Vepa Kamesam, former deputy director of the RBI, has resigned from the High Mark Board as independent director. The troubled credit bureau, which urgently needs an injection of money to remain viable, allotted 70% of its ESOPs to four independent directors, including Mr Kamesam and its chairman Prof Pandya
Moneylife’s reports on the affairs at the troubled and cash strapped High Mark Credit Information Services Pvt Ltd (High Mark Credit Bureau) seems to have claimed its first victim. Vepa Kamesam, one of the most high profile directors has resigned from the High Mark Board. However, it is not clear as to what would happen to the 1.63 lakh shares that Mr Kamesam was allotted.
Mr Kamesam, a former deputy governor of the Reserve Bank of India (RBI) was one of the four directors who, along with Prof Anil Pandya, chairman and founder-director of High Mark, bagged 70% of the employee stock ownership plan (ESOP). Mr Kamesam was allotted 1.63 lakh shares in the credit bureau as ESOPs.
According to sources, High Mark violated Credit Information Companies Regulations (CICR) Act, 2005 (CICRA) as well as Companies Act, while appointing Prof Dr Anil Pandya as its executive chairman. The issue was first raised by Siddharth Das, former Chief Operating Officer (COO) of High Mark, before the company board. But the board, including Mr Kamesam, apparently ignored it.
High Mark never appointed Prof Pandya on a full-time basis. The prefix ‘Executive’ before chairman was supposed to give the impression that he is a full-time employee in the nature of a CEO. Even as Prof Pandya continues to work on a part-time basis, the credit bureau also did not appoint any whole-time director or managing director. This clearly violates Regulation 9 (2) of the CICRA for which the board should be made responsible.
Subsequently, Das sent a legal notice raising this issue. Ajay Kohli, former chief executive of High Mark, tried to bring this to the attention of the board. This too has been ignored so far by the company Board.
As Moneylife reported earlier, High Mark's four independent directors, Dipankar Basu (1.63 lakh), Vepa Kamesam (1.63 lakh), Rajiv Johri (6.53 lakh) and Shyam Sunder Suri (6.53 lakh) and its chairman Prof Anil Pandya (3.27 lakh), together hold 70% of ESOPs. Of these, while Prof Pandya was designated executive chairman in position, if not in responsibilities, the other four directors have had little operating roles.
The board also allotted 1.9 lakh ESOPs to Kiran Moras, its senior vice-president and 2.7 lakh to Siddharth Das, its executive vice-president and chief operating officer. These options lapsed due to the resignation of both these officials. While Moras resigned on 21 March 2012, Das left High Mark on 20 March 2012. We learn from reliable sources that Prof Pandya has been indiscriminately sacking senior officials who are in the process of filing litigation.
Meanwhile, High Mark seems to be operating on the understanding that the Italy-based CRIF credit bureau will be allowed to bailout the Credit Bureau quite easily. We learn that CRIF executives have already been meeting senior executives to assure them of support and continuity after takeover. This development suggests that CRIF is completely confident of a green signal to acquire High Mark although the business is ostensibly strictly regulated by the RBI.
There is no evidence that Mr Kamesam has been perturbed by this alleged violation of the CICR Act and the possible action by the RBI. Of course, it remains to be seen whether the RBI will act atleast now, following resignation of Mr Kamesam, a former deputy governor of the central bank.
Mr Kamesam was appointed as deputy governor of RBI on 1 July 2001 and his tenure ended in 2003 after getting extensions twice. He was the first deputy governor of the RBI to hold the position even after crossing the age of 62 years.
Prof Pandya and Dipankar Basu (a former IAS officer of the Gujarat cadre and also an independent director of High Mark) did not respond to repeated text messages. Our email query addressed to Mr Basu and to Prof Anil Pandya was also not answered at the time of publication. Their response, if any, will be incorporated when it is made available.
High Mark is a start-up promoted by Prof Pandya and Anuj Desai. In 2005, Professor Pandya founded High Mark and in 2007 the company applied to the RBI for a license to operate as a credit bureau.
The order is considered significant against the backdrop of a MoU signed by Maharashtra government and Mahindra & Mahindra for commissioning of Rs700 crore project at Nashik for manufacture of 'Logan' car
Mumbai: The Bombay High Court has dismissed a petition filed by a company Zenith Metaplast Pvt Ltd praying for allotment of a three acre plot in Nashik to itself and cancellation of adjacent plots allotted to Mahindra & Mahindra Ltd and an industrialist, reports PTI.
The court observed that the Maharashtra government and the Maharashtra Industrial Development Corporation (MIDC) had acted in the interests of the state while allotting the adjacent plots admeasuring 17 acres and six acres to Mahindra & Mahindra and Nashik-based industrialist Abhay Kulkarni, respectively.
Zenith Metaplast also sought a writ of certiorari to quash the communications dated 16th December 2005 and 22nd June 2006, rejecting its application for the allotment of a plot admeasuring about 3 acres in the same MIDC area.
The order is considered significant against the backdrop of a MoU signed by Maharashtra government and Mahindra & Mahindra on 15 June 2005, in respect of commissioning of Rs700 crore project at Nashik for manufacture of "Logan" car.
"Having been through the records, we are satisfied that there is no arbitrariness in the decision. The decision to allot the said plots to Mahindra & Mahindra and Abhay Kulkarni was taken after due consideration of all the facts and circumstances of the case," observed Justices RY Ganoo and SJ Vajifdar in their recent order.
"MIDC and the state of Maharashtra considered the application of Mahindra & Mahindra and Abhay Kulkarni to be, inter-alia, in public interest for the benefit of the state. We find no reason to condemn this decision as arbitrary for any reason whatsoever," the judges observed.
The MIDC contended that the petitioner, over the years, had been allotted eight plots of land in the said area, but the full potential of even these plots was not exploited by the petitioner and therefore it has no case.
"The details of these eight plots and the extent to which they have been exploited have been furnished. The petitioner has not denied these statements or offered any cogent explanation for accumulating plots and not using them," the bench noted.
The judges noted that the petitioner was aware of the allotment in favour of Mahindra & Mahindra prior to 15 March 2006, as is evident from the letter dated 15 March 2006, addressed by it to MIDC. "The petitioner never objected to the allotment of the plot by MIDC in favour of Mahindra & Mahindra. This is evident from the correspondence addressed by the petitioner which we have already referred to."
By the letter dated 15 March 2006, the petitioner said that it could be allotted a plot "without disturbing the requirement of Mahindra & Mahindra". By the letter dated 3 April 2006, addressed to the MIDC's chairman, the petitioner requested MIDC to issue "the balance list of open space No.8 of 24,000 square meters left after allotment to Mahindra and Mahindra".
The petitioner, therefore, did not seek to disturb the allotment in favour of Mahindra & Mahindra, the judges further noted.
It was only by the letters dated 3 October 2006, and 10 October 2006, that the petitioner challenged the allotment in favour of Mahindra & Mahindra. This challenge was also essentially only on the basis of MIDC's circular dated 25 January 1994 and not on the basis that the allotment was not in accordance with the procedure or unfair, the bench observed.
As the result, therefore, Mahindra & Mahindra commenced the process as far back as 23 November 2005. There were detailed negotiations between Government of Maharashtra, MIDC and Mahindra & Mahindra with regards to the allotment for the mega project, the court noted.
Crores of rupees have been spent by this company in respect thereof, including the payment of premium of about Rs7.51 crore. The company also had the option to set up the mega project in two other states viz. Andhra Pradesh and Uttarakhand, the judges observed.
"The petitioner took no steps to challenge the allotment, although it knew about the same prior to 15 March 2006. We are not inclined to exercise our jurisdiction under Article 226 to annul the allotment in such circumstances," the judges noted.
The Tribunal dismissed Tata Power's petition challenging MERC's order to impose cross subsidy surcharge from high billing consumers, who have migrated from Reliance Infra to TPC
Mumbai: The Appellate Tribunal for Electricity (ATE) has dismissed the petition of Tata Power Company (TPC) challenging the Maharashtra electricity regulator's order on imposing cross subsidy surcharge from high billing consumers, who have migrated from Reliance Infra to TPC, reports PTI.
Tata Power had challenged the Maharashtra Electricity Regulator Commission's (MERC) order, which allowed Anil Ambani-led RInfra to collect cross-subsidy surcharge from its high-billing customers, who have migrated to rival Tata Power in the interest of the consumers as well as the licensees.
In a September last year, the MERC had said that if high-end consumers of a supplier move to another one under open access system, they will have to continue to cross subsidise the lower-end consumers of their previous supplier.
The ATE, in its order dated 21st December said: "Without reasonable subsidy, there is a possibility that all the consumers in RInfra may move to TPC and in that event, the monopoly of the TPC would be created.
"This action of imposing cross subsidy surcharge is to preserve the competition in order to promote the industry and simultaneously to protect the interest of the consumers".
Under the cross-subsidisation regime, consumers with higher power usage compensate for lower costs per unit charged from those consuming less than 300 units a month.
After the consumers were given the choice to switch power discoms, some high-end customers shifted to Tata Power, which had lower rates as a result of no obligations to serve low-end consumers at cheaper rate, the spokesperson said.
Upholding the decision of the state Commission, the ATE said: "MERC is required to look after not only the interest of the consumers but also the interest of licensees.
"Therefore, the Commission, while deciding that the change over consumers are liable to pay cross subsidy surcharge to RInfra for using their network has in fact taken into consideration the interest of the consumers as well as the interest of the licensees. Therefore, findings and directions given (by MERC), which would promote healthy competition are perfectly justified".
RInfra is at present serving around 28 lakh consumers in its distribution areas in suburbs, out of which, almost 23 lakh consumers are low-end ones, including 12 lakh coming from the unstructured developments in the suburbs, who are cross subsidised.
On the contrary, nearly 90% (bulk) of Tata Power customers include railways, refineries, large housing and commercial complexes and multiplexes.