THE INDORE bench of Madhya Pradesh High Court on Monday heard petition filed by Reserve Bank of India against Al-Fahad Investments Limited and Al-Fahad Fincom on the question whether the two Mhow-based companies, charged with cheating depositors to the tune of crores of rupees, should be wound up under Section 45 - MC of Reserve Bank of India Act 1934.
After hearing the arguments, the court of Justice A M Sapre reserved the judgement. According to documents submitted before the court, managing director of Al-Fahad group of companies Hamood Ahmad Siddiqui, son of then Mhow Quazi late Hammad Ahmad, is absconding since 2000 after locking the companies without returning dividends and principal amount deposited by mostly poor Muslims who had invested their life’s savings.
However, in her reply to the court, Siddiqui’s wife Husna has dismissed the allegations of RBI and said that the companies have sufficient assets to meet liabilities as shown in balance sheet of Al-Fahad Investments Ltd (September 30, 1999) and Al-Fahad Fincom (March 31, 2000). But, the two companies are unable to realise the assets and meet liabilities in the absence of active directors, she said through counsel Vijayesh Atre.
In its appeal, RBI, through counsel Bharat A Chitale, said that there were sufficient grounds to appoint provisional liquidator to take charge of the companies’ assets to prevent alienation of depositors’ money.
According to petitions, the two firms that acted as non-banking financial companies (NBFC) attracted fixed deposits under ‘Shar’yee Fixed Deposit Scheme’ promising high returns as interest, which was called dividend. The money collected as deposits was diverted to other business ventures, keeping investors in the dark.
Al-Fahad Investments, which was incorporated as a company in October 1995, applied for Certificate of Registration in 1997 but RBI rejected it on the grounds that the company submitted false returns and held public deposits under camouflage of Shar’yee scheme though it denied holding the same in the balance sheet.
The petitioner pointed out that Siddiqui and others, including retired Army Colonel M M Zena, were booked under Section 406, 420, 468, 471, 120 B of IPC on complaints registered at Bhopal.
Besides, Hyderabad High Court bench in 2001-02 ordered attachment of Al-Fahad group’s property worth Rs 8.37 crore located in Indore, Mhow, Delhi, Lucknow, Palanpur and Bharuch (both Gujarat) to recover money and return the dues to depositors that included Army officers and people living in Gulf countries. The company had set up offices in different parts of the country to attract deposits under similar scheme.
Al-Fincom formed in January 1998 was served an RBI notice in 1999, which said that it could not carry on business of NBFC, as it was not issued Certificate of Registration. The Bank issued another notice in January 2000 that it was not complying with RBI Act provisions. But all RBI notices returned undelivered from the Mhow address after January 2000.
According to aggrieved depositors who sent letters to different government departments for redressal said that over 1.5 lakh investors across the country invested more than Rs 150 crore with Al-Fahad group, which stopped giving dividend from November 1999.