Foreign and local partners of
Prajay Engineers Syndicate have moved the
National Company Law Tribunal (NCLT), accusing the promoters of the real estate and property development firm of mismanagement and malaise, thereby eroding its substratum and raising the risk of winding up.
Global partners
Belclare and
Whitestock, and a group of domestic shareholders led by Hymavathi Reddy, widow of its former chief promoter DS Chandra Mohan Reddy, filed separate petitions in the NCLT. They urged the tribunal to order a forensic audit of
Prajay Engineers and restrain its management led by chairman and managing director D Vijay Sen Reddy from alienating any assets. They also sought annulment of contracts entered into by the promoters against the provisions of foreign investment agreements.
Belclare, a Cyprus-based firm owned by Oman’s State General Reserve Fund, had invested Rs 70 crore in a stepdown property development subsidiaries of Prajay Engineers in May 2010. It has now accused Vijay Sen Reddy and others in the management of violating agreements on governance and corporate compliance. Belclare said it was excluded from the affairs of the entities where it had invested in and that it had not received any financial statements or information on the progress of the projects undertaken by the entities ever since it had made the investments.
According to the Cyprus firm, it learnt that its investments into Prajay Properties were diverted to parent Prajay Engineers through inter-corporate deposits and then siphoned off. Belclare told the tribunal that it had appointed
PricewaterhouseCoopers to conduct a forensic audit of the books of the Prajay Engineers entities, but the auditing firm wasn’t allowed to carry out it despite repeated requests.
Belclare alleged that the promoters led by Vijay Sen Reddy had resorted to “making material decisions, including altering the composition of the board by way of fictitious board meetings”. The investor said Vijay Sen Reddy had repeatedly requested it to retrospectively sign the “fictitious minutes” of such board meetings. “There was also a request from respondent No 4 (Vijay Sen Reddy) to backdate minutes of a meeting that in fact did not take place,” it claimed.