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Govt slaps inspection notice on RPL

The government has slapped an inspection notice under the Companies Act on Reliance Petroleum to probe if the company had diverted about Rs 7 billion, mopped up through public offer, to family companies for buying the shares of RPL but the group denied that it had received the notice.

The inspection notice under Section 209, issued about two weeks ago, follows the earlier enquiry notices under which RPL's reply was not found satisfactory by the Department of Company Affairs, official sources said.

If proven guilty after the inspection, that could take upto 3-4 months, the company faces the prospects of getting debarred from entering the capital market, sources indicated.

The enquiry into the allegation of diversion of funds and duplicate balance sheet is pursuant to complaints lodged by BSP MP Rashid Alvi in April.

Reliance spokesperson said in a statement from Bombay that 'there were no inaccuracies whatsoever in the copies of the balance sheet for the year 1994-95 filed by RPL with the Registrar of Companies and all other statutory authorities."

Sources did not rule out a probe by market regulator Securities and Exchange Board of India in the issue.

In its notices of inquiry issued some time back, DCA had sought reply from Reliance on various complaints it had received about diversion of funds and subsequently asked for explanation on a few points.

Finding the explanation not satisfactory, DCA issued the notice on inspection, sources said.

Alvi had alleged in April that funds collected by the Reliance group through public offer were diverted to stock markets by promoters and privately held Ambani family companies for personal gains but Reliance had denied the charges.

Alvi, who released voluminous papers at a press conference in support of his allegations, had subsequently written to the prime minister, finance minister, RBI, Sebi and other authorities demanding a thorough probe while alleging other financial irregularities by the group since 1994.

He had alleged that Reliance Industries had collected Rs 9.34 billion in March 1994 through a public issue but the promoters and family companies diverted Rs 7.89 billion "for playing on the floors of stock exchanges".

In its statement, Reliance said on Tuesday that the allegations were 'baseless, mischievous, factually incorrect and motivated'.

It said: "Reliance has complied with all applicable laws, rules, and regulations. Further, Reliance is fully committed to co-operate at all times, with all appropriate authorities, and provide all information as may be required by them".

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