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Liquidate Helios & Matheson
Madras High Court asks SFIO to investigate, appoints official liquidator. But when will the stock exchanges and SEBI stir themselves?
 
On 21st January, the Madras High Court (MHC) ordered the liquidation of Helios & Matheson (H&M) and appointed an official liquidator to ensure that any realisable money is not ‘frittered away’ or siphoned off. The same order asked the serious frauds investigation office (SFIO) under the ministry of corporate affairs (MCA) to conduct an inquiry and submit its report by 18 March 2016. A Moneylife survey shows that H&M depositors are the single largest group, among over 1,000 persons, who have failed to get back their money invested in corporate fixed deposits. Unfortunately, the details in the court order dash the hopes of these 6,540 depositors ever getting any money back from the company. 
 
Meanwhile, the regulators, bourses, MCA and most of the media continue to maintain their stunning silence about this company. Moneylife alone had reported the MHC order, at the time of going to press. All through the proceedings, H&M aggressively claimed that its financial problems were not serious, despite a series of recovery actions against it by banks and depositors. In June 2015, following a Moneylife report on the arrest of its senior management for failing to pay depositors, H&M ‘clarified’ that it was a “world-renowned IT/software solutions company” and the Tamil Nadu Protection of Depositors Act did not apply to it. However, its attempt to have the FIR (first information report) quashed through a writ petition and appeal failed.  
 
In September 2015, H&M, in a special leave petition (SLP) to evade recovery proceedings, gave an undertaking to the Supreme Court that it would deposit Rs10 crore in four weeks and repay the balance Rs38 crore to depositors within a year. This, too, did not happen. Will H&M try the usual corporate ploy to delay liquidation by gaming the judicial processes? Probably; but it remains to be seen if the trenchant MHC order, finally, prods SFIO to conduct a detailed investigation into H&M’s finances. The Court has already documented the management’s ‘prevarication’, ‘surreptitious’ actions, ‘clandestine’ sale of assets and attempts to ‘deviate and confuse’ issues. It also noted how H&M sold two properties for Rs11 crore and Rs15 crore and, ‘in flagrant violation’ of its orders, deposited only Rs1 crore and Rs5 crore, respectively, with the Court. 
 
What has the market watchdog done so far? The last time that the Securities & Exchange Board of India (SEBI) acted against H&M was in 2011 when it was fined a paltry Rs50 lakh for making wrong disclosures to the bourses. This was after six years of inaction and persistent complaints about H&M’s shady ways. Had the regulator been doing its job, thousands of depositors would not have been fooled into investing in its fixed deposits based on its falsely optimistic financial projections. 
 
What SFIO now needs to investigate is whether there is any truth in H&M’s business claims at all; does it even have the assets, offices, software contracts and offices that it claims to have? Ramalinga Raju of Satyam Computers fudged his accounts in a big way, but it certainly had a running business, massive offices and thousands of top-quality employees who were being paid. Hence, it found a buyer, despite the massive fraud.  
 
H&M, like another Chennai software company Pentamedia that went bust, seems to be hollow. The MHC order mentions that H&M’s liabilities to banks and depositors are over Rs245 crore and that the economic offences wing (EOW) of the Chennai police had frozen its accounts in 2015. The company had then claimed a turnover of Rs445 crore, a running operation and lots of employees. Yet, a cursory Internet search would reveal hundreds of angry rants and warnings from employees who have not been paid; many of them date back to 2012 or earlier. And, yet, our regulators were completely uninterested. The same regulators, of course, will wax eloquently about corporate governance, every few months.
 

User

COMMENTS

Ankit Synghal

6 months ago

Will look fwd for comments

Ankit Synghal

6 months ago

Hi all, do you know if the liquidators can be contacted for considering the FD depositors for any hopeful claim! Are some details available.

lalit

10 months ago

It seems another satyam in the news.depositors have been duped by the company in collision with the so called regulators (who should be penalized towards refunding the depositors money.

Dr PS Bhatnagar

10 months ago

We understand that in cases where official liquidator is appointed by Courts after detailed deliberrations, fd investors are also cosidered as creditors for repayment of company left-overs proceds. Can any one confirm it?

Manharlal Patel

10 months ago

I have also same concern for Helios & Matheson as there is no reply from company. My FDs have been matured but there is no reply. I hereby request Sucheta Madam if she can help us in this matter

ridhdhish

10 months ago

i do have helios fds and as happened with other i did not get any answer for my complaints to the co. please let me know how i can join the fight and what further actions i need to take.

Aravind

10 months ago

Is there any realistic possibility of depositors getting back their money???

REPLY

lalit

In Reply to Aravind 10 months ago

If the liquidator or the concerned ministry takes some quick and strong action we may recover the principal amt I hope

lalit

10 months ago

Please update when r u going to publish /take up the matter related to the FDs as per the survey taken by you about months ago.

If the same is not closed put out the same again so that if any investor has missed out he too can put the details which can help to file cases.

REPLY

Sucheta Dalal

In Reply to lalit 10 months ago


The memorandum is going out tomorrow. WE have over 1000 respondents.

We will publish it once we have delivered it to the ministry!

lalit

In Reply to Sucheta Dalal 10 months ago

Thanks for the update awaiting for the report to be published.

lalit

10 months ago

Dear Sucheta Mam,
Its time to take up the matter with MCA,file cases, PIL on behalf of the investors with regard to H&M , with the intent to recover the investors amount in time bound manner.Am again insisting that all the directors should be immediately arrested and put behind bars for cheating the investors.
Also the CLB/MCA should insist on insurance to be taken by the company in future for minimum investment so that if something happen to the company investors money is safeguarded.

Hope you take up the matter urgently,

REPLY

Ashok Visvanathan

In Reply to lalit 10 months ago

No insurance company will give a policy to H & M, certainly not now. Since bank loans take priority over depositors, banks may get 10 paise in the rupee. The depositors will get nothing.

Ashok Visvanathan

10 months ago

That the exchanges and Sebi have not done anything, may not be a proper indictment. They have compliance rules and filings, that the company has to follow. As long as the company does its exchange compliance, the exchange and Sebi cant do anything.

I am interested in the responsibility and liability of the independent directors. You think they were Ok ?

Vaibhav Dhoka

10 months ago

The enforcement of judicial order must be time bound process till execution otherwise in sluggish judicial process in India has lost all hopes of recovery in fact they help fresh scammers to play role to perpetrate scam.

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