CNLT staff have approached Malaysian stock market regulator to initiate action against company and its management
Former employees of now-liquidated CNLT (Far East) Bhd of Kuala Lumpur, an associate company of Thapar Group's flagship JCT Ltd, have approached Securities Commission, the stock market regulator in Malaysia, seeking help to initiate action against the company and its management for "financial irregularities and siphoning off funds".
This follows a court case they won on June 13, 2014 in Kuala Lumpur High Court. The court had given a favourable verdict to ex-employees after hearing a suit filed by them against directors of CNLT to claim their due salary and retirement benefits. During CNLT's winding up proceedings, provisional liquidators had instructed for an "investigative audit" of the company after financial irregularities were found. The court had also mentioned that since fraudulent acts were proven and the breach being with a criminal intent, Suruhanjaya Syarikat Malaysia, the registrar of companies in Malaysia, could initiate action against CNLT.
However, both JCT and former MD of CNLT, Prem Krishna Sahgal, have subsequently filed an application in Court of Appeal, which is likely to be heard on March 23, 2015.
Apart from Securities Commission, former employees have also approached and filed complaints with Bursa Malaysia (formerly known as Kuala Lumpur Stock Exchange) as CNLT's management had made false declarations in its financials since 2002 that are in breach of listing rules, Companies Act and Securities Industry Act. The ex-employees have also submitted a memorandum to Indian High Commission at Kuala Lumpur as Prem Krishna Sahgal is an Indian citizen."We have also filed complaints with BSE and Sebi in India against JCT Ltd. We are awaiting response from them," an unsecured creditor of CNLT based in Kuala Lumpur told dna.
Amid serious charges such as siphoning of funds from Malaysia and breaching laws of Malaysia by manipulating its books, the high court in Kuala Lumpur had instructed the liquidator of CNLT to take legal action against JCT for refund of funds.
JCT is now contesting the court order that made the CNLT remit $1.25 mn (around Rs 7.5 crore) to its Indian parent void. "We have already moved the court of appeal against this order as per the prescribed procedure in Malaysia," company spokesperson had told dna in an emailed response in August.
The BSE-listed JCT has not disclosed any of the transactions to the stock exchange. Despite dna reported the ongoing case in Malaysia, JCT has kept this issue under wraps. "CNLT is currently under liquidation and is administered by the official liquidator. JCT has written off this investment in its books in the financial year 2009-10," JCT spokesperson had responded to dna query earlier.
dna had earlier reported on August 25 that Prem Krishna Sahgal has also appealed against the verdict which upheld some serious charges against him. The charges include fictitious invoices and inflated revenues, over valuation of plant and machinery and siphoning of funds to JCT. The court has also asked the managing director to cough up RM 2.9 mn claimed by 83 ex-employees in salary of nine months and retrenchment benefits.
Though CNLT and JCT claimed the remittance was paying back advance ($890,000) against purchase with compensation ($360,000) the court has not accepted it in its verdict. Former employees and suppliers of CNLT have claimed and proven in court that the remittance was part of paying back unsecured loans secured from JCT.
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