar of Companies to investigate allegations of violations against CIPL. The industry body has however denied all allegations and asserts everything was above board.

Coimbatore, the city that entrepreneur built, has its small and medium entrepreneurs to thank for its glory. One of the showpieces of this enterprise was the CODISSIA Industrial park, paraded to the vistors and investors as the shining example of private enterprise and what it can do for its practitioners.

But, all is not well with CODISSIA Industrial Park Limited (CIPL).

After a spate of allegations of wrong doings and flouting of rules and regulations on several counts, this body has come under the scanner of the central government. Serious Fraud Investigation Office (SFIO), an agency under the union Ministry of Corporate Affairs (MCA), has asked the Registrar of Companies to enquire into the activities of the CODISSIA Industrial Park Ltd and check if there have been violations under the Companies Act 2013.

The Covai Post has in its possession to official documents emanating from the SFIO with directions to the Registrar of Companies Coimbatore to investigate complaints on violations alleged by one of the founding members of CODISSIA (Coimbatore District Small Scale Industries Association), AV Karthikeyan of Velumani Engineering Industry.

The company, CODISSIA Industrial Park Ltd formed under the stewardship of nine Directors in 2011 was meant to operate, manage and promote two industrial parks, in over 520 acres at Moperipalayam and Kallapalayam in Coimbatore district at an outlay of Rs 225 crore.

AV Karthikeyan, alleged that there have been “violations in receiving deposits to a tune of Rs 60 crore from 563 depositors including individuals, which is in violation to the Companies (Acceptance of Deposits) Rules, 2014”. Permission has not been obtained from ROC, SEBI or RBI to collect deposits from public in 2011 or until today, he said.

The documents by the complainant have also alleged that the trademarked acronym CODISSIA has been prefixed to an individual and not to the company, CIPL. And as per the minutes presented by the Company, the prefix CODISSIA has been ratified for the name of the Industrial park only and not for the Limited company to be formed.

Further, AV Karthikeyan said that the Memorandum and Articles of the Company CIPL did not indicate that the company was floated to benefit only the members of CODISSIA. Deposits have been received from many non-members and they were subsequently made members, even though some did not own any manufacturing unit.

Most of the 340 acres of land that was purchased by paying price in excess to the market value was agricultural land and not industrial. This land that was purchased with the money paid by the depositors has been pledged to a Consortium of Banks, including SIDBI (Small Industries Development Bank of India) for a loan amount of Rs 155 crores, A.V.Karthikeyan alleged adding “even this SIDBI loan granted to agricultural land has raised several eyebrows.”

The founding member of CODISSIA A.V.Karthikeyan also stated that alleged claim of the Company regarding issuance of shares to the depositors, has been done without approval from SEBI (Security Exchange Board of India) or ROC.

But the allegations were rubbished by CODISSIA office bearers.

Rebutting the allegations, K.Illango, one of three newly nominated Directors of CIPL, denied that there were any violations and that they had explained everything during the investigations carried out by the ROC and Ministry of Corporate Affairs. He flatly denied taking any deposits and said only an advance was taken from members who wanted land.

On the conversion of agricultural land, he said work was in progress, “as is the usual norm”.

“Because of the non-availability of a master plan, people purchase agricultural land and get it converted subsequently. That is the only way to establish an industrial unit in Coimbatore and there is nothing illegal about it”, he said.

On the issue of shares, he said that SEBI’s approval was required only for public issue and the CODISSIA Industrial Park was a private deal where an approval of SEBI was not required at all.