Auction of Heera Group properties without investigation and verification?
Fear of unfair and illegal action, demand for full investigation and then action
New Delhi / Hyderabad (Report: Matiur Rehman Aziz) Once again, several important questions are emerging in the matter of auction of Heera Group of Companies properties. Legal experts, affected investors and Heera Group’s legal team have demanded that before finalizing the auction of the properties, the relevant records, claims, actual amount of investment, previous payments and relevant lists should be impartially and completely examined. This demand is based on the basic principle that if any list or record is being used as the basis for auctioning properties worth thousands of crores of rupees, then the correctness, accuracy and legality of this list should be fully determined first. If the underlying figures are not disputed or verifiable, action on this basis may lead to further legal complications in the future. It has been claimed that the list referred to in the Heera Group case contains multiple entries of some names. Similarly, questions have been raised about the multiple use of some IBG numbers. If these objections are proved correct on examination of the records, then it will be necessary to determine to what extent such duplicate entries have affected the amount of the total claims. Instead of merely considering the total amount in a list as the final amount due, it seems necessary to examine the case of each investor separately. This should include the original investment, the amount received from the group, the profit or other payments, the outstanding amount and the determination of the legally acceptable claim.
In the Heera Group case, claims of about Rs. 500 crore have been referred to. However, it is an important question whether this entire amount actually represents the actual and payable liabilities or whether it includes claims for which partial or full payments have already been made. If an investor has recovered an amount equal to his original investment, or in some cases more than that as income or profit, then a reassessment of the current outstanding liability becomes inevitable. Therefore, the real question should not be “How many crores of rupees is the total claim?” but also what was the original investment? How much has been recovered so far? How much has been paid as income or profit? What is the current outstanding amount? Has the same investor or IBG number been counted more than once? Has independent documentary verification of all claims been completed? The most important aspect of the matter here is the ratio between the value of the properties and the alleged liabilities. If after a thorough and impartial investigation it is proven that the actual and liquidable liabilities are much less than the total amount shown in the disputed list, then the question must arise as to how far it is proportionate, fair and necessary to sell properties worth thousands of crores of rupees to meet a relatively limited financial requirement. For example, if after a final and verifiable investigation the actual outstanding liabilities remain limited to around Rs 100 crore, then the justification, procedure and proportion of auctioning assets worth many times more than that just to recover this amount should be made clear to the public. This is the main point on which the need for an impartial investigation further increases.
The legal team of the Hera Group has allegedly demanded that the verification of the relevant lists, claims and liabilities be completed first and then the decision to auction the properties should be taken. This demand is prima facie consistent with a basic legal and administrative principle. First determine the liabilities, then recover the assets. If the amount of the liabilities is in question in a case, it seems more transparent to have the liabilities finally determined before the assets are sold. Otherwise, there is a risk that assets will be sold on the basis of a disputed or unconfirmed amount that is worth much more than the alleged liabilities. In the Heera Group case, the interests of the government, the investigating agency or any single party are not at stake. The real focus should also be on the rights of the investors who have invested their money in the company. If an investor has a genuine right to a liability, he should get the money as per the law. But at the same time, it is also important that false, duplicate, unsubstantiated or already paid claims are not re-included in the liabilities. For this purpose, a transparent committee or investor-wise accounting can be very important, in which the original amount of each investor, the payments received and the current outstanding amount are clearly recorded.
Before proceeding with the auction of properties, at least the following questions should be answered by the public and the concerned parties: First: Have all the names and IBG numbers in the list attributed to SFIO been fully verified? Second: Has the possibility of the same name or IBG number being counted more than once been eliminated? Third: How much of the alleged claims of about Rs 500 crore actually constitute current outstanding liabilities? Fourth: How have the principal, dividends or other payments already paid to investors been adjusted in determining the current liabilities? Fifth: If the final liabilities are settled at a relatively low amount, is the auction of properties of such a large value really necessary and proportionate?
