~.

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i) Particulars of witnesses to be examined:

·S1. Name Father's ; Date I Occupation Address Typeo!
NO' Husband's Year of Evidence to
- name birth be tendered
1 .2 3 4 5 6 7
i~ 1 - List enclosed
.
1 . ii) List of articles (if required) Attach separate sheet: Form 66 enclosed

14) If FIR is false, indicate action taken or proposed to be taken U/s 182/211 IPC: Nil

15) Result of laboratory analysis: k:. per List of Documents

16) Brieffacts of the case:

. The aUegation in brief as contained in Crime No. 212009. which was initially

, . - -

registered on 9-1-2009. by CID P.S., AP, Hyderabad on the basis of a complaint.

lodged by Mrs. Leena Mangat, Wlo Sri Nahar Singh Mangat against A-I, other Directors, Auditors and others, that the complainant has invested her retirement benefits in purchasingthe shares of MIs Satyam Coml?uter Services Ltd (MIs SCSL) on seeing the performance of the company represented in and reflected through the

. -

balance sheet and with the belief that the representations made by the Chairman, the

Managirig Director and other Directors of Mis SCSL to be true, the Complainant has invested her hard earned money and purchased 100s~ares of MIs SCSL about four years back for a total ~ .ofRs. 19,OOO/-."Jp.e complainant stated that the value of the share of the company was at around Rs, 500/- in the market

The complainant states that due to the fudging of the company accounts and manipulation of records showing incorrect inflated balance sheets by the Chairman, MD and other Directors of the company which were certified by the auditors, the

- ~~l~~ - ~f the sh;~; ~f -tb~'-~~~~an; s~dde~i;' d;~pp~~'- ~~~~j~g 'h~ge fi~~ci;iloss -to--

. . . d th 1 r· , _. 1 ••• 1 1 f 1. L - •

the Cl,)mpi~uidIlj; an' 0 (;1" snare jicL,(j _;. • ne depreciation rn f;(:;; vaiue 0 the snares is

. .

1.-

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in the press while tendering his resignation wherein he admitted to the fraudulent deeds and acts committed - by him and other Directors with the assistance of the auditors. The complainant further stated that all the accused have conspired together with a dishonest intention and committed this huge financial fraud to cause financial loss to the share holders and also make a wrongful .gain for themselves. The complainant stated that the Chairman, Sri B. Ramalinga Raju (A-I) admitted that the cash and ~ank balances were inflated to the tune of Rs, 5040 crores and the liability was suppressed to the tune ofRs. 1230 crores and the debtor position was overstated.

Based on the above complaint, CB·CID, AP, has registered a crime vide No. 2/2009 u/s 120-B, 406, 420, 467, 471 and 477~A IPC on 9 .. 1-2009 against the then Chairman, Sri B. Ramalinga Raju (A-I), Directors, Auditors and others and

- .

forwarded the FIR. to the Hon'hle VI ACMM, Hyderabad. Subsequently cm has filed

a memo in· the Hon'ble::v1~ACMM, Hyderabad on 12-1-2009 adding :Section 468 IPe in addition to Sec. 467 !PC and adding Sec. 409 IPC in place of Sec. 406 IPC.

:"".,

Further, a notification vide No. 228/612009-A VD-II dated 16-2-2009 of the Under Secretary to Govt of India, Ministry of Personnel, Public Grievances and Pensions, Department of Personnel and Training issued U/S 5 of Delhi Special Police Establishment Act, 1946 (Central Act XXV of 1946) was issued subsequent to the issuance of Notification uls 6 of DSPE Act by the Govt of Andhra Pradesh vide its GO Ms.No. 100 dt. 13-02-2009 according consent to Central Bureau of Investigation for investigation of Crime No. 212009 registered by eID Police Station, Hyderabad. Accordingly CBl. ACB. Hyderabad has re-registered the above case vide RC 4 (SY.2009-CBlIHyd on 20-2-2009 and forwarded the FIR to ~e Hon'ble XIV AC~ Hyderabad. Further the case records were transferred. from Hon'ble VI ACMM to Hon'ble XIV ACMM:.

.• T" ." __ '" _.

._ --- - - - ---- ........ - .. _ ,----, .. -,

-----_._-- -" .... _- -

17) . Refer Notice served: NA . Yes I No:

NA

Date:

18) Despatched OD :

7-4-2009

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-I

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20) List of enclosures: a) Charge Sheet

b) List of Witnesses

c) List ofDocurnents

d) List of Material Objects (Form-66)

e) Annexures-I to V

f) Statements in Original as per list of witnesses

g) Documents in original as per list of documents

h)One set of attested copies of all statements &documents i) Accused copies (statements and documents)

(A. Y.v. KRISHNA).

Supeiintendent of Police CE.!, A. CB., Hydet'abad.

. ::f ·It·o?

Forwarded by DIG J CBI I Byd.

Name: V.v. LAKSBMlNARAYANA Rank : DIG, CBI, HYD & HEAD MDIT

. 'iii.

/1

IN THE COURT OF HON'BLE XIV ACMM HYDERABAD.

ce. NO. 12009. (In RC 4.(S)J2009~CBIIHYD)

State represented by CBI, SPE, Hyderabad Complainant.

Vs

1. Sri 8. Ramalinga Raju (54 years) 8/0 Late Sri 8. Satyanarayana Raju The then Chairman,

MI~ Satyam Computer Services Ltd, Hyderabad , RIo Plot No. 1242, Road No. 62, Jubilee Hills,

Hyderabad

2. Sri Byrraju Rama Raju (50 years) Slo Late Sri B. Satyanarayana Raju The then Managing Director,

MIs Satyam Computer Services Ltd, Hyderabad

RIo Plot No. 1326, Road No. 66, Jubilee Hills, Hyderabad,

3. Sri Vadlamani Srinivasu @ SriJiivas (48 years)

5/0 Sri V. Kanakaiah

The then Sr. Vice President & Chief Financial Officer Mis Satyam Computer Services Ltd. Hyderabad. .

RIo H.No. 2-621A. Road No.3, Kakatiyanagar, Habsiguda. H)'derabad

4. Sri Subramani Gopala Krishnan (60 years) Slo Late Sri R.S. Mani

Partneflncharge of MIs Price Waterhouse, Hyderabad

RIo 68. Shangrila Apartments, Road No.2, Banjara Hills, Hyderabad

5. Sri T~lIuri Srinivas (48 years)

Slo Sri Narasimha Rao

Partner of MIs Price Waterhouse, Hyderabad

Rio Unit No.6, SKR Enclave, 'Plot No. 47, Road No. 70,

Jubilee Hill~~_~C!~a~~ . __ ' '._~ ,._,_~_. __

6 .. Srl B., Suryanarayana Raju (52 years) S/o Late Sri 8. Satyanarayana Raju

Director, MIs SRSR Aqvisory Services Pvt Ltd, Hyderabad

RIo H. No. 17, Flat No. 203, Tulasi Apartment, Madhuranagar, Hyderabad

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7. Sri G. Ramakrishna (46 years) SID Late Sri G. Bhaskar Rao Vice President (Finance)

My Home Hub,

Mis Satyam Computer Services Ltd, Hyderabad

RIo Flat No. 40, Vayunagar, New Bowenpally, Secunderabad

8. Sri D. Venkatapathy Raju (47 years) Sio Late Sri D. Soma Raju

Sr. Manager (Finance)

My Home Hub,

Mis Satyam Computer Services Ltd, Hyderabad

RIo Flat No. 304, Madhu Mansion. Q.No. 1-11-208, Shamial Building,

8egumpet, Hyderarbad .

9. Sri en, Srisailam (33 years)

S/o-SIi Ch. Rajaiah_.,.-:..·- -. < -, •. ,.

Assl Manager (Flntince) : ...

My Home Hub,

MIs Satyam Computer servlcesLtdHyderebad

Rio H. No. 29-14651216A, Kakatiyanagar, Neredmet, Hyd~rabad

• Ow.,":;, ._~. " ". "<='~"'L""" ';-'.:,

.......... Accused persons

CHARGE SHEET FILED U/s 120-8 r1w420. 419. 467.468,471, 477-A & 201 fPC

MIs Satyam Computer -Services Ltd. (SCSL) was initially registered

. .

as Satyam Computer- Services Pvt Ltd under the Companies Act, 1956 and a

Certificate of Incorporation to this effect was issued by the Registrar of Companies (ROC), Andhra Pradesh at Hyderabad on 24th June. 1987_ The authorized share capital of the company was shown as Rs.10 lakhs divided into 1 lakh Equity Shares of RS.1 0/- each.

_2.. .. _.Jh~Jollowing persons were shQ_yt.!:l_ .. as the 1.st Dire~tor~ _ ~!_the _ .. n _n .n •

Company. viz.

Shri B. Ramalinga Raju

Shri D.V. Satya'narayaha Raju

_~ ~;c.. .... I~ ~"lt(S:\Shrj B. Rama Raju

/Y "'~'t-~ '~_j~"'-';

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13

and Shri D.V. Satyanarayana Raju was the First Managing Director of the Company.

3. As per the· Memorandum of Association of Satyam Computer Services Private Limited. The main objects of the company were as following:

a) To manufacture either for its own use or for sale in India or for export outside India Computer Systems, Computer Peripherals and accessories, Computer consumables, like Floppy Disks/Diskettes, Hard Disks, Ribbons, Continuous and Non-continuous stationery

. etc. and such other products are things which may be considered either as an integral part of a Computer System or as an optional attachment or supplement thereto.

b} To u~d~rt~k~' the: designing and development of systems arrd application software either for its own use or for saleln India or for export outside India and to design' and develop such systems· and application software for or on behalf of manufacturers, owners and users of Computer Systems and D.igitaVElectronic equipments in India or elsewhere in the world;

c) To set up and run Electronic Data Processing Centres and to carry on the business of Data Processing, Word Processing, Software Oonsuitancy, System. Studies. Management Consultancy, Techno Economic Feasibility Studies of Projects, Design and Development of M~nagement Infonnatior. System, Share/Debenture Issues Management and/or ·registration and Share/De~nture Transfer

.: Agency;

To undertake and execute Feasibility Studies for computerization,

... - _··_o ., ~_. __ ._, . _._

setting up of all kinds. of Computer Systems and DigitaIlElectro=n::=-:lc=---·---------

Equipments and the selection, acquisition ·and installation thereof

whether for the Company or its customers or other users:

d)

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e)

,

To conduct, sponsor or otherwise participate in, training

programmes, courses, seminars and conferences in respect of any of the. objects of the company and for spreading ~r imparting the knowledge and the use of computers and computer programming languages including the publicatlon of books, journals, bulletins, study, course materials, circulars and news letters; and,

f)

To undertake the business as Agents, Stockists, Distributors, Franchise Holders or otherwise for trading or dealing in Computer Systems, Peripherals, Accessories, parts and computer consumables, like Floppy Disks, Hard Disks, Continuous and Noncontinuous stationery, Ribbons and other allied products and. things and standard software packages.

"

4. A special resolution as required for ~e change of name of the .

company was passed on 15th. July, 1991 and the name of the Company ~as changed to' Mis Satyam Computer Services Umited(SCSL) and a fresh

-,

Certificate of lncorporauon consequent on change of name was issued by the

Registrar of Companies, Andhra Pradesh, Hyderabad on 26th August, 1991 and Company No.01-07564 was allotted to Satyam Computer Services Limited. The Company thus became a Public Umited Company since '26th August, 1991. This company w.!!!~.e~blic in the year 1992 by givi'ng shares to the public to the tune of 81.22%. fls such the promoters share holding as on 1992 is 18.78%. This company was also listed in NSE and BSE. As such the company has now become a public limited company with 80% of shares being

owned by the investors. Therefore, the affairs of the company will have to strictly follow the corporate govemance rules and all important decisions need

to be taken ~th approval of the board and the true health of the company

" .. __ .. needs 10 be .p.~pH:;.h.~ to the_market in the form of annua1 report to enable the

----------- .... _---- --_ .... __ .,,___.,----- -.--- -_ -_-_. __ ._- .. -.- ..........

investors and share holders to take decisions with regard to investment in shares of Mis SC::>L.

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Annual Report of a Company:

5. The Annual Report is an important document, containing not only the statutory Financial Statements, Tables, Notes and Management Reports but also anything else that the Company may wish to disclose. It is the formal report by Directors to their shareholders about their performance during the year and the financial position of the company at the end of the financial year

6. The Annual Report of a Company is designed primarily to satisfy the needs of existing and possible future shareholders for information about a company. It should be understandable and comparable, reliable and relevant.

. .

Financial Statements are provided to assist and support their decision making and-to .form: the' basis of a statement of the Dir.ec~q~s~$teward~~jp -of the funds .. shareholders have invested. in the company.

StatutOry Auditors:

7. Every public company must employ Statutory Auditors. Statutory Auditors are professional accountants who check the accounting records and all other relevant sources of data and information and ensure that the financial statements' give a true and fair picture. Statutory Auditors are independent from the Ma~agement of the company. They' are employed by the shareholders and not by the Oirectors. They report directly to . shareholders through their report and attend the AGM.

8. The Audit Report must state that

• The accounts were prepared in accordance with the Law with

~enerally Accepted Aud.iting Practices (GAAP).

-- _ .. - ----.-~.--------- ... - .. _-----------_ ... _- ---------._--_. __ .- .

:I The audit was conducted in accordance with Generally Accepted

Auditing Standards (GAAS).

c._.. The Financial Statements show a true and fair view.

L

• ., All required information and records were made available .

. All explanations requested proved satisfactory.

-,

Statutory Auditors are expected to have looked at everything appearing in the Annual Report anc should satisfy themselves that the company's internal control systems are adequate. Initially MIs Srivas and Company were the statutory auditors of the company and during the annual general body meeting 2000, MIs Price Waterhouse, Chartered Accountants were employed as statutory auditors of the company.

Directors of a·companv:

9. Directors of a Company are accountable to t!1t? sharetiolders. They have Qvera-If" responsibility' for the Management ot aGornpany~s'·'A.ssets and Capital. P~rt of the Director's responsibility involves providing shareholders with adequate information on the principal aspects of the oompany, At a minimum, Directors provide details of the operations of the Company during·the year (Income Statement}, its financial position at the end of the year (Balance ~heet) and its sources and uses of financial resources (Cash Flow Statement) .

. 10. . At the Annual General Meeting (AGM), the Directors present the Annual Reports to the shareholders, who then have the opportunity to . raise any question they wish.

11. Each year, Directors must provide shareholders with a written report.· This identifies the main business activity of the Company. and . should give shareholders a clear picture of the perfonnance of their Company and its financial. position at the end of the year ..

---------_. __ .

Brief Facts of the Case:

confessional letter to the Board of Directors (Annexure - I) and brought the foilowing facts to their notice:

1) The Balance Sheet carries as of September 30, 200.8

o Inflated (Non-existent) cash and bank balances of RS.5040 Crores (as against Rs.5,361 Crores reflected in the. books).

o An accrued interest of RS.376 Crores which is non-existent.

o An understated liability of Rs.1,23o. Crores on account of funds arranged by him.

o

An overstated debtors position of Rs.490 Crores (as against

Rs.2651. crores .r~.v.~~JJJ~:~~:99:Q~$). . ".' .' ._ ... :<';;~~:';~ ~" !:.;'.;,;,' ~ _ .::::.:. , __

2) For the September Quarter (Q.2) reported a Revenue of Rs.2.700

Crores and. an operating margin of RS.649 Crores (24% of Revenues) as . against the actual revenue of RS.2112 Crores and an actualoperatinq margin of RS.61 Crores (3% Revenues). This has resulted in artificial, cash and bank balances going up by RS.588 Crores in Q.2 alone.

13. Shri B. "Ramalinga Raju (A-i) also mentioned that the gap in the Balance Sheet.has arisen purely on' account-of inflated profits over a period of .. ' last several years and what started as .8 marginal gap between actual operating proflt and the one reflected in the books of accounts continued to grow over the yeats. The differential gap in the real profits and the one . reflected in" the books was further accentuated by the fact tha~ the company

had to cahy additional. resources and assets to justify higher level of operations ther~by significantly increase the cost.

L

')

investors and the market. Therefore this deal was aborted within few hours after announcement.

15. As a result of the failed proposal to acquire Maytas Properties and Maytas Infra by' MIs SCSL, the share prices of MIs SCSL dipped from ~/-. Further, as a consequence of the above confession letter and the revelations made by A 1, the share price of Mis Satyarn Computer SelVices Limited plunged from RS.1701- to RsAOI- on 7.01.2009. Due to this, many investors suffered losses and based on the complaint of one of such investors Smt. Leena Mangat, a. First Information Report vide Clime No.212009 was registered on 09,01.2009 by Andhra Pradesh State Crime Investigation Department Police Station against Shrl B. Ramalinga Raju (A-1), the then Chairman of Satyam Computer Services Limited,

: ~ ~'bir~'clci~'~~'~J A~ditorS of 'Satyam Comi:,ute{SerVlces t.irntt~ and 'others. u/s

120B rlw 406,420,467,471, 477A IPC. Subsequently, Section 409 IPC has been included in place of Section 406 and Section 468 IPC has also been included by CID Andhra Pradesh.

" .

16.

Then, Government of Andhra Pradesh issued a Notification uls 6 of

the Delhi Special Police Establishment Act, 1946 vide its GO Ms No.1 00 dated 13.02.2009 according consent to Central Bureau of Investigation for investigation of Crime No.212009 registered. by CID PoliCe Station, Hyderabad. The Government of India issued a Notification U/S 5 of DSPE Act,

. .

and accordingly, an Regular Case vide RC.4(S)12009was registered by the

Central Bureau of Investigation, Anti-Corruption Branch, Hyderabad on 20.02.2009 and the investigation was taken up by· a Multi Disciplinary Investigation Team"(MDln headed by Oy. Inspector General of Police, CSI, Hyderabad.

- .. ------ .--_. N~~-~EXI;tent~h-&Bank.Ba(ances -ofMIS-S-CS[:-_··--· .... - ..

'i "1. MIs $CSL is maintaining the accounts both Deposit Accounts and Current Accounts with the many Scheduled Banks in addition to number of

The following are the scheduled

D

(i)Bank of Baroda, (ii) ICIGI Bank,

(iii) Citi Bank,

(iv) HSBC Bank, (v) Vijaya Bank, (vi) HDFC Bank, (vii) ~NP Paribas,

(viii) State Bank of India. (ix) Global Trust Bank (x) Allahabad ,Bank· . ~ ..

(xi) Indian Bank

(xii)State Bank of Travencore, (xiii) Bank of Nova Scotia (xiv) Canara Bank

, (xv) Times Bank

In the Annual financial statements MIs SCSL has projected huge amounts as cash and Bank Balances.

18. In corporate governance, too little cash and Bank Balances with a company usually Indicates 'potential prcblems in paying short term creditors. Too much cash, as an idle resource, indicates poor financial management. Cash itself is of no use unless it has been used to generate additional income for the Company. Cash balances may produce interest when deposited in a

---------banIC:but a qompany shouTcroe-·a5re ·to generate--fTi"6re--nef Income by

investing the money in its own business. In fact, a cash rich company is an . attractive target for acquisition.

. ,

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19. Mis SCSL has shown in their Balance Sheets the cash & Bank Balances position in the above said Scheduled Banks over the Years as following: (Annexure - II)

, Year Cash Balances in Current I Cash Available in Cash and Bank
Accounts as shown in the FDRs as shown in the balances as shown in
Balance sheets in Rs. balance. sheets in Rs. balance sheets in Rs.
(a) (b) (a+b)
2000-2001 140,82,04888 12 53 487 141,54 58 375
, 2001-2002 250,63,17,096 820,55,24,121 107118,41,217
12002-2003 230,83,95,441 1262,60,88,295 149344,83,736
2003-2004 313,73,84,102 , 1469,15,94.918 17828979,020
2004-2005 397,68,25,638 1804,38.48.734 22D2,06,74,372
2005-2006 1021.28,01 878 1907,42,20,043 2928,70,21,921
2006-20D7 41518,37,616 3365,81,55,971 3780,99,93,587
2007-2008 956 29;04~881 3317,69,64,590 4273,98,69,411
Q1-2008 1338,62,32,924 33187693,214 4657,39.26,198
Q2-2008 1841,16,51,S15 3319,17,03,274 5160,33,54,789 '"20 ..

to the Cash and bank balances i.e. balances available' in the current accounts with various banks and cash available in Deposit Accounts (FDRs) over the years as shown.in the table be/ow:

I Year Actual Cash· Balances Actual Cash' Actual Cash and Bank
in Current Accounts AVailable in FDRs Balances of MIs SCSL
(Rs.) (Rs.) . (Rs.)
-(a) ~(b) (a+b')
I 2000·2001 27,04 39,511 66,66,810 21 71,06,381
2001·2002· 34.47.45.246 38 58,80,629 7306,25,875
2002-2003 63,87,39J890 25,93,00,044 89,80,39 934 .
2003-2004 . 49 50 36,709 22,71 23,856 72.21.60.565
2004-2005 75,90 77,~80 11,.9131,346· 81 82,08,926
2005·2006 69,32,12,316 111,92(25,747 181.24 38,063
2006-2007· 172/12 6~.119 I 57,45,14._792 229 57,30,911
2007·2008' 127~39~26 262 936,14.910 ·136.75A1.112 ..
Q1- 2008 108,39,06,125 103956·736 1.18:78,62,861
Q2-2008 12a,95~15,132 1Q 82,07,532 139,1~;22~664 21. Thus, it is revealed that huge amounts of cash and bank. balances

,

were fraudulently and dishonestly reflected in the balance sheets of MIs SCSL

-.--._-_ ----- Dytnea:ccus-e<t,:whereas-:on!yvery-less amotmts-of- cas ft-afld..,.:..eaflk-bafaflees-· .. - .. -- -----

were actually available. The cash and bank balances shown in the balance

sheets and the actual position of cash and bank balances with various

scheduled banks is shown i~, .tQ~-(qlJ~~ing table:

c .. ··;)~~, .fo~'!-:

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.(-~7' (''f"': : . ...;-'. .

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~}~.,)i .J?;:,,!t ~1-:';':. '.. .~ s"" "~fj' ,.r&). i~,.{. "".·.2 '$0'1 •

• 1 .. H:' I .,~.~ ...... t~~~·'1~ .-(1 :t;\~~:r . '!'''~.~.: ;:.~\" J':- .• , t¥. ;~·r ,ii~ ... ;,:';:1Ii'_ l"'~~ ,.-~ r,\-'4· \ 't'~";,:-"-::":"'<'!:";.\t.~"", i ;; . ., ?i .. ~:. (~ -q¥;:o..;t~~i\ ::"~·':i;~;'-·"".· .1,\",: ,\. ~: .. io'f;t ':?!..':-' ... ~.~I.'l<, ID .. '''Y " • ":rl,(" .I~$. :;:'~:~"ot J ... ~.

M"- .. ~ ~. t'" ...

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Year Cash and Bank i Actual cash and Difference
Balances Shown in Bank balances (Rs.)
Balance Sheets with the banks
(Rs.) (Rs} ,
(a) (b) (a·b) ,
2000-2001 141,54,58,375 27,71,06,381 113,83,51,994
, 2001-2002 1071,18,41,217 73,06,25,875 998,12,15,342
2002-2003 1493,44,83,736 89,80,39,934 1403,64,43,802
2003-2004 1782,89,79,020 72,21,60,565 1710,68.18,455
I 2004-2005 2202,06,74,372 87,82,08,926 2114,24,65,446
I
2005-2006 2928,70,21,921 181,24,38,063 2747,45,83,858
2006-2007 378(},99,93,587 I 229,57,30,911 3551,42,62,676
2007-2008 ,4273,98,69,471 I 136,75,41,172 4131,23,28,299
Q1-2008 4651,39,26,198 I 11878,62,861 4538.60,38,337
Q2-2008 5160,33 54,789 1391822,664 '502055,32,125 22. From the above table for the Second Quarter (Q.2) in the year 2008, the cash and bank balances as shown in the baiance sheets were to the tune' of Rs.5160,33,54,7B9'~, whereas the actual cash and bank balances

. .'~.;. ,~~.~;:~t'~avaHab[e with MIs SCSL -were,;. tQ,,:-th~\ terte,iJ0i ,.:.13$..;1'39, 78, 22,664/~. ThU.$, ... ijJ_~~~ .·"H#;- r_~~,~,<."'~ ,_ :;',"':;_;:

, . ,

non-existent cash and bank balances were to the tune of Rs.5020,55,32, 125(~

i.e RS'.5020.55 Crores.

23. Shri, B. Ramalinga Raju (A-1) In his confessional letter dated

. .

07.01:200g·'has mentioned that the balance sheet for September, 2008

<;\. carried non-existent Cash and Bank Balances to the tune of Rs.5,040 Crores.

, ,

Thus, the investigation has established that the Balance Sheets for the

Quarter 2 of Finandal Year 2008, had Non-existent Cash and Bank balances to the tune of Rs.5020,55,32,125/-. Similarly, the Non-existent cash and bank balances fraudulently and dishonestly reffected by the accused in thebalance sheets dunng the previous years are als~ established. If the current a/cbalances in Bank of Baroda, Newyork Branch ~Ione,are considered which were reflected 'in MIs SCSL 's Quarter 2 results as Rs. 1784.66 cores and the,

.

Bank Balances l.e FDRs as reflected in MIs SCSL accounts as Rs. 3319.17

crores; then the total cash and Bank balances become to Rs. 5103.83 Crores, where as the actual cash and Bank Balances available at the end of Quarter 2 were or.!y Rs. 61.71 crores . making' "e difference as Rs. 5042.12 Crores which is very close to t~,e amount mentioned by Sri. B. Ramalinga Raju (A1)

\

in his confessional letter

24.

!

In order to show these FDRs, the accused have prepared forged '

Fixed Deposit Receipts ( FDRs) of various scheduled banks and also forged the monthly bank statements to inflate the balances in the current accounts, thereby inflated the cash and Bank balances in the financial statements over the years. By doing so, the accused fraudulently attracted the customers and investors.

Interest Accrued:

25. With regard to the interest accrued on the FDRs, MIs SCSL has projected the amount of interest accrued in the Balance Sheets as following (Annexure- III):

.-.0 .... ,_-

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i ..• _ :'. ..~~_ • .:. • :""':' -, ' .,_.L -: •• ~- -s-»

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Year Interest Accrued on FOfG as
Shown in Balance Sheets in Rs.
2000-2001 . 99,29.000
2001-2002 1410,88,000
2002-2003 31,92.72,000
2003-2004 9306,75;000
201)4..2005 100,05,10000
2005-2008 115,00,77,000
200B-2007 165,77,00,000
2007-2008 270,01,00,000
Q1·2008 324,11,On,OOo
Q2·2008 375,53,00,000 26. The actual interest accrued on the FDRs in. various banks is as

shown below:

YaH' Acruallnterest Accl'1iled (in FDRs in
Rs.
2000·2001 1,05,52,876
2001·2002 38,13,565
2002·2003 71,11,907
2003·2004 1,81,13,940
2004~ZP05 50,87,321
2005·2008 - ~,71, t1?r3t-
2006·2001 ·2,04,38,072
2007·2008 .1,90,17,501
- .~----:-
Q1· 2008 26,78,482
Q2·Z008· 7,42,885 ! Year Interest Accrued on FDRs as Actual Interest Difference
I Shown in Balance Sheets , Accrued on FDRs in Rs.
I " in Rs. in Rs.
(a) (b) '(a-bi
2000-2001 99,29,000 1,05,52,876 -623,876
, 2001-2002 14,10,88,000 ' 38,13,565 13,72,74,435
I
, 2002-2003 31,92,72,000 I 71,11,907 31,21,60,093
2003-2004 93,06,75,000 1,81,13,940 91,25,61,050
2004-2005 100,05,10,000 50,87,321 99,54,22,679
, 2005-2006 115,00,77,000 4,11,11,431 110,29,65,559
2006-2007 165,i7,OO,OOO 2,04,38,072 163,72,61,928
I 2007-200S 27001,00,000 1,00,17,501 269,00,82,499
Q1-2008 324,11,00,000 25,78,482 323,8421,518
Q2-2008 375,53,00,000 7,42,885 375,45,57,115 28.' In the confessional letter dated 07.01.2009, Sri B.Ramalinga Raju(A-1) has cOnfessed that the balance sheet as of September, 30 2008 carries 'an accrtled':,intetest 'OLRs~376 Crores wi:lich,,ls':~1~~l~~f1 '~'~'" _~ .: balance sheet for September, 30 2008 an accrued interest of ,Rs.375,53iOO,OOOI- was shown whereas the actual lnterest paid by the banks

, was only Rs.7,42,88S/-. Thus, it is established that in the balance sheet a non-existent accrued interest of Rs.375A5,57,115/- (rounded ·off to RS.376 Crores) was fraudulently and dishonestly got reflected by the accused for the 'quarter ending September, 2008. Similarly, the interest accrued fraudulently and dishonestly got reflected by the accused c;turing, the previous years also has been established.

Tax Deducted at Source (TDS on non-existent, accrued . interest):

- .... _ •• __ L __

29. As per the provisions of Section 194 A of Income Tax Act" tax is to be deducted at source on interest paidl credited on accruaV payment basls. MIs SCSL has reflected in their published balance sheets the Tax Deducted at sol:irce on-interest paid as shownrn-the'fOJlowmg table.

-_- --------,--_

Year Tax Deducted at Source as
shown in the balance sheets in
Rs. In lakhs .
2000-2001 . 20.59
2001-2002 8.55
2002-2003 519.62
2003·2004 ·1,903.02
2004-20.05 2,090.28
2005-2006 2,594.00
2006·2007 3,710.00
2007~2008 13,104.00
Q1- 2008 16950.06
Q2-2008 3,050.00 30. The Actual Tax Oeducted at Source by the banks on interest

accrued on FDRs are as under.

. ". ·.year"· :' ..... .... The Act-ual Tax ~_ducte~ at .
Source in Rs. In lakhs
200D-2001 , 23.17
2001-2002 . 8.Q5
·2002-2003 15.28
2003-2004 23.26
2004-2005. 10.12
2005-2006 106.10
2006-2007 45.85
2007-2008 .. 19.76
Qi-200S' 5.54
Q2-20oa 1.53 . 31. The difference between the Tax Deducted at Source as reflected In the' balance sheets and the actual Tax Deducted at Source by the banks is as following:

Year

Tax Deducted at Source as shown In the balance' sheets Rs.ln lakhs

a

Actual Tax Deducted at Sciwrce Rs .t n 'akhs

Difference' Rs.Jn Jakhs

b

a-b

2004-2005 2,080.16

2005~2006 2,437.90

r,n .

- .. '\

, '

32, However, in the Income Tax Returns submitted by M/s SCSL the Tax Deducted at Source was claimed s per the actual Tax Deducted at

Sourc.e by the banks l.e. as p:~ c u,~~ No.4 0 the above~li~.,z.., 1

33. From the above, it is established that the accused dishonestly and ln furtherance of 'the conspiracy have forged the balance sheets by inserting inflated figures pertaining to cash and bank balances, Interest accrued and Tax Deducted at Source on interest accrued on FORs .. This is done by the accused in furtherance qf the conspiracy to. project a healthy financial' status of the company fraudulently and dishonestly to attract the customers for business and to attract investors for investing in the company.

34. MIs SCSL represented by the accused has shown the false

.' ':.: ;:.i·:·~::·::··~~-·~·':at<:ll;nul~tf"orr·i:ifcash and -bank"balances 1fver~1t(effu£hJf.:.time: .. arnountinq. to .. A;~"·.:<~'.~ '{;';';-'.j4!~ Rs.5,020/-Crores (details of which are furnished above). In order to show the

sources for such accumulation of cash and bank balances the accused

. .

persons namely Sri B.Ramal.inga Raju(A1), Sri B.Rama Raju(A2) and Sri

V.Srinivas(A3) in conspiracy with the ether accused persons have artificially inflated the quantum of sales by raising falsified invoices and reflecting the same in the balance sheets.

The mode of generation of forged sales invoices is mentioned here

in under.

Inflation·of Sales by Generating false Invoices:

. . .

35. The rang~ of services offers? by Mis SCSL includes software development; 'consulting, system design, system integration and application maintenance. The mode of bill~ng for the above services is based on Time, and Material or on Fixed Bid basis. Time and Material means, servlces are billed based on time spent byassociates /employees on a projectle. either through Hourly rate, daily rate" or monthlv rate. Whereas'!n the case of a Fixed' bid project irrespective of the effort I time spent by associates/employees

,

36. Normally when a customer needs services for the above, either

through a leader or through a request for procurement, Mis SCSL gets knowledge about the requirement of customer. Based on this, sales team interacts with the customer and understands the requirements. Once requirement is known, technical team ascertains the required efforts and based on the negotiations contract is finalized either as Time and Material or as a Fixed Bid.

37. All the customers of MIs SCSL are. classified based on Line of Business of the customer and the concerned Business unit addresses the delivery o.f work to customers. Oncs. contract is signed with customer. customer gives a Purchase Order which will have details of technical"

. requirements and cornmerclals like rate and . .w.!1~p. ~I1q.h9.wJ9..:qll.l!J.!l'&~ t!:U;!.e, customer.

. . .

38. Invoice is a demand note sent by MIs SCSL to its customer seeking

payment for the rendered services. When an invoice is raised. the amount

. .

mentioned in the said invoice is shown as '~eceivab,es' in the Books of

Accounts. The name 'Debtor' is used alternatively. Affer the receipt of the payment, it gets reconciled as 'Cash in Hand'.

_.

39. In the confessional letter dated 7.1.09, Shri B. Ramalinga Raju (A- 1) has mentioned that . the. Balance Sheet of September 30, 2008 carries an overstated debtors position of Rs.490 Crores (as against Rs.2~51 crores reflected in the books).

40. In MIs SCSL. severalln~house applications were developed andby integrating them, a net-work of systems was developed for the generation of

invoices. A flow chart depicting these In-house applications is shown below:

---- _._._ .. _----_._ __ __ .. ----_-----_ .. _-_._-_._---------

Z?-

41. In MIs SCSL during the normal course, whenever a Purchase Order

.. ··is placed by a··cUstom'etdtitn~&nceme·tFausiiiess Relatiofl-ManagefS'i;W!W.;~e.~·,:: i._:: .:.;~. ._, ... in touch with the clients, send the details through the Finance ln-charqe (FIC).

of a business circle to .OPTIMA and the same is sent to Sat)Pcmr Projects

Repositqry (SPR). where the Finance fn-charqes and the Associate In-

charges of the Circles approve the project and after approval a unique serial number called the Project 10 gets generated· in Satyam Project Repository

.')'"

{SPR). Then, details regarding associates are provided by another application

called 'SHINE'. With these inputs, OPTIMA forwards the details to ONTIME wherein the man-hours required to calculate the. billing on the customer gets· decided. From there, it moves to next application called Project Billing ManagemE!nt System(PBMS). _in ·PBMS, a· bill is generated with unique serial number. and details of the asscclates, their efforts in terms of man-hours, amount per hour against each associate, total number .of such associates along with the period and finally •. a partial bill is raised in PBMS. Then, this partial bill is exported to Invoice. Management System (IMS) and the same

------.-. ·-llets-consotidate{!-iri-IMS--afid-tfle--GooseHaatea-8m-+s-Q·~r:lique,--- _

serial number. Based on this Consolidated Bill, a final invoice is. qenerated to be sent to the customer. The invoice contains details of total amount, name of the customer, pr-oject ID, project name, Purchase Order, etc. Theri these ::~

;,,' ~1"'''''ln.~D . re exported to Flnanclals and as and when payments are.

,./_';r.,.,~X!>~ .... .!,;!- .

z....... ..... \<. ,,",c""'"

<i~~ ~. v.{-; ~

·n~~ ... ':;\\

i?: '3.'6 \t

·:Sr' 'n .e: u

i ~ i')~ it

\t~~ .. ~~ fj

~.,,~

received, they get adjusted and if the payments are outstanding, then the same are shown as debtors.

42. However, in MIs SCSL in order to cater to emergency generation of invoices, by-passing the above mentioned procedure, invoices can be generated directly by a technique called "EXCEL -PORTING". The access to this EXCEL - PORTING is given to only select roles to those associates who' are working in the Accounts Receivable Team (AR Team).

43. During the period 1.4.2003 to 31.12.2008, a total of 74,625 invoices were generated in IMS through the EXCEL-PORTING Technique. In these invoices in the field ear-marked -InVOice Field StatUs· either the alphabet H' or S was entered. A total o~ lnvolees out of the 74,625 invoices were found.

'.. . ... ''':~.r. ~.' ._. -to"ri9' 'With jnv6i~' FieJd· Status· ~tere<f: as· .S~an~ ;these froioice$:were~hjdd!S~''f''';;-::';'~J. , .. ,.', .. , .. ,';;c, ..... -;;:;__':: . from the view of Finance In-charges (FICs). Out of these 7561 invoices, 6603

. ---='

involces were found in the Oracle Financials reflecting the actual sales. The

. ,

total amount shown against these 7561 invoices is Rs.6.117.69 crores and

. .--=

the tot'al amount" corresponding to the 6603 invoices found in Grade

Financials is 'RsA,746 Crores. Severai validations were conducted with regard to the genuineness of these 7561 invoices by the following methods:

, .

a) Confinnation from FICs:

The FICs in whose business circles, these invoices were shown to have' been generated denied the same confirming' .that these' 7561. invoices as falsified.

b) Confirmation from the Associates:

Some of the Associates whose names have been shown to have _____ .... _ ... worked in these projects contained in these invoices denied ·having worked in

. .- . .- ... --.--_____;;-~

such projects thus confirming the falsification of the invoices.

c) Back trackinq reports from the PBMS, ONTIME & OPTIMA,:

Z-,

d)

Examination of Indian customers against whom some of these invoices were raised:

.)

11 Indian Customers pertaining to these 7561 invoices were identified and during examination, it was revealed that the invoices raised against their names were never received by them.

e} Examination of the Business Unit Heads:

The Business Unit Heads after consolidation of the reports from their Business Relation Managers have confirmed that these 7561 invoices as' false.

1) Examination of officials from Bank of Baroda:

.. . •• -, , .. '''' ~<;><"-:' .... ~.:1fw~~f"'·:~~;~ .... c;;l@§:~~ .. FinC1Dcials, p~ym~!l~<~$r~_~h~~R~~~.;.;~~~~)~~~IU~ceived

at the MIs SCSL account in Bank of Baroda, New York Branch; The bank confirmed after analyzing. their data that no such payments were received.

g) Validation with regard to the associates allocated to the Project IDs contaIned in these 7561 invoices:

It is confirmed that out of 33,510 associates shown to have associated with the project IDs mentioned in these invoices associates to the . tune of 32,761 were not actually allocated.

h) Identification of Fake Project IDs:

Examination of the' relevant Quality Manager of MIs SCSL revealed

. .

that 205 project IDs that were used in the false invoices wei'e not existing in

the Satyam Project Repository.

44. Thu~tthrough the above validations it is conclusively estab:llshed.

_thaUhese 7561 inVQlces are false documents.:£~.rth:.r~ it is also establishe~, .. __ . __

as to the modus. operandi, that was adopted for generating these false

invoices. Apart from creating these false invoices through Admin Role with

Excel Porting technique the accused have fraudulently and dishonestly.hidden

these false invoices from being seen by the business circles and their finance

, ,. . .

incharges. This incorporating a

\

k

30

" ,

subroutine in the source code of Invoice Management System (IMS) which created a new role called Super User Hole which could hide the. invoices as mentioned above. This particular source code was identifled and it was established that it was Sri.SrisaHam Chetkuru (A-g) who corresponded with the technical persons with regard to this code. Further it was also established that Sri Srisailam Chetkuru (A-g) has used his sub-ordinate associates to generate and hide these falsified invoices. Detailed analysis of the computer logs was carried out and the relevant extracts from the computer servers were taken and it was established as to who were the individuals and which computer systems were used for generating these falsified invoices. Further the server HMF NT.010 where the false invoice data

-

was stored was also identified and incriminating' electronics records were

-,-.~.":' •. ·"l·- ';~~~:' - .. '''retrh;~ved and .. ~.mput~r.-fQ.fefl$iG.A~.xf.l.eF!:--opinfQr)s ,w~te~!3,~q~.9J~·talr,!!~.~, .·It~w~.% ,;::: .. '~ ..... ~Iearly established that 7,5§1 false invoices worth Rs. 5,117 crores were'

. generated using the above modus operandi as part of the conspiracy.

..... '

45; .. ... After generating ·.the fake involces in the Invoice Management System Sri. Srisailam Chetkuru (A-9) in furtherance of the conspiracy got entered 6603 fake invoices out of the above said 7561 invoices into tbe Oracle Financials through his sut>-ordinate associates thereby falsely inflating the sales to the'tune of Rs.4,746 crores. Out of these 6603 invoices, the acc~sed h~ve also reconciled the receipts for 5,889 invoices thereby inflating the cash balances in hand by· an amount of Rs.3,983 Crores.

46. So Srisailam Chetkuru (A-g) was. physically getting the false invoices generated in the IMS by providing required' data to his subordinates namely Sri K.Malla Reddy and Sri P.B.V.Suresh Kumar. Based on these inputs Sri KMalia Reddy and P.B.V.Suresh Kumar were generating)he false

-·-----------i-AvaiGes.....aAG-stGr:iR9-tt:le-.saffie_~tI:1.e_seot.eL HME NT 010 as .peJ_tb.e_nu _

lnsfructions of Sri Ch. SrisaiJam (A-g). Sri Ch.Srisailam (A-g) was

clandestinely omitting the certain number in the series while generating

regutar lnvolces tn order to use these numbers for gen~rating false invoices at

got recorded u/s 164 Cr.P.C. and the certified copies were also obtained. The same are being cited as relied upon documents.

,

r-

47. The detailed quarter wise break up of falsified invoice generation in the Invoice Management System and their reflection in the Oracle Finandals and further the reconciliation of receipts in the· Oracie Financials is shown in the table below:

Quarter wise break up of false· Invoices raised In IMS through EXCEL Porting, entered and reconciled in Oracle Financials for the period from OUl4.2003 to 31.12.2008 in Mis

. . Satyam Computer Services Limited

FAlSE INVOICES RAISED FAl:.Se INVOICES ENTERED FALSE INVOCIES
IN INVOICING IN ORACLE FINANCIALS RECONCILED IN ORACLE
MANAGEMENT SYSTEM (OF) FlNANCIALS
(IMSJ_ (OF)
No_of Invoices Amount In . No. of Invoice Amount in No. of In~oiC:e Amount
'i: : .. ~~-:--I.~ :-...:-.\~"'~" ~.~~ ~' Invoices ;, ....... ,,; J<.'. J.tj~-.::.;u· _.,,~ ;l!f~.' t _".~." ..... INR invoices for shown as
Raised· ·'whI6h·"·'" .:.' :·'~·n!~~~t~~-,_~ I~~''''
... nteroo ~~.:-
receipts inlNR
shown
01 {Apr 2oo3-';un 2003) 97 675773058.45 97 675773058,45 99 655402054.96
Q2 (Jul 2003-Sept 2003) 8 48458754.45 8 48458754.44 8 48776308.53
03 (0cl2003-Dec 2003) 50 402460265.30 50 402460265.33 49 398273915.64
Q4 (Jan 2004-Mar 2004)· 112 1005375943.25 112 1005377 693.25 111 1041036043.52
TOIo\lI .. 267 2132068021.45 2137 2132069n1.46 267· 2143488322.65
Q1 (Apr 2004-Jun 2004) 112 863756817.65 111 863656833.16 111 891163006.74
Q2 (Jul 2004-Sept 2004) 64 414972335 53 407071698.24 62 391741948.52
Q3 (Oct 2004-Dec 2004) 73 50?35S438.50 69 495526123.42 69 481194041.09
04 (Jan 200S-Mar 2005) 217 1423958104.90 208 1328135485.94 208 1286458799.27
Total 466 3205042696.05 451 . 3094390140.76 450 3052557795.62
01 (Apr 2OQ5.Jun 2005) 249 1547384062.10 249 1&46913·816.30 249 1494243547.72
. Q2 (Jul.200~ept 20OS) 24~ 134466970.1.40 242 1344637971.79· : 238 1334649309.02
03 (Oct2005-Dec 2005) 296 163477565200 291 1501734841.45 . 262 1414381192.20
04 (~an 2006-Mar ~006) 400 2133425995.50 398 . 1934497015.11 361 1840686424.12
Totil 1188 6660255411.00 . 1180 6327783644.65 1110 6083960473·.05
01 (Apr 2006-Jun 2006) 25 7564979.80 12 1307021.40 11 1139584.67
Q2 (JuI2006-Sept 2006) 101 1417512548.·m 30 1348426093:20 20 1326829000.00
Q3 (Oct 2006-0ec 20(6) 385.' 2839480410.80 237 2423440829.97 237 . 2273743059.50
Q4:(Jan 2007-Mar 2007) 457 3405583824.00 375 3019854977.87 373 2499668380.60
Total· '68. 7670141763.00: ~4 8793028922.48 641 6101380024.71
01 (Apr2007-Jun 2097) 680 3941982559.60 473 .3226186008.17 473 2690m862.67
,.."., , r.,~t-20.07-\ 741 41512Z6136...4.0 486 3205579253.95 485 277249.9~9.1}4 .
-
Q3 (Oct 2007-Dec :2007) 889 5987744196.60 ·730 5258217183.91 726 4836825391.36
Q4 (Jan 200B-Mar 2008) I 794 5653003861. 10 I 7g4 5653003861.13 794 5401277946.71
Total 3104 19734006753.7°1 i 2483 173429136307.1, 2480· 15901330310.58
Q1 (Apr 2008·Jun 2008) 791 5889432614.40 . 791 5889432614.45 791 5483034759.91
..
Q2 (Jul 200S·Sept 2008) 777 5885986975.20 777 . ·5885986975.18 150 1067531809.30
Q3 (Oct 2008-Dec 2008) O. ·"",,·.~C.F'h\flOjl a 0.00 0 0.00
Total 1568 d't?1p4 .. ' . J,;~6:68 11775419589.63 941 6560566569.21
GRAND TOTAL 7561j ....... .. ' "iSti1'7J6!l.-!4: 2sa .. .;~:tG.6OJ ~746,56, 7B,376 5889 ·3983,33,33,995
.. ~.",,:-
_~tL~~ .~~~ ~ •. s .... >.: ,)-r .. ~- '-{~'''''< u.
; J."~ .l ~.~-::_ ~~ ~ .. ":J .t,
... !" ._'~'. -z...:" 11·"0 'I ~ • '::' ~.~ •••• ' L •••• -

)

48. From the above table it is clear that the Sales have been fraudulently and dishonestly shown inflated every quarter to show a larger balance sheet and correspondingly higher profits to make the investorsanc shareholders believe that the company was performing very well.

.'

49. To account for the receivables shown in these falsified invoices the corresponding Bank Statements were also falsified by. the accused. The monthly bank statements provided by -the bank to MIs SCSL we~e got forged by the accused and several false entries corresponding to the amounts mentioned in the false invoices were entered in the bank statements maintained in Oracle Financials. The testimonies of the bank managers made during investigatio'n on comparison of the falsified bank statements prepared by Mis SCSL with the original bank statements revealed that the accused got

.. s- -e .. -:.:···:.}:";--··~,::~-:·..'..·, .. ·~·~t·:-~: "", '. '" ,- . '. . ..,~. --.' . r . ->, ,.,;.:.:.-' ... :,~ .:':' .: .. L.·'

prepared falSified bank statements." .

"": . - ,~. " .

.'

)

" ',. , ..... ~ .

.'

50. By creating these false invoices the accused could show artificial·

sales and this has led to increase in the overall size of the balance sheet This has also increased 'the prestige and credit worthiness of the company in terms of the total business turnover vis-a.-vis the 'other companies in the same field.

. .

Through this inflated false sales the accused 'could attract prospective

customers and investors making them believe under deception that MIs SCSL was really carrying out such huge volumes of business.

Inflated 'Sales:

.51.

By generating the above mentioned fal~e invoices ·the accused A··1 to A-3 along with the other accused in furtherance of the conspiracy were inflating the sales every quarter. During the course of investigation the actual sales

'. . .

figures were collected from the respective business circles and the- total of

,

.'

;.- -~----.---- --these· acttlal-sates-were-:ea-ic-tflated: Further the-sa-les-sl:town-in..th~IisJ:led_ ._ ~ __ ', _'. .

balance sheets duly audited were. collected during the course of

invesuqaffon and tabulated. This analysis has clearly proved that the

accused have dishonestly and fraudul_~ntly inflated the sales figl:lr~s thereby

inducing the in~~~~~~~J .. c:stomers I.nto evincing larger interest into

. __ ".lb!=! . affairs Of~:' .~~lf{tft~r were able tc attract prospective

~- ~;1. ,..~ • ,~ ....

_rl D"';'~+~",.~... ~-I"". . " .. 1" .... -'.·.~t ... 2

! ·~\{··~~Z..,;, ,~··~~{f;~~·:l\.o::.~..,. \ .

"'. . ... ,', J ;:re ~!..;(..:.,·· l'

,0 " .,.;:.;~ ~' .•. ~.' P 1- ~ L .

. - .. ~?:~.~ ~&·~~~'~t.4iJ¥.lD:tt?: .~~~

• ~.~ r· .. 'n; ,;,'0/ . p /.

.' .~~~t ... ~. _'.

'* . '.. ~¢~. '\.-: ... -/ fl· .. , .... ~ . ..;_~ ... _ _. "'·-l·~- '.~ ._!'· •• :~1

• ~" -_,>o."" .-' ,

~riff'l(~' ~~ ~,;-~,' ,.~.

~.,-~:....:~ .... :"-:-./:)/

~ ... ~!:- .. -_........ .

i

customers and investors by making them believe under deception that MIs SCSL was really carryinq out huge volumes of business. The s~les figures were being inflated continuously every quarter to the tune of several hundreds of crores of rupees in every business circle thereby inflating the total quantum of sales of the company by huge magnitude. In the last 18 quarters itself the sales were inflated to the tune of RsA,257 Crores. By doing so the accused were recognizing the non-existent- income. through inflated sales and thereby projecting a highly inflated growth figure to the market. The averaqe inflated percentage of sales for the same period is around 18%. Detailed. figures pertaining to the actual sales, those pertaining to the inflated sales, the difference· between the actual and inflated sales

. .

and the percentage of inflated sales are given in the table below:

of inflated sales in Cr.

of Inflated Sales

Sales in 'cr,

... Publlshed . and Audited Sales in Cr.

Inflated Debtor Position:

, ,

..

52. By generating the above mentioned false invoices the accused as part of the conspiracy were inflating the sales every quarter. Further a portion out of these inflated sales were being reversed everl quarter in their records in Oracle Financials based on the forged monthly bank statements and the remaining portion of the in.flated saies is being reflected as debtor in the balance sheets. Whereas investigation has revealed that the company was not having any such debtor for the relevant period. By doing so A-1 to A·3 in conspiracy with other accused have dishonestly and fraudulently reflected non-existent debtors thereby inducing the investors and other customers into.

. .

evincing larger interest into the affairs of MIs S.CSL and further were able to

attract prospective customers and investors by making them believe under

-, , .... ' '\: ~+,,- ;._ .. ch~ception that Mls~ SCSl ~wa~3' :"iealiy::-GaITying .. Qut.huge volumes '(jf.:-b"uSines·s: . :/;.~~, .'~; r: .... ', t: .. ~ .

For the· Quarter-2 of the financial. year 2008-2009, Mis SCSL had overstated the debtor position by Rs.481.84 Ci?res. The table given below giv~ a detailed quarter wise break up of the inflated debtor position which was .fraudulently reflected in the 'balance sheets.

Quarter-wise break of non-existent debtors published by MIs SCSL in the balance sheets

. Period ,Debtors inflated in the
balance sheet
(Rs. In Crores)
Q1 :Apr 2003-Jun 2003) 2
Q2 Jut 2003-Sept 2003) . O.
Q3 Oct 200U)ec 2003) 0.41
Q4'· Jan 2004-Mar"2004 0
Q1 (Apr 2004-Jun 2004 a
Q2 (Jul 200+$ept 2004) 1.53
Q3 Oct 20044)eC 2004 1.43 ,.
..
Q4 Jan 2005-Mar 2005) 3.96 ...
Q1 Apr 200S-Jun 2005) 5.2G
Q2 JJul 200~ept 2005) 0.99
n~ rnl!t ?nn~_nAl! ?nnli.' 8.73
Q4 Ja.n 200G-Mar 2006 9:38
01 Apr 2006-Jun 2006) 0.01
Q.Z (Jul 20tJ6~Seot 2006 2.·15
Q3 (Oct 200·S-Dec 2006) 14.96
Q4·(Jan 2007~Mar 2007 52.01
Q1 (Apr 2007~un 2007) 33.54
Q2 {JuI2001~~OP7:} ,~. 43.30
Q3·(O~t, ,.o.0iil"'~~ 42.13
d:...~ .,~ .• ,;-}: ~ _
.......... - _.-'~ "\
.... r.., ~:t4'\r."", .~.... ".4!~'. .:
I I. "" _ _, .- .. -~---.---

.( (

04 (Jan 200B-Mar 20081 25.17
Q1 (Apr 2008-Jun 200fl) 40.63
Q2 (Jul 200B-Sept 2008) 481.84 53, In the confessional letter dated 7.1.09· Sri 8.Ramalinga Raju(A-1) has revealed an overstated debtors position of RsA90 crores for Quarter-2 of FY 2008-09 and the same is established during the investigation.

Management Infonnation Systems:

54. Further the accused A-1 to A-3 in- furtherance of the Conspiracy

. .

with Sri. G.Ramakrishna (A-7).got both the actual and falsified inflated sales in

~·"";:~·~i<i:<""~:~;:'f~J·~~.f~~ryr"gfJ~anagemellt_lnf.9.®~!~~~~~~~W.4:1~·~~~: Q.~~~Jated every ~~~:~~~. _.~;:~":''''~'' ~'~;;(',(.t2'" "'."

. which clearly establishes their knowledge about the existence of two sets _of' - .,....

data, one- real and the other inflated. These falsified sales were published in

the annual -financial statements to cheat the existing and the prospective

investors. One set of such real and inflated results were retrieved from the e-

mail box .of.Sri. V . Srinivas (A3) on his disclosure leading to the. discovery of. .

incriminating material. Fu~er, severa! such sets of actual and inflated MIS

sheets w~re retrieved from HMF NT 010 server which clearly shows the

organized manner in which the objective of the conspiracy was' carried out

Sri. G.Ramakrishna (A-7) was generating these MIS results till 2003 and later

. I .-

delegated the same to his subordinates ..

55. It was also.establlshed that the gap between the actual sales and "the falsified inflated sales was substantial for every quarter -and the quantum of difference became palpably abnormal in the last eight quarters ~uring 2007.and 2008.-ltwas further established that this gap between the actual

- '-

. --'-·-~lstfied--iftflaterf.sales--was-eEtyal-tG-t~~-saJes.invoices

that were generated for .the corresponcinq quarter. This was establlshed by analyzing the data that was available_ on HMF NT 01"0 server:

=, ~~~~:~ ...... ,,,.::;/!i\~\- ,<.!~I./,~

.-·i -~r.1 : _- .. ~ ...... , .. _ .

.• ~: ~, .,-.' .:.~'. \~~- -.l'~ .. v ,

:'.~ :'1.-.' '. ~ r-» ' '<':; .. ~;!.~~ ~'

~ ~ ..... ~ • ··a"" Jj~

~ ~ . ·~~_~'i~h~'.' ."j~:l.\ .

~T,<~. I~ ':.:b~:·'" ~±\ . \" .• -, ,

tt.2 \! '~\}j1.~./~~~'~J.:. ',;~i ;.g

\ ~ ~ :fI"'---"~· ·"~n'£ .,,". 1"

J:. t·;t '~\~~'fi"~~;';.i~;.~' : r. ~\ ',-.. ~:i!fJt;.J:r~ ~

- ~~~t:v>~":;';';;'f--~/."";>,, '

_"'.~/>·)!A~~o ~~~;~~;/

~ ~.a~.:.-.~:_~";:/.~ .

.... ..w.~_ .. _i'."..

36

'I ,

56. By indulging in the acts discussed above the accused have inflated the sales through false invoices, further created non-existing Cash & Barik Balances and Debtors, thereby gained wrongfully in the follow~ng manner.

Off-loading of Shares of Mis SCSL by the Accused and other gromoters of Mis SCSL:

57. MIs SCSL had the following 'promoters in the beginning, viz. Shri B. Ramalinga Raju (A-1), 8hri B. Rama Raju (A-2), Smt. B. Nandini Raju (Nife of A-1), Smt. B. Radha (Wife of A-2), 8hri B. Suryanarayana Raju (Younger brother of A-1 & A-2), 8hri D.V. Satyanarayana Raju, Smt. Appalanarasamma

, ,

(mother of A-1 '&'A-2), 8hri B. 8atYanarayana Raju·(father of A-~ & A-2)~ Smt

B. Jhansi Rani (Wife of A-6) and. MIs Satyam Construction Co. These p'rbm6te'rS'weretfiolathffshiil~es' to the tune of 34;'89,400' -cor.lstittltfntf18_78%; of the total shares of the company in the year 1992.

-- - :: t;'. - -

58. On 31.05.1995, the following 5 investment companies were floated. ' by Shri B. ~am,lIi~g~ ~aju (A-1) and others for the purpo~e;. O!, sale of s~~~~~_~ .. held by the promoters. The details of these investment companies are as . following:

S.No.

Name of

Investment Co.

the Name of the

Directors ,

Names of shareholders.

the

3 MJs ~i.ndty Invesbnents Shri B. B. Ramalinga Rajtf(A-

Pvt. Ltd. . Suryanarayana Raju 1). D .. Sriniyasa Raju.

A6

MIs Elem Investments Pvt. ·ltdr

Shri M. Rama Raju

D. Ravi Kumar,

B. Suryanarayana

RauA6

MIs High Sound H.Satyanarayana

_ .. ·--····,-------+--+--=n-;-:-:ve==s:x::tm:=-:e:o"::n:r.ts;:"1PVf"""=.-tC.:tij;;r-.--I-mijU-"

(Presently MIs· SNR B.Radha.Raju

lnvestments P'.It. Ltd.) B,Te]2 R3jU

1

2

Mis High Grace Investments Pvl Ltd.

Shri Raju

K. Krishnam I B. Rarna Raju .

. (A-2), A. Srinivasa RaJu

. .! ,(Brother-in-Law of A-1)

4

B.Suryanarayana·

B.Teja Raju

. B.Rzma RE1iu(,A2)

. I J

I

,

I 5 MIs VEEYES .

I

. -

Smt. B. Jhansi -Rani & I Smt. B.

I Appalanarasamma Mother of A-1 .

· ,

"

:59.

r'

In the year 1997, the sons of Shri B. Ramalinga Raju (A-1), viz. Shri

B. Rama Raju Jr. and Shri B. Teja Raju also became the promoters. During the year 1999, bonus shares to the tune of 44,18,692 were allotted thereby the total number of shares held 'by these promoters has become 89,30,606 constituting 17.34% ,of total shares.

60. During the year 1999, the promoters Sri B.Suryanarayana Raju(A- 6), Smt.B.Jhansi Rani, 0Nife of A-6) and Srn,t.Appalanarasamma (Mother of A-1; A-2 & A-6) have offloaded their shares indirectly through the accounts of ,17 individuals who are the trusted employees and their family members, The

, '

modus operandi adopted was initially to transfer the physical shares through endorsement in the names of the above 17 individuals who in tum deposited the same in their DEMA T accounts and got them off loaded in the market

'~L.,·~:·._ ..... ~_·t~.,..;.,·:: .• ,..: ..... ·:.: .. · .. ,.'.-", ..... ~ _ ,' .. ," .

through the 5 ,iwestme'fif companies mentioned above.' SulJse!cfue'ntJy.',these:.. _.:'

investment companies sold these shares in the market and transferred the amounts to the individual accounts of 17 persons. Then from the accounts of these 17 indlvlduals amounts were transferred to the accounts of the promoters through cheques.

~, 61. During, the year 2000-2001, through the Investment companies floated by the accused mentioned above, the following. promoters of MIs

, '

SCSL sold their shares and received, moneys as shown below:

Name of the Promoter Name of the Amount received' Total
·Invesbnent Co. through saie of
shares
B. Satyanarayana RaJu Mis Elem 2,00,00;000/-
·Mls Flnclty 2 00,00,000/.
MIs High Grace 1 50.00,000/- 5.50,00,000/-
Smt. B. Mis Elem 2,00,00,000/- ., .,"
Appalanarasani'ma !; .. -,,:
MIs Flncity 2,00,00 000/-
, MIs High Grace 1 50,00,000/- 5,50,00,000/-
'8.~' ;"~-~f!ayana-- -.~ f-Mts Elem 12.78 70 000/- .
..... -.
Ra]u(A6)
Mis Fincity . 1 00,00,000/-
MIs High Crace. I ' 7,OO,OO,OGOJ~
, Mis Ve~yes 4,05,3,0,000/- 24,84,00,000/-
B. Jhansi Rani M/s·Etem .' 3,10,20,0001-
.J!I.!~! ·11.~ity 2,71J,20,OOO/.
.' ,~r.,.~ .: ;lYIIS, ~e 2. 12.0~.QOO/::-
-ill' :'::;;t~j~i~~- -, .:~:. --z. M/8.' iii igtt~"VnCl 3",50,000/-
v~·w ~~,f.?~_" .~~~~ ~~~,,,. ).
;o~: ~ .:-.o.\\'! c '*:.. : .••. 3'. Mis Vee:t_es , 3,O!,70,OOO/- 11,10,60,0001.
B. Pritham Teja M/sElem 1,00,00,000(-
Mis Fincity 5,92,10,000/-
MIs High Grace 6,OO,Ou,OOO/- 12,92,10,000/-
B. Rama Raju Jr. M/s Elem 6,21;30,0001-
MIs Fincity 6,50,OO,OOO{-
Mis High Grace 50,00,000/- 13,21,30,000/-
Smt. R Radha MIs Elem 86,75,000/-
MIs Fin·city 96,51,000/-
Mis High Sound 8,74,0001- 1,92,00,0001-
, TOTAL 75,00,00,000/- 62. During the year 2000-2001, the proceeds obtained through sale of shares was gifted to the family members of Shri B. Ramalinga Raju (A-1) by the above mentioned promoters who off loaded the shares through the investment companies. The distribution of the said amount among the family members of Sri B.Ramalinga Raju(A-1} is as following:

z: ~ " , - , ,

.' -~. r' ~ ,_

....... ,- • ~_ '. • • L

, ...... L' ....

S.No. Name Amount
received
1 Shrl B. Ramalll1ga RaJu (A-ll 27,91.13,005
2 Shri B. Rama Raju (A-2) 2689.11.910
3 Smt. B. Nandlnl Raj_u --"OO_fe of A-i) 1 O.2Q,_56.679
4. Smt. B. Radha RaJu (WIfe of A-2) 9.7072343
·.5 Shri B~ Rama Raju Jr.jSon of A-1) 1,9746.000
TOTAL 756899937 63. Over the years. the promoters of the company have sold the shares in the open market and received huge amounts. As the whole world was under the impression that MIs SCSL was performing very well and thereby started investing in this company due to which· the share price of the script of MIs SCSL has maintained very good level in the market, As

...........__---------

. .

diSguss~d earlier, the performance of the company was.,p()t as projected in

the Balance Sheets as it has been proved during· the investigation that the Balance Sheets over ·the years have been forged and the figures mentioned against various heads did not reflect the true performance of the company.

The accused have made hay when the sun was shlniflg by I')ff loading the shares, while the other investors might have been ·holding on to the shares

with a false hope of jnc~.~ ~: _ ~ ~~;~e of the Shares~ "" amounts received

PY.,:.the:p'!;9moters by B!f;.~ f1.J.f4.~, are shown 10 the following table:

(?;.\~Il.l!o'cl :~ .• , ~~iI ~:~.' ~~·""··f •• , . \

"' •. ur: ~ E...:\: .~(J.. ~~ :-.. ...... .J ...... -;~

s: e ~. ~r\. ,.. ~'..-?;i · ._ ~ J~ 1.l

,<;~;q- ~i~\ ... ~ .f'!f..' fr~ ~0 .. ' <0.' • \

~j ... & !) 'iio ~ ~ ....... \' • j'.(k • ..! .. ~

tu: l1 .. ~ ~~. ..~ "E : r·· , ... ~ ,""'Pi , .'

J I~ }!: !i ,. i .. "',. .~ . ·JI .' ...:rl:';-.'. Ii: I~'

~~ ~ :" ~. :) ~ ;. L~ .t~. ~ ~iSf,' -: .. e:; T' '.

tt .. , :, fl· ~&2~'::~ ~'o(~~A.:;;::: ~·l. I

i;, l·f x .~. ~ ... ~I e: i_fr'

~ ....... w f"Jf'i 'I .!-.. ,.' ,'·t·· ,""'"

":..:.~. ~;.,~ ~~' t ..... '.l.!u:I<JlI' ,.J;.." •. -e, .. ';i_v'.

~ . Y 'II .Stj" ;; ... :,.. J "y.-'

'... ~?r,.. <!. .• ,.., ,.r~~i- ' ~. ~ ~~ ~.......;7.

I ~~~:'" .:.~"':- ~..,. !.. ...... _.:-:.:.. .~ .. -:-: .... ..'1..!J.,..~. ~,..,

-......,.'1.:::._;:~::;.};:~ t, • .~.u.._~~..,.-"".

-_)

. S.No. Name of the promoter Amount received on
account of off
loading of shares of
MIs SCSL
1 B. Ramalinga Raju (A·1) 26,67,97,1981·
2 B. Rarna Raju (A-2) 26,68,37,168/-
3 B. Su_ryanara_y_ana Raiu 181,16,86,494/·
4 B. Pritam Teja 92,85,27,193/-
5 B. Rama Raju Jr. 92;54,16,171/·
6 Maytas Infra Ltd. 190,16,31,043/-
7 B. satvanaravana Raju . 20,93,46,5321-
8 B. Satyanarayana Raju - HUF 2,05,82,450/·
9 6. Appala Narasamma 17.58,42,936/-
10 B. Jhansi Rani 56,39.32,971/-
TOTAL 707,06,00,156/- '. -". ' '. \.~ .',

64. In addition, the investment company, viz. VEYEES Investments Private Umited has received RS.a, 13,57,4551- by selling some of the shares thereby making the total amount received . by the promoters and VEYEES

'-llW.6$tm!Wts<: .. to -·R§:.715.19,57,611/- ... In the pr,.~~t9taJ_pt 1;09.42,0,20,

.. .,~ . ..-. . ~.~ . . ."

shares of MIs SCSL were sold to receive the said amount Due to this offloading the stake of the promoters of the company had gone down from 17.34%. In 1999 to down to 8.59% in 2006. Outing the year 2006, bonus shares to the tune of 2,78,67,000 were allotted to the promoters and the total shares held· by the promoters in 2006 were 5,57,36,000

£5. From time to time, dividend was paid to the shareholders from _the year 1-994 till 2009, the promoters ·,jn total received a. dividend of Rs.11S,12,30,5521-. The Dividend received by the individual promoters is'

-

shown in the following table:

-----_._--

S.No. Name of the promoter . Dividend received
t. B. Ral'nallnga RaJu (A·1) 21,05,02034/-
2 B. Rama RaJu _(A .. 2) 24,32',16.2951-
·3 B. Su_rya~arayana Raju . 180,25,6011-
4 B. Nandinl Raju '8 98,72 9051-
5 B. Radha 8,57,84,3271-
6 B. Prftam Teja 1,42,64,936/-
7 B: Rama Raiu ·Jr. 1,38,86,3841-
·8 Maytas'lnfra Ltd, 1,56,24,0371.
9 SRSR-Holdin_gs Pvt. Ltd. 44,58,24,000/-
10 B. satvanaravana Raju '57,77,304/-
11 B. Appala Narasamtna 42,84,27.51-
12 'B. JhanslRanl 41,68,454/-
TOTAL i '115,12,30,552/-
.,.=:, i,- r

66. ~ On 22.06.2006, a private company, by name MIs SRSR Holdings was floated with Shri B. Suryanarayana Raju(A-6, Brother of A-1 & A-2), Shri B. Teja Raju (Son of A-1) and Shri B. Rama Raju (A-2) as Directors. On 14.09.2006, all the shares held in the accounts of Shri B. Ramalinga Raju (A- 1), Shri B. Rama Raju (A-2) , Smt. B. Nandini Raju (Wife of A-1) and Smt. B. Radha Raju (Wife of A-2) were transferred to MIs SRSR Holdings.

.)

67. In addition to off loading of shares as mentioned above the accused promoters have also floated 327 companies to further their objectives of investing the ill-gotten sale proceeds of shares in real estate and other allied businesses, in order to consolidate their financial position at their personal level.

-, t"

. .

Floating-.of~327 ~companies and their financiatactivjties:, !-'..: '!. '0"" _.

. -~." -._ .. --- .. ~- - .... - __ .

t

68. A total of 327 companies were lncorporated frorn 1999 to 2008 from

time to time by Shri ·B. Ramalinga Raju (A-1), Shri B. Rama Raju (A-2) along with their tamily'. members. . Out of ti'ese 327' companies,' -83 companies belong to Shri B. "Ramalinga Raju (A-1), Smt B. Nandini Raju (Wife of A-1),

.• <li'I'

,

"'i~; Shri B. Teja R~ju and S!1ri B. Rama Raju Jr. (Children of A-1). 78 companies

belong to Shri B. Suryanarayana RajiJ (Brother of A-1 & A-2), Smt B. Jhansi Rani (Wife of~hri B. Suryanarayana Raju. (A6}) and their children B. Pumlrna and B. Satyanarayana Raju .. Another 86 companies belong to Shri B. Rama

I •• .'

Raju (A-2l, his wife S~t B. Radha and their children B. Deepti and B. Rahul

Raju and the.: remaining 80 ccmpanles bel?ng to other family members and trusted employees of Shri B. Ramalinga Raju (A-1). The main objec~ve of these companies is in' th~;tield of agriculture and other· allied activities. These 327 companiesare located at 12 addresses. The details of the companies is given in Annexure - IV.

,-''\.-'_

.~:.:. '

------._----

.. __ ._._--- ------~-'-------.-.-"----.

69. One of these companies' Viz. MIs SRSR Advisory Services Pvt. Limited ¥jas floated for the purpose of doing the accounting and advisory Shri B-.

\

4-1

"

- I

_.j

Suryanarayana Raju (A-5, Brother of A-1) is the Director of MIs SRSR

,_

Advjsory Services Private Limited.

70. . . Mis SRSR Holdings· which started holding the shares of the Promoters as mentioned above since 2006, started pledging shares held by it as. collateral security with various NBFCs on behalf of the companies raised

. by Shri B. Ramalinga Raju (A-1), Shri 8. Rama Raju (A-2) and their near

relatives. From these NBFCs a total amount of loan to the tune of

Rs.1, 744.355 Crores was received over a period cif time.

71. The details of the loans obtained from the NBFCs by pledging the

. shares of Mis SCSL held by the accused in the name of MIs SRSR Holdings as collateral securities is as following:

..

' ..

. _., -v , ':V':',_ '~'~~~,/_-:- • ..T-~~;"'~~1'.';I.{"'I ~'C'ol,._ ...... ' .... .. ..... -' .. ','," .•. ,c-'··· ...•.•• " "
-Name of NBFC Amount of loan Name ofthd'coWipanY'';
recsived in Crores. received loan
IFIN 203.000 MIs Harangl Agro.
149.700 . Mis Amaravatl
I ~ • 70.000 MIs Narayanadri
Dautsche Investments India ·10.9.375 MIs Vyaya Agro
Pvt. Ltd. .'
_ ...... -. 85.000 MIs Samudra
GE Capital Services 76.050 MIs Pavithravatl
168.330 MIs Vamadeva
DSPMLC' 319.340 Mis Amaravatl
330.990 Mls'Bangar
87.730 Mis paYithravati
36.840 Mis Vamadeva
Sicom 48.000 MIs PavithravatJ
Dautsche Mutual Fund 60.000 Mis Bangar
Total 1744.355 - '-l1. ., (

"_"', ',i <'

72. As some of these companies who received the loans from NBFCs could not.repay, the corresponding NBFCs sold away the shares of MIs SCSL

. .

pledged as. Collaterals by M/s-SRSR Holdings in the open market and setlled

. :'{-_

-. -. -,--.---.-- -their outStanding habllizy:- ---

. __ ._ .. _ .. - ---.- --------

73. By indulging in the activities as mentioned above like selHng of

shares directly in the market, ~elling of shares through the five· investment . companies and raising. ~lJ'~dgjng the shares, over the years, the percentage of share~;}~!~~~~s. has declined as .shown below:

. . ,:!Y/:" .. ~~1.1)

.~~._~~~~/"'_"" .i~'!/ff'''iii#~''¥: ~I' .... :~"' .. ~

.' '_', \o!""--~ -~. 4-:'.. ',~ 1iiJ!fe!ll/'i>' ·Vu ;'. \' , ,

'J$ ~~ ~"'r~:» .: -l~~. " ·:r~·r .~I.\ t· i

i~">r:~ ~.:1;>~~~~ji,·~.;!:t·t ft. ~ .. ~ '1'1" " .(' f ·1~

ll&.~ - ~ "$ ~.;,. ~.~':~ - :1' n rl~. t.l' fJ lt~

lr~' ~ %. if; r·j!?~··~~X';i~. "\ . ':11. ~ .... I), =: ~:!!J

I ~ : oPt:) e ~~. ~ ~ ~-~ .. ~~ ~.;J." 1(; r'.;p'-

li'i . 1.? ~.~~ _.~o:~~,~ ... ~.~

~\ /1 - ~~.k:~.l:Y ~ ~.\ ~"':; .' ~

t --- ,'.,. 'f [.~ .~. ~ """'~

'~~~~;,,: -, ',;'._':" ~.~~.,~." _,.":': :'{.:.-' . "~J{~:::1.~~'" »:

Year No. of shores held % of shares held
by promoters by promoters to
the total shares
June, 1992 34,89,400 18.78
1993-94 34,89,400 18.78
1994-95 43,51,701 19.51
1995-96 51,56,002 19.82
October, 1997 51,41,402 19.76
May, 1998 51,89,6Q2 19.95
May, 1999 45,12,004 17.34·
31.3.2000 74,29,904 13.21
(including Bonus
Shares)
31.3.2001 3,62.12.020 (1:5 12.88
split)
31.3.2002 3,61,12.020 11.48
31.3.2003 3,42,36,000 10.88
31.3.2004 3.27,46,000 10.35
31.3.2005 "3.09,45.000 9.69
31.3.2006 278,68.000 8.59
31.3.2007 5.57,36.000 8.35
• ,po. . . .' (Inclqding Bonus
- "._ .... : ",.' ··':-sr\~re~r-:·~·~· .. '. -t : 2.:\"-.. .' ;', :: "
31.3.2008 5,57,36,000 8.31
31.12.2008 1.26,14,319 1.87 ..

. = ".'''"''i4 .:

74. . Jt IS revealed that an amount of Rs.1,425 Crores o~rQf the above

. said loans obtained fro~ ~arious NBFCs was transfe~ed to th~·b~nk accounts of MIs SCSL by 37 among the 327 companies asloan over a period of time ranging from 17.11.2006 to 30.10.2008 to meet the expenses of MIs SCSL Ott; of this amount an amount of Rs.194.6 Crores was returned by MIs SCSL during th$ months of October & November. 2008 to 15 out ot the above 37 companies. The details ofthe amountsreceived and paid by Mis SCSL is shown in ,Annexure-V. Thus an outstanding liability of Rs.1,2,3Q.4 Crores still

,

subsists. This aspect clearly re.f1ects the financial condition of MIs SCSL

75.

Shri S;;"Ramalinga Raju (A-1) ln his letter of confession d~ted

:~-

07.01~O~ has also mentioned ~at the company had an understated liability of Rs.1,230 Gmres--aAEf-tRat-tAe-same.-.was_not reflected in :tb.e..___6_Qoks of

--=-'00-. __

Accounts. Along with this letter he enclosed the details regarding the loans received from 37 companies. anq details about return of part of the. amount to ..

15.companies. This clearly establ that Shri B. Ramalinqa R·aju·(A-1) l1{as

-.-.,.---

aware of these financial

SCSL and the companies

·J

and also that the other Board of Directors of MIs SCS L were kept in the dark

>

with regard to these borrowals and the resultant liability on MIs SCSL. The

accused persons fraudulently and dlshonestty suppressed the liability on MIs SCSL on account of these borrowals to the investors also.

76. After the said letter of confession dl 7.1.09 of Sri B.Ramalinga Raju(A-1), letters were issued to Mis SCSL by 37 companies who had advanced loans to Mis SCSL, the next day l.e, 8.1.Q9 demanding repayment of the outstanding amounts. These letters were issued by the Directors of these companies at the behest of Sri B.Ramaliflga Raju(A-1} and Sri

, . .

B.Suryanarayana Raju(A-6) as revealed during the investiga~on .. These

"borrowed amounts were not reflected in the Books cif accounts or in the annual financial statements of MIs SCSL pu~lish~d from time to time. There

'>': -:i'i;'~b\ftiCdm'S~t~r)i evlden'Cs to that effecC,A.si thes\~!-:~l!tanS:.·Were·t.aised- by the'

Companies floated by Sri. B.Ranialinga Raj,=" ( A1), B.Rarna Raju (A2) and their near· relatives, . apprehending changes in' the Management· and C_onstitution of the Company and in view of the non-reftection of the liabilities lnthe boeksof accounts of the company, the accused gpt the letters issue~ from the Directors of the lending companies demanding repayment of loans on 8.1.2009. The above letters got issued by the accused. persons in order to create a record with regard to the liability w~ich is otherwise o!"ed to them by Mis SCSl indirectly as an after thought

77. It is further revealed that the above mentioned companies have rotated the. monies amongst themselv.es. and the 37 companies mentioned earlier have given an amount ctRs. 1425 crqres·as loan to Mis SCSL and out of which an amount of Rs. 194.6 Crores was returned to 15 out of these 37

~ .' ~ c\" .

companies. However these transactions were not reflected in the financial statem.(3ntS of the company which were prepared from the Oracle financials

-. -- . ----~

and the Board was never informed about these transactions. Instead, these

amounts were got carnouftaqed by the accused vV:'~h dishonest intention by ?howing' flctltlous entries in the Bank Statements as if the same were received through. sale proceeds .

. J-112.?~~~-~t'_'"

..... '-. ~;-;:;:"""~L.'· _ ..

,

, I

78.

After the Jetter of confession dated 7.1.2009 of Sri B.RamaJinga

Raju(A-1) the average share prices of MIs SCSL have nose dived from RS.1701- to Rs.40/-. Because of this crash, several' individual investors and Institutional Investors have suffered huge amounts of losses. The loss suffered by some of the Institutional Investors is as following:

Name of the Institutional Loss suffered (in
Investor Rs. Crores)
UCO Bank 0.24
Punjab National Bank 3.96
Union Bank of India 2.77
Corporation Bank 0.49
Indian Bank 0.94
Oriental Bank of Commerce 1.62
Allahabad Bank 0.11
UC i)f India 948.85
Total 958.98 . ~ .. ": . . .

Analysis of Loading Factor/Utilisation of Employees of Mis

,

SCSL:

Loading'factor denotes the actual percentage of. the employees on

roles of the company who are having revenue generating proiects on hand. The employees are categorized into two groups, those who are working in India are called "offshore categorY and those who . are working in the· customer premises abroad called "onsite category". The I~ading factor percentages are published for' these two categories separately in the mvestor link by the management of the company every quarter. The higher loading

- • • ~ L

factor indicates higher percentaqe of employees wor:king on profitable

.. .

projects meaning company expanding its activities, ensures sustenance of the existing customers and attracts the prospective customers.' Investors also evince their interest in inv~stirig in the company. If the loading factor is high, it

- ----- ---- .... -, -impI1es--t[;at-the-eamflafl)4s-Ra~te...r..lur:nbec..olwar.lum:fe_han.d. _

I

I

1

i

j

1

I

J

j i

'I ~

'\

dC. The .investigation established that the accused Sri.· B. Rarnalinqa Raju (A-1), Sri. RRama Raju (A-2) and Sri. V. Srlnlvas ( A-3 ) fraudulently have been p.ublis~ing falsified loading factor/utilization of associates of Mis

, :1.

nine quartersl.e from Q2 financial year 2006-07 to Q2 of financial year 2008- 09, the accused have fraudulently published the loading factor/utilization of associates as 74.88% (off shore) whereas the investigation revealE?d that the :oading factor! utilization of associates ~oVas only 62.02% for the above period:

Investigation also established that for the similar period the company was declaring 96.71 % as the loading factor for the onsite category, whereas investigation established that this factor is actually 94.86% only. This clearly shows that the accused fraudulently published falsified figures about the utilization of associates to the markets thereby gave an impression' that the

. .

company is having large number of projects on hand and that the associates

nO.t gainfully utilized ( bench strength) is less, whereas investigation revealed that this projection was incorrect and the bench strength was as high as 40%

·'·.'"'·;J:.~ic:..,,~~';;":" JO'- 9tf!?hore category. :.~;ph .. r~~~l~~ ... BAQ.~~ ... gq:. the perf~rp1.~n9.e .. -3I[ld~~.'!"-;",~~:-; .. , "~"~'~'.,,,, ...

. management of the company th~~reby giving a deceptive impressicn to' the .. :.,.:~ .. V.::..,·~ ..

'..1

. investors. Further, as a result of the under utilization of the associates, 'the company is now forced to pay salaries without jobs on hand which increased the burden on th.e finances of the company. The table shOwing the differences

-_. . 'in the actualand thef-published 'loading factors for both offshore and onsite

categories is given below.

Period

Onsite'category

Offshore category

Investor link Headcount

loading' loading

facto r factor

Q3 FY06~07

96.6% 97~4%.

Q2 FY06-07

Investor link ioadrng factor: .

Head 'count loading ~ctor·

..

97.0% 97;2%

71.19%

68.9%

. Q4 FY OS'()7'

68.5%

63.8%

96.6% 96.4%

! Q1 FY 07;'()8.'.

71.3%

62.1%

96.2% . 96.5%

Q3 FY07~8

96.8% 94.5%

QZ FY 07 -os. :

63.8%

97.1% . a4.0%

76.4%

60.6%

Q1 FY 08~09

96:5% 93.5'10

. ..Q1 FY07;'08

. 1 Q2 FY oa·09 !---ii.ver.age

·78.2%.

59.e%

81.8%

.58.5%

73.7%

59.1·%·

76.1% 74.88.%

61.8% 62.02%

.. 97.;3".% 93.4%

96.1%' 94~1%

96. '16C-:I):-:Yo·--+--9-4-.a-6-o/c-o --!

ir6

81. Sri B. Rarnallnqa Raju (A-1) in his letter of confession dt. 7.1.09 has stated that - "The company had to carry additional resources and assets to justify higher level of operations- thereby significantly increasing the costs." This shows the knowledge on the part of the accused persons with regard to the status Of human resources actually pressed into service during the above mentioned periods.

Inflated Revenues:

82. During investigation tlie inflated revenues of MIs SCSL was got analysed for the period October. 2007 to September. 2008 by deducting the inflation created by the' accused in the sales. This analysis has disclosed startling facts about financial health of the Company.

•. -_' ....... ;... . _'-. 1'- _ -;.:.

. . .

83. Some of the financial parameters as reflected in published results

and the actuals ts shown as following: (Rs. In crores)

_.

.'
.IQuarter PubliShedi Expenditure Published Operating 0/0 Published
... ,>._ .. Margin I "ACtual' . Operating , ..
Actual Sales Operating Margin Marglnl %
'c
Actual
operating
I Margin
Q3-20D7 1594.881 1185.93 408.95{166.61 25.64112.32
,
1352.54
Q4~2007 1709.03( 1301.85 407.181105.10 23.8317.48
.-t',-
r,!/' .
I :1407.05
I
+.9.~.:~008 __ 1759.081" 1346.37 412.71/90.10 23.4616.27
--------- r- - --_ .... - .. _. -,------ r--------- -
I 1436A7
I
Q2·2008 1948.231 ~i1 Y7:":i~6.64 401.59(81.04 20.61/4.98
_'t·S; r;,'-'" .', "!.',
~.~ ,t ......... ~.
~ ... ~- ........ ,
16 -, \l). . ~ .. , •
- '" .•• '.,," I~
i :'~'_~f~ ~~, ~· .. fi ~.
~J"'. • ....
t...... _ a",~.":.'"" .... .t.~
'.'~~.a.~ -,._ if·tI)'_.\lI7.4~"l.I;;;~{~. \~\
h-:-" ~
""'~ "\ A. J ,..... ~. ~'::.r. . a • . I 1\
. , . - ~!f.~~""'-_. , .. . ---.----- ~ ._

)

Q3-2008 2110.591 1641.86 468.731-57.09 22.211·3.60
1584.77
Q4-200S 2319.381 1773.89 545.49/-19.81 23.521-1.13
1754.08
Q1-2009 2526.901 1878.29 648.61/59.67 25.6713.08
1-937.96
Q2-2009' 2700.52/ 2051.25 649.27/60.68 24.0412.87
, '
. 2111.93 .
. " . "'.' "

..... - ..... ;:

84.

. '

From the above it is clear that during the Second Quarter 2908, the

revenue was sho~ asRs~2700 Crores whereas the actual revenue was only Rs. 2112 Crores. The Operating' Margin was shown as Rs. 649.27 crores where as the actuat operating margin was only Rs. 61 Crores. In percentage terms the published and actual operating margins are 24.04% and 2.87%. In' the letter of confession dt. 7.1.09, Srt B.Ramalinga Raju (A~1) has confessed pertaining to Operating Margins. He mentioned that" For September quarter (02) we reported a revenue of Rs. 2,700 crores and an operating margin of '

. '

Rs. 649 Crore (24% of revenues) as against actual revenues of Rs. 2,1-12 crores and an actual operating margin of Rs.61 Crore (3% of revenues). This

, '

has resulted in artificial cash and bank balances going up by Rs.588 CrQre in

Q2'alone.

'85. From the' above it is very clearly established that The Performance

- "

of the company.was very dlsmal, but the accused projected a healthy financial

posItion oflJ'ie--cori'rp"any-ny I esorth Ig to--fratlcftlferit-anei--d-isfi6Aest aGts like-, _uo -'" • -- - - - --,

inflating the sales through falsified invoices, forging the FDR~ and forging the

, '

Audit conducted by Sri S.Gopalakrishnan (A-4) and Sri Talluri

-y Srinivas(A~5):

86. Statutory Auditors. are professional accountants who check the accounting records and all other relevant sources of data and information of the Company and ensure that the financial statements give a true and fair picture. Statuto!), Auditors are totally independent from the Management of the company. They are employed by the shareholders and not by the Directors. They report directly to shareholders through their report and attend the AGM. The Audit Report must state that;

• The accounts were prepared in accordance with the Law and Generally Accepted Auditing Practices (GAAP).

--

e'

The audit was conducted in accordance with Gen~ra!I~·A~pted '-"'_'C_:," - ;~:_:'- .•. """

Auditing.Standards (GAAS).

e The Financial Statements show a true and fair view.

• Proper Accounting Records have been maintained.

•

All required information and records were made available and examined.

• All explanations re_quested proved satisfactory.

Statutory Auditors are expected to have looked at ~verything. appearing in the Annual Report. Auditors should satisfy themselves ·that the cornpanys internal control systems are in place and adequate.

87. 'MIs Price Waterhouse' chartered Accountants were appointed as Statutory Auditors for MIs SCSL. dur~ng the Annual General. Body Meeting

. ~

" held 'during the year 2000 for the first time and continued thereafter,

7·----------·-- . " .

c •• __ ... _

88. Sri. S. Gopalkrishnan (A--4) affixed. his sjgnature on the balance sheets from the year 2001 to 2007 whereas Sri. Talluri Srinivas (A-5) for the subsequent year. Both of them have affixed their signatures on the balance sheets as partners for ;.,j:~;%~~ ~ ~If ~f 'Price waterhouse'. Chartered

. ;,..-;~~~~;;nt.ants. The AU~~~~:t.:!· .. ~r ~t the financial statements give a

-::_' - £!;~ .,.~. '~~~- .j,&j;j!,oftr...'- ". \ ~ .

j ¥"".,,/~\ '~k:": - ~,:~ ... ~~~ \'"'" \ ~ ' ..

.. -' '!I- ~ !;f;f{ ~ it·,~.1~'''~~ ~.l~

- . \-i \ -nw· . '~j'1i~j.!. . ~if. ~w~ ~ .~

J"~ C'1 ~ J <'~f.;~.~. "~~~!I~i/.P'-J

~} t ~"",,""';:'__' ".,' ~~Zl./"-

. ·~1·.* * ·S\....____ LW·I"'lf.<! J/'.!' .

'V:;,:\_ -7,. •• , ~ ,"". , U \J. • & ,,/" .c

.,~.:.,_ ./.iJ ~'- •• ' pi·' :'l~"'~ ~.7 ~

~ :'1''''~ -=:') ~ . ~-=,~:- .... \.:4~"'~~ ... ,..J.. ,.;

~ ~'.< ~~ '!;~r~ -"" '''~'.'-'''''''" ·t-."""

. -.~~£~~~:~~?t.. ~,,·~."-~~~~t~~~.~

'.1

true and fair view in conformity with the accounting principles generally accepted in India.

89. It is revealed that as per the records maintained by 'The Institute of Chartered Accountants of India (leAl), Sri. S. Gopalakrishnan (A-4) and Sri. Ta!luri Srinivas (A-5) are partners in the firm 'Mis Price Waterhouse, Banqalore' and not in 'Mis Price waterhouse'. Both the accused by affixing their signatures on the Audit Reports for and on behalf of 'Price Waterhouse' deliberately with the knowledge of it's implications ·and consequences viola:ted the requirements of Auditing & Assurance Stand~rds (AAS) 28.

90.- The Shareholders of the company have appointed 'MIs Price Waterhouse) as the statutory auditors of the company. An agreement to that

-. ·;-·-;t';~ "-':-:--'-effect was entered into··be~eell>fv1Isl :$CS.4-::~n.q._~M/s ::~ric~_ WAt~.rhQM§,E;b_;-:." "~:":O" .:.)"_'_;_:'.;"",: t'l--

. . '. . .- - .,_.

Sri. V.Srinivas (A-3) affixed his signature on behalf of. Mis SCSL Being a

'. ~

Chartered Accountant hlmself.. Sri. V.Srinivas (A-3) was having the

knowledge with regard to this fact that Sri. S. Goplakrishnan (A-4) and Sri. Srinivas Talluri (A-5) 'are not representatives of 'MIs· Price Waterhouse' but

- .

are partners of . 'MIs Price waterhouse, BangaJore' and that Mis Price.

Waterhouse' and 'MIs Price waterhouse.. Bangalo~e' . are two distinct and different entities and that i.t_ is MIs Price waterhouse which was appointed as

. .

the Statutory Auditor by the Shareholders and not 'MIs Price waterhouse,

Bangalore in which Sri. S. Gopalakrishnan(A4) and Sri.- Talluri Srinivas (A-f?) are partners. Thereby, the accused Sri. S.Gopalakrishnan (A4) and Sri.

. . -

- . .

Talluri Srinivas (A-5) have intentionally misrepresented themselves as

, .

partners of MIs Price waterhouse and their firm MIs Price waterhouse,. Bangaiore as 'Mis Price waterhouse' consciously and dlshonesny entered into the said agree~~nt r , in furtherance of the crtminal conspiracy with ·Sri .

. - -. -------~----V..5tini¥as--<A~3)?:"..8ri B BamCl!inga RiillI.: (A .. 1) and Sri .. .!!.B_~.maraju (A-~) thereby Sri. S.Gopalalakrishnan (A-4) and Sri. Talluri Srinivas (A-5)· have intentionally cheated the shareholders and other stakeholders by personating themselves as partners in ' MIs Price waterhouse', on which the shareholders & investors placed their ........ ':.A-l ..... _,;..".; - •. ~?'.::>_-

_-_-~-------

. y,.

. !

91. In furtherance of the ConSpiracy the statutory Auditors Sri. S.Gopalakrishnan (A-4) and Sri. Talluri Srinivas (A-5) for the respective periods, did not match the sales realization with the Bank statements, deliberately did not take into account the huge variation in the figures of Fixed . Deposit balance between the bank confirmation received directly and the one received through the company, deliberately did not verify the sources of new

- Fixed Deposit Receipts, did not verify the advice of domestic " international transfer issued by the authorized signatory of the bank, did not obtain ·direCt confirmation of balances, did not follow-up the international confirmations as envisaged in their own internal guidelines, contrary to the accepted general practices relied upon photo copies of. the fax messages received for confirmation of current account balances and other willful violations in

" ..... ' .:derogation .to.-1heir .: professional . respo.n§iQjlJti.~r _.~~r~!?Y._~~~t'!·H''f:l().~ate~:.th~ . ~"_ '. fraudulent and dishonest acts of Sri. B.Ramalinga Raju '(A-1), Sri. B. ~ama Raju (A-2) , Sri. V. Srinivas (A-3) and other co-conspirators, Knowing fully well

the implications and consequences of their overt acts and intentional omissions .

92. As a quid-pro-quo, The Auditors have been compensated through exorbitant Audit Fee by Sri. B.Ramalinga Raju (A-1), S~. Rama Raju (A-2) and Sri. V.Srinivas (A..,3) for the role played' by them in furtherance of the conspiracy. A comparison has been made with regard to the Turnover & the

. . . .

Audit fee paid by the peer companies in IT sector viz. MIs Wipro Limited and

MIs Infosys technologies Ud. Vis-a-vis MIs SCSL .

Name of the Turnover of the . Audit F\;!es paid (Rs.in .<
Company : company Crotes)
Rs. In Crores' 2006-07 2007-08
2006-07 2007-08
M~s SCSL' 6228 8137 3.67 3.73
.M(s WiPiO - - -v.so----. - - -'~1:11)-'-
-
MIs Infosys 13149 15648 0.55 0.83 51

existence of a well knit criminal conspiracy between the management of -MIs SCSL i.e. Sri. B.Ramalinga Raju (A~1), Sri. B. Rama Raju (A-2) , Sri. V.Srinivas (A-3) and the Statutory Auditors viz. Sri. S. Gopalkrishnan (A-4) and Sri. Talluri Srinivas (A-5). In addition to the above Audit fee, the Auditors received' an amount of Rs. 1.24 Crcres and Rs. 1_27 Crores for the above mentioned years respectively. tow.ards rendering other services. These amounts were not reflected separately in the accounts though mandated as per the reporting norms.

Role of the Accused Persons in Commission of Offences:

Shri B.Ramalinga Ralu (A .. 1):

.94 ... ' .' ~.,S~riJ;! .. J1em!i!.tin.9.a:~1l,J (~-1). was the Chairlr!an of M/~. SC.~L since

. " .•. .,...... '. "_ . - ·····.~-..:ar:"""·--r •. :..·_~fro;O';""'''::I ... 1 ._...,. •• c; ....... _';__ " ..

itsinception in the year 1987 till he submitted ~is resig.nati~n·:~~ Oi.ot2009~ ... ~.,

the date of confession. In his confessional statement. Shri. B. Ramalinga Raju (A-1) has disclosed the covert and the overt acts committed by him and other accused. Stiri B. Ramalinga Raju (A-1) is conversant with all the ~ctivities

and functions onh~"Company and its growth over a period of time and he cannot disown his role in the decision making and its implementation especially in the fields of finance and investment.

95. Sri. B.Ramalinga Raju (A-i) has conspired with the other accused at Hyderabad during 'the- period 2001-2008 and in furtherance of the said conspiracy has lured the innocent investors into buying the shares of MIs

. ,

SCSL during the above period by continuously publishing false and inflated

, ' .

bal-ance sheets and' Annuai Financial Statements 'of MIs SCSL thereby causing wrori'g~ul' ioss to the investors and onme other hand he ~ot the shares of family members offloaded at opportune fimes and thereby had

gained wron-gfOlty:---:------'-- .-.---------------:-----.--- _

\ '

accrued, data of Tax deducted at source, data of income generated on

) services, investments and receipts besides other data and also by suppressing the liability status of the Company thereby inducing the interested parties, viz. the customers and the investors.

97. Sri 8.Ramalinga Raju(A1) on 07.01.09 sent a letter of voluntary confession to the" Board of Directors, MIs SCSL reg:2rding the falsehood of the contents of the Balahce Sheet for the quarter ending September 30, 2008 with regard to non-existent cash and bank balances, non-existent accrued interest, understated liability on account of funds arranged by him and overstated debtors position. In the same letter of confession, he mentioned that the reason for the gap in the Balance Sheet is on account of inflated profits over a period of last several years, showing his privy and involvement This letter ai"io"'proves" the "uncieriYfng' "conspifacY-"h :perpetrating" the offence--" of" " defrauding the public and investors over a period of several years.

-,

98.

Sri B.Ramalinga Raju (A1) in 'furtherance of the conspiracy with the

other accused got the monthly bank statements of various banks forged, got

" "

" "

issued forged bank balance confirmation letters, got forged letters signed by

Sri B. Rama Raju(A2) showing purported transfer of funds and got forged FDRs prepared. Atl these forged documents" were used for the purpose of inflating the cash and bank balances artificially in MIs SCSL books of

. . . -

accounts over several years. This resulted in reflection of the same. in the annual balance sheet and financial statements of the company.

. . . ,

. ""

99. Fu~er in order- fil~ this artificial inflation" in inflow of income through

services, :5ri. B:Ramalinga Raju (A-1) in furtherance of the- conspi~cy with the oth~r "accused got false invoiCes generated in the IMS of Mis ScsL to "create fi~tious sales,

B.Ramalinga Raju (A-1) himself offloaded the shares a~d received Rs. 26,67,97,198/-.

101. 327 companies were floated by Sri B.Ramaiinga Raju(A1) along with his brothers. B.Rama Raju (A-2) , Sri. B.Suryanarayana Raju (A-6) and his near relatives in the guise of carrying out agriculture and other allied activities through these companies, The funds mobilized by the above said companies were obtained from various NBFCs by pledging the ·shares of Sh,ri B. RamaJinga Raju (A-1) and his wife, Shri B. Rama Raj_u (A-2) and his w,!fe through the holding company MIs SRSR Holding~ !?, the tune of Rs. 1744 crores. The itinerary of funds thus mobilized and their end use show the

---- - . ,. -

nature of sham' tran'sactions carried out by Sri. B. Ramalinga Raju (A-1).

proceeds of the money acquired from such nefarious deals into assets thro~gh the said 327 companies floated throug~ his family members and trusted employees in furtherance of the' conspiracy with his brothers Sri. B.Rama Raju·(A-2) and Sri. B.Suryanarayana Raju (A-6).

103. By deceiving the Board of Directors, barring other co-conspirator Directors, in furtherance of the conspiracy, Sri B,RarnalingaRaju (A1) as Chaiim~n of the c~mpany. got Rs.143Q Crores from the 37 comp~nies' floated by him and his relatives into MIs SCSL, clearly reflecting the financial status of.

104. Further by deceiving the Board of Directors, barring other co-

. .

conspirator Directors, in furtherance ot the conspiracy Sri, B.Ramalinga':

. " -..'

Raju(A1) as Chairman of the company got Rs. 194.6 Crores paid to tsout ot

--.~-- - ,. -·-tAe-al?~ompanles-from. the funds .oLMls SCSL and fraudulentll__and _

dishonestly projected these transactions as amounts received through sales.

. .

, i

flouting the procedures of allotment of ASOP-A shares and without actually convening the mandatory meetings in this regard, strengthens the charge of conspiracy against Sri BRamalinga Raju(A1), Sri B.Rama Raju(A2), 'Sri V.Srinivas(A3) and other co-conspirators Viz. Sri. G.Ramakrishna (A-7) , Sri. O.venkatapathi Raju (A-B) and Sri. Srisailam chetkuru (A-g).

106. Deceptive replies were given by Shri B.Ramalinga Raju (A-1) along with Sri V.Srinivas(A3) in Satyam's Eamings Conference caU conducted every quarter to _various investors distorting the actual financial position of the Company.

.... : .

", .....

107. Sri ,B.Ramalinga Raju (A-1) as Chairman was .responslblefor declaration of dividends having complete knowledge about the inflated

. .'

'balance'·sheets;·and financi~Lheal.th~·of- the company~in ·telJ1\S,,ot.pratit&.t-E.ven-;· .,- . ' .

• .• r ',' _. '~""""-~,'.'

though the cqmpany is making very low profits he declared high dividends not

- in consonance with the profits of the company. tie also _gained wrongfully to the tune.of Rs. 21,05,02,0341- by receiving dividends.

108.

Sri B. Ramalinga Raju (A-1) conspired with Sri. B.Rama Raju (A-2)

and other accused in fraudulently and dishonestly declaring the load fago~1 .utilisation in their investor link in order to cheat the investors and the customers.

:-.'

109. Further Sri. B. Ramalinga Raju (A-1) as chairman has got generated forged Fixed Deposit Receipts of varia~s banks and once the fraud came to. light, these Original forged FDRs were .got destroyed as. part of the . conspiracy; which amounts to destruction' of evidence. Knowing fully well that the financial health of the company was poor and also knowing fully weil that the results were inflated he has wrongly accepted a compensation of Rs. 1.44

-" ------------et:a~--- .. - - .. - -,- ... - --------- ------

_ .. ------ .--------------------

i

Shri B.Rama Raju (A-2):

111. Shri B. Rama Raju (A-2) who was the Managing Director of the Company during the relevant period was aware of all intricate details of the Company on all fronts. Being the Chief Functionary of the Company, he cannot plead ignorance about the developments of the Company with regard to the inflation of the .data in sales, inflow of funds, liabilities, etc. He was one of the signatories to all the forged Balance Sheets. containing the falsified data.

112. Sri B.Rama Raju(A2) subscribed his signatures on the manipulated Annual Financial Statements r:eflecting the financial status of the Company, - thereby vouched for the propriety of their contents.

113.

, ... _.iI'·.'''':c·.;,.}':)5:''·~I_~,"!·""":-!.,,..,.rI'~'f~:.~.t~~t:~re~.''$...~·~II;-'· ... -. :'_:'... '-... .. :J'.~"h-;; ~"'? :"..:."':': ...... 1: .. :-.r{,~.:J :.! ~.·i~. ~~Ii .~.\ ~ .. -. '

Sri 'BJ~_ama' Raju· (A2) in furtherance 'of the "con'spitacy'tffrbugh' tiler' ,r-,_·, .

other accused got the monthly bank statements of various banksforqed, got issued forged bank balance confirmation letters and slqned the forged letters showing purported transfer of funds and got forged FDRs prepared. All these

, ·forged documents- were used for the purpose of inflating the cash 'and bank

, . .

balance artificially in Mis SCSl books of accounts over several years. This

resulted- in reflecuon of the same in the annual balance sheets of the company.

114. Sri B.Rama Raju(A2) got the shares of the Company held by hls

'family members, sold through his relatives in the stockmarket and had received J a fortune of RS.715 Crores when .the Company was not financially doing well. Out of the said, Rs.715 Crores in the year 1999-2000, he has received Rs.26,68 •. 37, 168/- as gifts frOM his family members.

____________ J_15.

327 companies were floated by Sri B.Rama Raju(A2) along with his

L

company Mis SRSR Holdings to the tune of Rs. ~17 44 crores. The itinerary of

-J funds thus mob-ilized and their end use show the nature of sham transactions got carried by Sri. B.rama Raju ( A-2).

116. Sri B.Rama Raju(A2) as Managing Director of the Company, by conspiring with Sri. B.ramalinga Raju (A-i) and Sri. B.Suryami.rayana Raju (A- 6) raised loans to the tune of Rs.1430 Crores during the period 2006-2008 from the proceeds received by pledging his shares to Mis SCSL from 37 front companies. However, these transactions of MIs SCSL were suppressed from the remaining Board of Directors and the investors by fraudulently and dishonestly reflecting these amounts as sale proceeds thereby suppressing the liability of the company In the Balance Sheets of MIs SCSt.:. and thereby cheated the Beard of Directors and investors.

"-:: '_',

'." .

117. Sri B.Rama Raju(A2) in conspiracy with At, has dishonestly and fraudulently caused unauthorized trans~er _ of Rs.194.6 Crores to the companies floated by him and his family members from the account of MIs

. SCSL without being authorized by the Board of. Directors. _

118.

Sri B.Rama Raju(A2) was responsible for converting the proceeds

of the money acquired from such nefarious deals into assets through 327 companies floated through his family members and trusted employees in furtherance of the conspiracy hatched in league with his brothers Sri. B.Ramaling_a Raju (A-1) and Sri._B. Suryanarayana Raju (A-6).

119. Sri B.Rama Raju(A2) as part of conspiracy has' signed on the

letters addressed to the banks directing renewal of non-existent. F~Rs and for .

,- (-

falsification of balance sheets.

120. The allotment of stocks through the Associate Stock Option Plan

.,..--------.---, (ASOP-A) to the member;;f the Finan~e Departm~nt especially the -a-ccused-- -- .. ----

co-conspirators whose services were utllized in committing this fraud by

flouting the procedures of allotment of ASOP shares and without actually

,

,.

Raju(A1), ~ri V.Srinivas(A3) and other co-conspirators Vi2. Sri. G.Ramakrishna (A-7), Sri. D.venkatapathi Raju (A-8) and Sri. Srisailam Chetkuru (A-g).

121. Sri B.Rama Raju(A2) as Managing Director was responsible for declaration of dividends having complete knowledge about the inflated balance sheets and financial health of the company in terms of Il rofits. Even though the company is making very low profits he declared high cfvidends not in consonance with the profits of the company. He also wrongh.l ~ y ga ined to the tune of RS.24,32,·16,2951- in the form of dlvldends.

122. Sri B.Rama Raju(A2) conspired with Sri. B.Ramalinga. Raju (A-1) and other accused in furthering their illegal objectives much detri1'lental to the .!C'. interestoftfufC0mpati~raJid the lnvestors.,. .. ~:r,~.~.~,,-;~,~,.,,,,,~;::::'~.';:~¥I:,~;. ~~': .. :.

.. - _',.' .... - .'.

123. Sri 8 .. Rama Raj~ (A-2) conspired with Sri. B.Ranialinil8 Raju (A-1) and other accused fraudulently and dishonestly declared the load factor/utilisation in their investor link iri order to cheat the inveslors and the customers.

~.'

124.

Further Sri B. Rama Raju· (A-2) as. Managing Dire::t:or caused

generation of forg~d Fixed Deposit Receipts of various banks. Dn.ce the fraud came to light. these original forged FDRs were got destroyedas part of the conspiracy, which. amounts to destruction of evidence. Knowing.1fully well that the financial health of the company is poor and also knowing fultyrw~ll1hat the results were inflated he has wrongly accepted a ccrnpensation of Rs. 1.34 crores from the company.

125. The .aboveovert acts of Sri B.Rama Raju(A2) reveai the offences

punishable u1s 120-8 rlw 420, 467,468,471, 477A and 201 oflPC.

~-----------. -_. __ ._--- . --_ .... _ •.. _-- ._------_.- .. _----_ ..

. .

Shri Vadlamani,Srinivas·(A-3):

126. Sri V~Srinivas(A3) was the Chief Finance Officer (CFO) of MIs

.J

dealings of the Company including reflection of the data in the corresponding Books of Accounts.

127. Sri. V.Srinivas (A-3) dishonestly got the falsified inflated~ales invoices generated and fed in the Oracle Financials System. He was in league with other accused persons and perpetrated the fraudulent acts and thus was privy to the offences.

128. Sri V.Srinivas(A3) subscribed his signatures fraudulently and dishonestly. on the forged Annual Financial Statements of the Company reflecting the status of the Company, thereby vouched for the propriety of their contents.

'.: .. :~i-;:l'-"") 1·.··;· .129.. Thouqh Sri V.S~~iY~~~f-.~) -, yva~ .~ever designated as Director, he

_.. • :. ~. • , '.' ~.' " .-: ,_. • _.....: ', • .' • ..",.... : , P, ' J -=~'. :.::.'

subscribed his signature in the annual financial statements of the company as . .

a Director.

.. ~.

130. Sri V.Srinivas(A3) being CFO of the company and in furtherance of the conspiracy along with co-conspirators gqt the falsified inflated sales invoices infused:into the accounting system and thereby projected false hike in sales in order to.attract new customers and new investors under deception.

~

131. Sri V.Srinivas(A3) in furtherance of the conspiracy through the other

accused got the monthly bank statements of various banks forged, got issued .

. -' . - . .

. ~ ,"

-'I, •

forged bank ~alance connrmanon letters, got forged letters signed by Sri B.Rama Raju(A2) showing purported transfer of funds and got forged FDRs prepared. All these forged' documents were used for the purpose of fraudulently rnfIa-ting the cash andbank balarice artificially in MIs seSl books of accounts over several years. This resulted in reflection of the same in the annual balance sheet of the company.

--------

132. Sri V. Srinivas (A-3) was. receiving the actual and the inflated sales statements on a quarterly basis from the fi"nance department He. was further

. .

making ·changes by manipulating the results and guiding the·: finance

I

be false and forged, Some of these inflated results in the form of

-- J Management Information Systems have been retrieved from his e-mail box which clearly shows his knowledge of the same. Further he was also directing his subordinate staff to make manipulation and changes in these results.

133. In furtherance of the conspiracy, Sri V.Srinivas(A-3) actively guided the personnel in the finance department with regard to the quantum of inflation of sales to be infused into the 'computer system from time to time,

134. Dividends- received by Sri V.Srinivas(A3) and the amount received by him by off loading the shares .at opportune moments is the ill gotten financial gain to him which otherwise would not have accrued to him had the

- ,

real financial' position of the company been reflected in the annual financial

135. 'Sri V.Srinivas(A3) by conspiring with Sri. B.Ramalinga Raju (A-1) and Sri_ B.Rama Raju. (A-2) got the Associate. Stock Option 'A' (ASOP-A) shares allotted to "the employees of Finance Department who were involved in

. manipulation of the" 'data, YVithout actually convening the Trust Meeting;

;1'" Minutes showing that the said Meetings were conducted were created by Sri.

V. Srinivas (A-3) by ~ffixing his signatures and subsequen~y letters of allotment of shares were issued by Sri. B.Ram'a Raju (A-2) and Sri. V.Srinivas ( A-3). The allotments were made in total. deviation from the laid down procedures. Sri.' V. Srinivas (A-3) by affixing hi$ Signature on th~ minytes of ASOP~A allocation agenda having a financial b~aring on the company has falsified the documents.

. .

136. In furtherance of the Conspiracy, Sri. V. Stinivas (A-3) d~ring the

board - meeti~gs and in the audit committee meetings through his ---------presentat.cA-s--deGeptiv-eIY-P!=oj€Gt-ed-a-Very rosy pict'lre of tharoropan_)l to the Board of Directors and Audit committee members knowing fully well the real

. .

.' ,.

t137. Deceptive replies were given by Shri B. Ramalinga Raju (A-1) along

with Sri V.Srinivas(A3) in satyarn's Earnings Conference call conducted every quarter to various investors distorting the actual financial position of the Company.

138. Shri V. Srinivas (A-3) as a CFO though had a clear knowledge

about the funds arranged by Sri. B.Ramalinga Raju (A-1) and Sri. B.Rama. Raju (A-2) throuqh the companies floated by them did not get these liabilities reflected. in the annual financial statements and thereby Sri. V.Srinivas (A-;3) along with Sri. B.Ramalinga Raju (A-i) and Sri. B.Rama Raju(A-2) wqrked . against the interest of the company and the share holders whose interests' they were required to protect

1.39.''' . - The·t·-above "overt .acts of Sri V.Srioivas(A-3) ;.r:~~I::··tt\e::;.·off~r1:g§!?;. '." punishable u/s 120-8 rlw420, 467,468,471. 477A of IPC.

Shri S.Gopala Krishnan lA-4}:

140. Sri S.Gopala Krishnan (A4) affixed his signature on- the financial

..

statements as, partner of MIs Price . Water House ·the Statutory Auditors for

MIs SCSL since the financial year 2001 till 2007 ..

. . - ~

141. . As per the records rnalntalned by 'The Institute of Chartered

Accountants of India (leAl), Sri. S. Gopalakrishnan (A-4) is partner in the firm 'MIs Price Waterhouse, Bangalore' and not in 'MIs Price Waterhouse', By

. . .

affixing hls sig.nature· on the Audit Reports for and on behalf of 'Pri~

Waterhouse' he deliberately, with the knowledge of irs implications an.~ consequences violated the requlrernents of Auditing & Assurance Standards

. - ----.:..-- - -__(MS).2B_-

-----_. __ . --~.

-----.---- .. _._--------

142. In the agreement entered into between MIs SCSL and MIs Price Waterhouse, instead of affixing his· signature, Sri. S. Gopalkrishrian (A-4) has. signed as 'Price Waterhouse' .contrary to' the established procedure and

partner of the firm to affix his

61

i

signature as representative of the Auditor firm authenticating the contents of 'J

- the report. Sri. S.Goplakrishnan(A~4) having been aware of the fact that he

never represents 'Mis Price Waterhouse' designated statutory Auditors for MIs SCSL has signed as "Price Waterhouse' and thereby cheated the investors in furtherance of the conspiracy with Sri. V.Srinivas (A-3), Sri. B.Ramalinga Raju (A-1) and Sri. B.Ramaraju (A-2).

143. By virtue of Sri. S.Gopalakrishnan's (A-4) status as a Statutory

,

Auditor, it is incumbent on his part to verify the bank balances and FDRs

claimed to be held by MIs SCSL besides other investments, liabilities and sales of the Company before certifying the statutory Audit Report which forms the basis. of Annual Financial Statement of the Company_ Sri.

. .

S.Gopalakrishnan (A-4) has knowingly certified the inflated and forged

-. balance' .sheets- preparecf ~asing: .on the .forge.dc··EGR.s .. ··?f1G·_ qt~~j_,.~!:w.ith~ .. -: . regard to the banks and also the status of sales without making any mandatory independent verifications. The auditors are required to write direCtly to the banks and obtain 'confirmation of balances. After obtaining the confirmations should compare these figures with the figures as appearing in

the books of Accounts· oft he company. Sri. S. Gopalakrishnan (A-4) received

the confirmations from the banks which are in great variance with the figures provided by the management and appearing in the books of accounts. Despite this glaring discrepancy and having both the. confirmations i.e. the original" confirmations received from the banks and the forged· bank confrmatlons provided by the other accused, Sri. S. Gopalakrishanan (A.-4) in furtherance of the conspiracy. has accepted the forged. bank confirmations provided by the accused, certified the same and incorporated in the final accounts. He has flouted the prescribed Audit and Assurance Standard number 30 of Institute of Chartered Accountants of f ndia (leAl), thereby···

---+!ar;>o.C!M·iitated tbaprojectiol] of falsified data in the .MnY_al Financi~L§tatements of

-_'-- ':"""

the Company continuously,··

144. The presentaflons' made by him to the audit committee about the health of the company were misleading and in fact he gave very good certification

.• c ,

/ J

" )

regarding the financial discipline and controls available in the company contrary to the reality.

145. As a consideration for his acts in accommodating the accused persons, he has received an exorbitant audit fee from M/s SCSL over and above the market rate which reflects a quld-pro-quo arrangement. He has consciously overlooked the accounting irregularities committed by MIs SCSL for the past 7 years showing his complicity in the commission of the above

, .

said offences and he is Hable as a co-conspirator.

146. Letters generated on the letter pads of MIs Price Waterhouse were recovered from, the computer systems of MIs SCSL. These letters were supposed. to be written by the auditors addressed to. the banks seeking confinnations about the balances .. Sri S. Gopalakrishnan (A-4) as part of the

L' .J.': •. ~. '.~' .-~.:,~~~~"~.:.: .. ,,.:~,~, -', I • _.. .. '"r.:l' ~_. '_,;- .•.... -:J: •• _ ~ -e , ~.... • _" :

. conspiracy g6t"thes~' 'leUeii'ge'rierated'l'n 'the eomp'uter 'sys'fem~{ot' M!~fSC$C', "

for the purpose of creation of records which depicts his privy and involvement in the conspiracy. Sri. S.Gopalakrishnan (A-4) also made MIs SCSL to' generate certain letters addressed to the banks directing the banks

to directly Inform the auditors. However these letters were generated merely for the purpose of record which shows the role of S~. S. Gopalakrishnan (A-4)

in the conspiracy this was proved by th~ GEQD opinion. But for his active cooperation and disregarding the crucial evidence available with him, this fraud would not have taken place for so many years. Sri' S.Gopala Krishn~n,' (A4) affixed his signature on the f!nanci21 statements as partner of "4Is'Price Water House the Statutory Auditors for MIs SCSL since the fina~cial year' 2001 till 2007.

147. Information Technology General Check was carried, out for the first time during financial year 2006-07 by Head of Information Systems Audit of

.-- .. ---- MLs.._Erlce...waterbouse, wherein around 180 deficiencies were found and was communicated to the Audit team with the assertion that the IT systems in existence in ~/s, SCSL are not fully. integrated and are s.ubject to manipulation. It was also suggested that in the light of above deficiencies,

. substantial and elaborate 'examination of the financia!s should be conducted.

In spite of this Sri. S.. deliberately did not make any.

. ,

.. '

, . ~.

.,".

e : "

f ," .~ ~

i

L

.. :.':' '.' -; .

63

extensive changes in the audit plan which clearly establishes his motives and

.:.J intentions in ·allowing the fraudulent practices to continue in MIs SCSL. '

148. Even though as many as 135 control deficiencies were identified in the integrated audit conducted in accordance with the Standards of the Public Company Accounting Oversight Board (PCAOB) which has severe impact on the internal control and flnancial accounting, Sri. S. Gopalakrishnan (A-4) deliberately did not bring these control deficiencies to the nonce of the Audit committee and there by facilitated the continuance of the fraudulent practices unabated.· He also did not comment on these control deficiencies in his Audit report even though they ar~ material in nature, there by his privy and active rote in the conspiracy is established.

:~ .. ~ ;. ~ ,.<:~::~~ ~;>.t: .. t49.,_··: >;. <,·As . per the.recor~s .Q1?\n~~!p,~<;t<~~;;;rpa.I~~tit,ut~; of .! 9b?:!!~1]5L ~:' : ;jo.'.~--'-"'-1~.; ... ;.,.~",

Accountants of India (leAl); Sri. s. Gopalakrisbnan (A-4)· is partner in the firrr;··· - .

'MIs price Waterhouse I Banqalore' and not in 'MIs Price Waterhouse'. By

affixing his signature on the Audit Reports for and on behalf of 'Price

Waterhouse' he deliberately with the knowledge of irs implications and

consequences violated the requirements of AUditing & Assurance Standards

(AAS) 28 .

.. ~.

150. In the agreement entered into between Mis SCSL and MIs Price W~terhouse~ instead of affIXing his signature Sri. S. Gopalakrishnan (A4) has

. .

signed as 'Price Wa~erhouse' contrary to th_e established procedure and

practice .whereby it is incumbent on individual partner of the firm to affix his signature as representative of the Auditor firm authenticating the contents of the report. Sri. S.Goplaklishnan(A-4) having been aware of the fact mat-he

. .

never represents 'MIs Price Waterhouse' designated statutory Auditors for

MIs SCSL ·has signed· as·Price Waterhouse' and thereby cheated the

investors in-fUrtherance of the conspIracy With Sri. V.Srini~-----,..--- 8.Ramalinga Raju (A-1) and Sri. B.Ramaraju (A-2).

151".

(A4) reveal the

"";-::-,

L -: ~. •

........

. !

.I

Shri Talluri Srinivas (A-51:

.'-J

' ..

152. Sri Talluri Srinivas(A5) affixed his signature on the financial statements as partner of MIs Price Water House the Statutory Auditors for MIs SCSL for the financial year 2007-2008. Sri. Talluri Srinivas (A-5) continued the legacy of Sri. S.Gopalakrishnan (A-4) and he actively taken part in the conspiracy hatched by Sri. V.Srinivas (A-3) , Sri. B.Ramalinga Raju (A-1) and Sri. B. Ramaraju (A-2);

153. As per the records maintained by 'The -Institute of Charted Accountants of India (lCAI), Sri. !?ri Talluri Srinivas (AS) is partner in the finn 'MIs PriceWa_terhouse, Bangalore' and not in 'MIs Price - Waterhouse'. By affixing hi~ signature on the Audit Reports for and on behalf of 'MIs Price

c.: ._.- -' ~----. '- Waterhouse' "he"'deJib'er=ately~ with -the knowleqg~,~9f,-,_it-~s,~imQl~ps.:AlJld,_;_ - consequences violated the requirements of Auditing & Assurance Standards (AAS) 28.

1 ~. In the agreement entered into between MIs SCSL and Mis Price

- Waterhouse, instead of affixing his signature Sri Talluri S'rinivas(A-5) has signed as 'Price Waterhouse' contrary to the established procedure and practice whereby it is incumbent On individual partner of the firm to affix his signature as representative of the Auditor finn authenticating the contents of the report. Sri Talluri Srinivas(A5) having been aware of the fact that he never represents 'MIs Price Waterhouse' designated statutory Auditors for MIs SCSL has signed as'·Price Waterhouse' and thereby cheated the-investors in ' - furtherance of the conspiracy with S~i. V.Srinivas (A·3). Sri. 8.Ramalinga Raju

, '

(A-1) and Sri. B.Ramaraju (A-2).

~-,. ,:.f:.-j.

155. By virtue of Sri. Talluri Srinivas (A-6) status as a Statutory Auditor, it is incumbent on his part to verify'the bank balances and FDRs claimed to be

...__.-- .... --~ ... --.-- .... -- --------------- .. - -- ......... --:--- ---:..---

held by MIs SCSL besides other investments, liabilities and sales of the

Company before certifying, the statutory ,t"udit Report which forms the basis of Annual Financial Statement of the Company. Sri. Talluri Srinivas (A-6) has intentionally certified the inflated. and forged balance sheets prepared basingor) thertafgee FORs and to him with regard to the banks

... 8 " _

~- .

, ,

)

and also the status of sales without rnakinq any mandatory independent

>

verifications. The ,auditors are required to write directly to the banks and

obtain confirmation of balances. After obtaining the confirmations should compare these figures with the figures as appearing in the books of Accounts of the company. Sri. Talluri Srinivas (A-6) received the confirmations from' the banks which are in great variance with. the figures provided by the management and appearing in the books of accounts., Despite this glaring discrepancy and having both the confirmations i.e. the original confirmations received from the banks and the forged bank' confirmations provided by: the other accused, Sri. Talluri Srinivas (A-6) in furtherance of the conspiracy, has chosen the forged bank confirmations provided by the accused, certified the same and incorporated in the final accounts. .He has flouted the prescribed

.,~"'r.'~:-~'''~~:.'' Audit . .and .... A~~~~.~:I''t.s~.(:t~r4.#mb~[ 3~Q_, .9.L.tQ~WW~~~~.f.Qi.~~~i.i4":~-.,,,, ... , ,,",.~ _

Accountants of India (ICAI), thereby facilitated the projection of falsified data '

in the Annual Financial Statements of the Company continuously.

_.. , .

156. The presentatfems made by him to the audit committee about the health of the co~pany:were~misleading and in fact he gave very g'ood certification regarding' the _ finanCial discipline and controls available in the company

.,. ..

~, contrary to the reality. In consideration for his acts in 'accommodating the

. ,

accused persons, he has received an exorbitant audit fee from MIs SCSl

over and' above the market rate which, reflects a quid-pro-ql3o arranqement,

157. Information Technology General Check w.as eanied o~ for the first time during financlalyear 2006-07 by Head of ' Information Systems Audit of MIs Price waterhouse, wherein around 180 deficiencies were found and was communicated to the Audit team with the assertion that the IT systems in existence, "in MIs SCSl are not fully' integrated and are,,', subject to

. -,'

manipulation. It was also suggested that in the light of above deficiencies,

'--- - - ._, ,. subSfafiUaranaelaborate -exaf'ilinatiCitcofihe finaTlcials slloufd-b8-condttct~d:---- -----'-- ---

, ,

In spite of this Sri. S. Gopalakrishnan (A-4) deliberately did no~ make .any extensive, changes in the audit plan which clearly establlsheshis motives and intentions in allowing the fraudu radices to continue in MIs SCSL.' Sri.

· :'

, !

-")

Talluri Srinivas (A-5) also followed the suit and in furtherance of the conspiracy allowed the above deficiencies to continue.

158. Even though as many as 135 control- deficiencies were identified in the integrated audit conducted in accordance with the Standards of the Public Company Accounting Oversight Board (PCAOB) which has severe impact on the internal control and financial accounting, Sri. S. Goplakrishnan (A-4) continued the.trend and deliberately did not sring these control deficiencies to the notice of the Audit committee and there by facilitated the continuance of the fraudulent practices unabated. He also did not comment on these control deficiencies in his Audit report even_ thou,gh they are material in nature, there by his privy and active role in the conspiracy is established. Sri. Talluri Srinivas (A-6) also did not take remedial action and continued the same

-, ~~~~~~ - t~ contin~es>--~hia;- est~-biiS-h~5 hi~-' rol:~--i~ 'perpetuating -the- frBud by - :

the other accused.

,

~,

159. Sri. Talluri Sririivas (A~) has consciously overlooked the aCCQ1:Jnting, irregularities committed by MIs SCSL since 2007 showing his complicity in the commission of the above said offences and he is liable as co-conspirator.

160. - There is a discrepancy with regard to the existence of the Price Water_ House, Hyderabad as Auditors in the registration withlCAl, a statutory body. The --ICAI has confirmed that Sri. Tallun Srinivas (A·5) is member of 'Price Water House, Bangalore" and hot ·Pnce water ~ouse". As' such, the certification of Statutory Audit Repo~s by such non-member Audit. Finns consequently invalidates the Annual Financial Statement of the Company which is a statutory requirement under law to invite - investments _from the

," ,~, '

prospective investors.

161. Letters generated on the letter pads of MIs Price Waterhouse- were ----~~---'---recov~r~d-from -the ~omputer systerris--;;{ MIs SCSL. -Th~se -Iette-rswere---=---------------

supposed to be written by the auditors addressed to the banks seeking ~

- ,

confirmations about the balances. Sri Talluri Srinivas (A-5) as part, of the

conspiracy got these letters generated in the computer systems of MIs SCSL for- -the purpose of cr!t~':!}}4-~~OrdS which depicts his privy and

- s.: .... -_ L~_:~~~ - at",:~'·~.lJf:.u?"'.1f '

:"¥.1t;:. .-,.. .... ,.... r.tt'"., I, ':'f...! • '_

- • o_.r- ;:oa.a';;::'i~ ".71\ - - -~&" ".., 06 - 1

J~ ~ ~ c - ~~i~:~~" ,y~~hi1h~ .. ~~~~'t, ~i.'.

~I.;. - b" --f s» ~.. n •• ';O:·..;'''.·r. ~, ..

.:!\ 0;;,;",. "'1~"'" i., T.' .' ,~f"\ f}.:" :.. t r. .

-"'t- ~ . !. ~ ~~:! - ~. t.fl':, :.1f:;W (..~ • ~.

~ , i - -- i1: . !<{:t.b'("'(.~~{_lji-' ',::

A P D ,.. . I ~ff.f:~"'P;;';o!" ,-,- I.,

,; Ii • ·t."J,"'l~S-'·' -f ;','-,-:_

" 10 ,to... "'1- ,r;I.~~. .c: i~-:' = -'hI-

t '.. ~.J .. , t ~ ... ·"-" ,._-;,...... . _i .. ~.

,,') ~-~·Y,·f-,Y.iv-(,) ,,~ ';:":;-'5("~:r

" ~ :"'1;0'" '(', _' 'I' ~

1~""'\; 1· :......:.:..'....·~~·, ......

,,-~{:~. ~~~:.. -'t't'_'_!-'~"--"-'~

I

. )

involvement in the conspiracy. He also made Mis SCSL to generate certain

.oJ letters addressed to the banks directing the banks to directly inform the auditors. However these letters were generated merely for the purpose of record which shows the role of Sri. Talluri Srinivas (A-5) in ·the conspiracy. But for his active cooperation this would not have taken place for the period

. .

since 2007.

162. The above overt acts of Sri Talluri Srinivas(A5) reveal the

offences punishable u/s 120-8 r/w 420,419,467,471, 477A of IPC.

Shri B. Suryanarayana Raiu (A~6):

163. Shri B. Suryanarayana Raju (A--6) is the brother of Sri. B.Ramalinga·

$.' • '~:~- ,_,·'-Rajtl'§A""1j ;artd:-Sri:;-B~Bama -Raju:(A-?l-:at:ld~i~.,a~D~~9tq>~~f~ 1~ut:~~fJhe. 32.1:; ~;-:-; ~_~:.'':---''''''_''~'''-;:'''',!. companies floated by Sri B.Ramalinga Raju(A1), his family members and

- relatives.

164. Sri. B. Suryanarayana Raju (A-6) is responsible for converting the proceeds of the money acquired from nefarious deals into assets through the said 327 companies floated in furtherance of the conspiracy with his brothers Sri. B. Ramalinga Raju (A-'1) and Sri. B.Rama Raju (A~2).

165. Sri. B.Suryanarayana ~ju (A~)'s role conies into. being in obtaining loans from NB,FCs in the names of 10 out of 327 companies by pledging the shares of Sri. B.Ramalinga Raju (A-1), Sri. a.Rama Raju(A-2) .and their

. .

spouses through the SRSR Holdings for which he is the Director and thereby

raising a-loan to the tune of Rs, 17~ crores. Further Sri. B. Suryanarayana Raju (A-6) also played a crucial-role in fraudulently offloading the shares of his fEiniily members through fiv'e -investment companies thereby wrongfully gained an amount of Rs. 715 crores when MIs SCSL was not actually' making

__ .--. -----any profits.----·-·-------- '----------------------- -- - . -

166. Sri. 8. Suryanarayana _R?ju (A-6) is the Power of Attorney holder of Sri. B.Ramalinga Raju (A-1) and Sri. B.Rama Raju (A-2) for the purpose 'of signing on documents for pledging of shares etc.

I

f

167. Sri. B.Suryanarayana Raju (A-6) has appointed several trusted employees as Directors of these 327 companies in order to facilitate the fraudulent acts. He is the Director of Mis SRSR Advisory Services Pvt. Ltd. which is key company providing accounting and advisory services to all the

. 327 companies as such Sri. B.Suryanarayana Raju (A-6) is responsible for 'all the covert and overt acts of these companies. The end benefit to the accused in this fraud was reaped by way of offloading I pledging the shares at opportune times through the 327 companies whose affairs were completely managed by Sri. B.Suryanarayana R<;Iju (A-6).

168. /ls a promoter of MIs SCSL he and his wife got transferred some of their physical shares in the names of 17 persons who are their trusted employees and through them got their promoters shares sold in the market.

;.~ "'and gotthe monies ba'cklntQ,their accounts .. : -:,' .~.:.- '-~.: ~-!'C~~'7' .:.~:~ ;~~C·:,'::;·c" :.!":>': ':"~'''r - .'

169. Sri. B. Suryanarayana Raju (A-6) was instrumental in offloadlng of the

promoters shares duri~g 1999 and ~OOO and an amount to the tuneof Rs.75

Crores was gifted to Sri. B.Ramalinga Raju (A1), Sri. B.Rama Raju (A2) and

their spouses and children. This shows the existence ot a close knit

conspiracy amongst Sri. B.Ramalinga Raju (A-1), Sri. B.Rama Raju (A-2) and

Sri .. B.Suryanarayana Raju (A-6) and in furtherance of the said conspiracy

they were gaining through" off loading! pledging of shares.

170. Sri. B.~ury~arayana Raju (A-6) got arranged RS.1425 Crores as loan to MIs SCSL "by. pledging the shares of Sri. B.Ramalinga Raju .(A-1), Sri. B, Rarna Raj!J, (A-2) and their 'spouses in Non-Banking Financial Companies (NBFCs) through MIs SRSR Holdings Pvt. Ltd. for which he. is the Director .

. +\ .

171. At the jnslance of Sri. B.Ramalinga Raju (A-1) and in furtherance ~f the

criminal conspiracy, Sri. B.Suryanar~yana Raju (A-6) on 8.1.2009 got

. ~ p_rI~oged the lettets from the pirectors of the 37 companies who were shown

• • L .__ _ .:... _

to have lent money to MIs SCSL demanding repayment of ·the outstanding -Ioans arranged by their companies. As there were no documents showing.an agreement between these 37 companies and MIs SCSLregarding the

borrowals made by Mrs SCSL, nding denial by MIs SCSL in future In

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books of accounts, Sri.

i

i

B.Suryanarayana Raju (A-6) persuaded at the instance of Sri. B.Ramalinga Raju (A-1) to cause issuance of the letters demanding repayment of outstanding loans by the Directors of the 37 companies. The factum of projection of this liability on MIs SCSL in Sri. B -, Ramalinga Raju (A-1)'s letter dated 07.01.2009 and the immediate issuance of these letters on 08.01.2009 establishes' a well knit conspiracy in the entire transactions between Sri. B.Suryanarayana Raju (A-6) and other accused. The fraud would not have been complete but for the crucial role of Sri. 8.Suryanarayana Raju (A-6) tn the conspiracy.

·172. The above overt acts of Sri B.Suryanarayana Raju(A-6) reveal the . offences punishable U/S 120-8 r/w 420 of IPC.

Shri G. Ramakrishna CA-7l

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173. Shri G. Ramakrishna (A-7)' is the Vice-President in the Finance

Department of MIs SCSL during the relevant period.

174. Sri. G. Ramakrishna (A-7) is responsible for the implementation of the nefarious ideas put forth by Sri. B.Ramalinga Raju (A-1), Sri. B. Rama Raju ( A-2) and Sri. V.Srinivas (A-3) mto action through his collegues Sri.' D. Venkatapathi Raju (A-8) and Sri. Srisailam Chetkuru (A-g) in furtherance of

the criminal conspiracy .

. 175. Sri Srisailam Chetkuru(A-9) in furtherance of the conspiracy directed Sri K.Malla Reddy and Sri P.B.V.Suresh .KulTlar to feed inflated sales invoices into the Invoice Management System(IMS) which resulted in falsified inflated

. .

sales to the tune of Rs.5,117 Crores got generated in the annual financial

statements from 01.04.2003 to 31.12.2Q08.

176. Sri G:Ramakrisha (A-7) prepared the forged monthly bank statements and got them 'entered into the Oracle Financial systems which projected false

G,·R.;;;makrishna (A-7) got thls accomplished through Sri P,Gyana Prasad.

I

During investigation, the actual and false sales in the form of MIS were

.:.) retrieved from the server HMF NT 010 to which Sri. G.Ramakrishna (A-7) had direct access.

178. Sri G.Ramakrishna (A-7) forged the FDRs and kept in the company records.

179. Sri. G.Ramakrishna (A-7) also got his laptop reformatted one day before the confession by Sri. B.Ramalinga Raju (A-1) in order to destroy the incriminating digital evidence available on his laptop. Further, after the traud came to light he has also instI'Ucted Sri. D.Venkatapathi Raju (A-8) and Sri. Srisailam Chetkuru (A-g) to delete the records from the computers who in tum' instructed their subordinates.

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......

t80 .. S~i. G.R~makrishna (A-7). is the proce~.~,.owl:t.~r fQI:,IMS .. ~119. has also normnated ~ri.· sris~ii~m' Ch'e~u~' (A-9) 'as the sin~l~ pOint conta'ct f~r 'th~ . IMS in order to effect modifications in the source code for enabling the generation of false invoices as part of the conspiracy to perpetrate this fraud,

~81. Sri. G.Ramakrishna (A-7) also received preferential' allocatlon of ASOP-A shares as a quid-pro-quo 'for committing this fraud. Further Sri. G .. Ramakrishna (A-7) was also responsible for getting the SOX testing report generated through his subordinates wherein the photocopies of the forged FDRs form part of the report. Further, based on the dlsclcaures made by At several incriminating electronics records were retrieved from the. server where the SOX testing report is stored.

182. Further Sri .G. Ramakrishna (A-7) as Vice-President (Finance) was providing the~'iforged Fixed Deposit Receipts to Sri P. Gyana Prasad:.,A:fter the fraud came to'light, these origil}al forged FDRs were got destroyed as part of the conspiracy, which amounts to destruction of evidence.

:=-_ •

-:. .

183. Sri. G.Ramakrisha (A-7) was incharge of the sections where the actuar··-:----------·

!

mentioned about the role of Sri. G.Ramakrishna (A-7) in this fraud. The '

'"

statements of these witnesses were got recorded u/s 164 Cr.P.C.

184. The above overt acts of Shri G. Ramakrishna (A-7) reveal the offences punishable u/s 120-8 r/w 420,468,471, 477A and 201 of IPC.

,Shri D.Venkatapathi Raju(A-8):

185. Shri D.venkatapathi Raju(A-8} is Sr. Manager (Finance) in Mis SCSL and looks after the Treasury Department during the relevant period.

186. Shri D.Venkatapathi Raju (A-8) conspired with Sri G.Ramakrishna (A-

, , .

7) and in furtherance of the consplracy he used to hand over the forged '

monthly statements of the banks to Sri P.Gyana Prasad and Sri Srisailam theikur'L"(A:9Y"fgH~'aki~g reconciliation and entries:int6'th'e;dr~C1e'Finanoials '. system knowing, fully well that the monthly statements, of the banks being

provided were forqed.

187. The spouse of Sri D.Venkatapathi Raju(A-8) is one of the 17 persons,

- 'through whom'the promoters sold their shares in the open market in the year 2000. This shows his complicity in off loading the shares at opportune: time.

188,. Sri D.Venkatapathi Raju{A-8) also received shares under ASOP-A scheme out of tum over a prolonged period and, these shares were allotted,

, , '

bySri. a.Ramaling?! Raju( A~1), $ri. 8.Rama Raju (A-2) and Sri. V.Srinivas (A~

3)·showing the cornpticlty of Sri. D.Venkatapathi R~ju (A-B) ln.furtheranceot their conspiracy.

189.. Several incriminating electronic records were retrieved from his laptop

~ . .

,.;:;, which clearly shows 'that he had a ciear rQI~ in this well knit conspiracy.

Letters pertaining to fake FDRs and forged monthly bank statements were

~----- --reeeve-reEf-fr-eFA-his-~aptep,,-GfQD-QpiA~ived.in..this.regatcL_ .. ., _. .

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190, Sri OVenkatapathi Raju (A-8) is in-charge of the treasury team of finance division whiGh is responsible for harid.ling the cheques of MIs SCSL.

, '

/ (

same in the accounts of MIs SCSL, he failed to reflect the same in the books of accounts of MIs SCSL accordingly. Instead he got the same reflected wrongly as part of the conspiracy as if these monies were received through sale proceeds from Bank of Baroda, New York Branch with the help of his subordinates.

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191. Sri P.Gyana Prasad who is directly working under Sri. D.Venkatapathi 'Raju (A-B) has clearly mentioned about Sri. D.Venkatapathi Raju'(A-8)'s role in the fraud. The statement of Sri P.Gyana Prasad was got recorded U/S 164 Cr.P.C.

192. The above overt acts of Shri D.Venkatapathi Raju(A-8) reveal the offences punishable Uls 12(}'B rlw 420,468,471, 477A of IPC ..

:,

.: ,.; "",:~,_", ~,,: ,'.:r;':-Shf.i Srisaifam,Chetkuru(A-9):: "<',<b ._, ,:_:::: ':.:_:, '_ ",:-=- ::C,' <',:';' " .: :.,:~ " ~ :,,~~ ~""';. ~ ':,.::: '.':, ',' :':" ~;", :',' ':

193., Shri Srisailam Chetkuru(A-f) is the Asst. Manager (Finance) and In-

charge of sales and AR in MIs SCSL during the relevant period.

194. Sri Srisailam Chefkuru (A-9) got created 7,561 falsified saies lnvolces iwlMS through Admin role and by utilizing the super user facility has clandestinely got them hidden from the business circles. He got the data fed into the, systems, by Sri K.MaUa Reddy and Sri P.B.V. Suresh Kumar. These

invoices which were generated in'IMS were exported to Oracle Financials

, _

from where the, annual financial statements were generated reflecting the

inflation of sales on account of these falsified sales invoices.

195. Sri Srisaill;lm Chetukuru (A-~) got the super user facility got created in I MS in order to ~enernte these fal~~ sales invoices by communicating With the Internal Information Systems Division of ,MIs SCSl.

196. Sri Srisailam Chetukuru(A-9) also received shares under ASOP-A

--~~heme out of tum-over a-pro,long'ed, period ~mdth-ese'shares were allotted Dy_;_-----~-

,4,-1, A-2 and A-3 showing the complicity of Sri Srisallarn Chetkuru (A-g) in

'~ ,

furtherance of the conspiracy.

"

197, Further from' the laptop of Sri Srisailam Chetkuru (A-g), several

:,:IJ~r~n:~.7 . .':lectronic reco~,~~~~B~:1tO: the fal~ified invoicesand super i(P,~ ~l>:""_ ~qA'1I.0

rh~~ le}'/'

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user features were recovered through computer fo~ensic examination at GEQD,

198. Sri Srisailam Chetkuru (A-g) has also instructed 'his subordinates to delete the electronic records and reverse certal n entries in the Oracle Financials after the aborted Maytas deal. He also instructed his subordinates Sri K. Malia Reddy and Sri P. BV,Suresh Kumar to generate the false invoices and store the data in the server HMF NT 010, Several incriminating electronic records were retrieved from the server HMF NT 010 with the help of GEQD experts.

199. Further, Sri Srisailam Chetkuru (A-g) was also providing data like the invoice numbers, customers names and the amounts to enable his subordinates to generate the false invoices.' He was clandestinely omitting

,,;~,.' ", ,::' :.':~ : :', :'~ft~j~ numbers In'" the":1nvoicEf iiuh16~? 'iet;es:';'ih order use" thiise',:mfs$ing':" .. ::, ( .. ::', -: ,

numbers for generating false invoices at a future date thereby interspersing

the false invoices 'in the, regular series. He has also corresponded With the

Internal Information S~stems Division to hide certain invoices and, also to

reverse 'the fieldlnvolce status of certain other invoices from visible to

invisible and vice-versa. Knowing fully well he has got the details pertaining to

, , '

the fake invoices entered into oracle ftnaneials through his team thereby

inflating the balance sheet He got several false invoices generatect without actually receiving the billing advises from the financial incharges of respectve

business circles.

200. The statements of Sri KMalla Reddy and Sri P.B.V.Suresh' Kumar

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were got recorded uls 164 Cr.P.C. and certified~ copies were also received. These witnesses have clearty' stated about the role played by Sri Srisailam

. '':_'

Chetkuru (A-g) in the fraud, These certified copies of the statements are being

cited as relied upon documents.

,,_ - - -----

---.--- ... ~.- ~ ••• _ •• -------- ........ • __ • L. _

- -- - - -_ - -- --------- - -_ .. - - .... ---~---

20~. The above' overt acts of Shri Srisailam 'Ch,etkuru(A-9) reveal the ' offences punishable u/s 120-8 riw 420, 468,471, 477':A and 201 of IPC.

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202. Sri D.Gop~la Krishnam Raju was arraigned as an accused during

. )

, . investigation. Since no incriminating evidence has come up against Sri

D.Gopala Krishnam Raju, he is not sent up for trial and the same is reflected at column No.12 of the charge sheet.

Summary:

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203. The evidence available against the accused persons is that they were party to the criminal conspiracy hatched in Hyderabad during the period 2001- 2008, and in furtherance of the said conspiracy they dishonestly and fraudulently lured the innocent investors under deception into buying 'the shares of MIs SCSL during the above period by publishing false and inflated

.. ' balance sh.ee~.z proje~~ng a ~~~~~Y yict~r,~ .~9u~Jh£t~~p~r;J~M!~~L~G~L" '.' '. .

r _ , I

thereby caused wrongful loss to the investors and at the sa~e time, they sold

thelr shares .at opportune times in the open market and received wrongful gain for themselves.

204. Investigation has also revealed that various irwestors who hadinvested

in the shares of MIs SCSL have lost heavily due to the drop in the prices of shares of MIs SCSL after the disclosure of this fraud committed by the accused. The public sector banks namely UCO Bank, Punjab· National Bank, Union Bank of India, Corporation Bank, Indian Bank, Allahabad bank, Oriental Bank of Commerce have suffered a wrongful loss for a total amount of Rs. 1'0.13 crores, The Lie of India alone has s~red a loss of Rs. 950 crores.

205. From the investigation, it is clear that the whole fraud was designed and orchestrated by Sri. B.Ramalinga Raju (AM1), Sri. B.Ramaraju (A-2) and' . Sri. V.S'rthivas (A·3},.and they got the same implemented with the active connivance of Shri. GJ~amakrishna (A-7), shri. D.Venkatapathi Raju (A-B).

_. - • -- nu -- -- n. ~ind- Snir SnsaUam Chetkuru [A':-9J~' F1Jit1'ier Sr1. S. Gopa1ak:rishnan '(A~anct-· . u

ShrLTalluii Srinivas (A-5) have actively participated in the conspiracy by auditing the .fudged balance sheets and certified the same and thereby connived with the other accused. 'Further, Sri. B.Suryanarayana Raju (;\-6)

.:§-

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(A-1) I' Sri. B. Ramaraju (A-2) in reaping maximum benefit from this fraud and

r :

in rotating the funds amongst the companies.

206. From the investigatio"n it is proved thaf the fraud was orchestrated between 2001 and 2009. Initially the accused have manipulated the results of the company and have shown heavy profits and growth rate on par with the market conditions and thereby kept the share prices artificially high. Further during this phase they have intelligently offloaded the shares of their family members and made a sum of Rs. 715 crores and brought down their stake in

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the company from 18.78% to 8.59%. By doing so, they have cheated the

investors on one hand and rnade maximum gains for themselves on the other hand. . During the subsequent periods, the acCused continued to inflate the profits and growth of MIs SCSL in order to reap maximum benefit for the

:'snate§'wlii"ch th8'{·t1ave~-preCfged: as. co\laterakseD!Jrit¥.~~. Faf§~ ;1d2n's~to ·the tune of Rs.1,744 crores. These loans were raised by pledging the shares of. Sri. B.Ramalinga Raju (A~1), Sri. 8. Rama Raju (A-2) and their spouses. By

. . .

doing so, they continued to cheat the investors by concealing the true . performance of the company on one hand and raised maximum possible loans for themselves on the other hand.

207. Subsequently, the accused continued the inflation of the profits of Mis SCSL fraudulently and dishonestly· in order to retain the control of the company to prevent exposure of their misdeeds and to avoid the margin trigg~rs for the pledged shares. By doing so, they continued to cheat the

, r

.. un-----commission from MIs ~CSLcfurlng-fheTrauapenod by tne virtue ot"msu,---,-" .. - •• -.-----

position as the Managing Director of MIs SCSL Sri B. Ramalinga Raju (A-1) .. and Sri B. Rama Raju (A-2) were also getting extensions as Chairman and . Managing Director periodically by fraudulently and dishonestly projecting the

. ~

performance of the company there9y'~g~ni~g wrongfully. The accused have '-'~"".'''' ~,,~.~ ....

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run a public limited company as if it is a proprietorship concer:n by throwing all

the corporate governance rules to the winds. They utterly failed to protect the

. .

. interests of the investors and on the other hand they deceived the investors

and also made wrongful gain for themselves.

208. In view of the above, the accused Sri B.Ramalinga. Raju(A-1), Sri B.Rama Raju{A-2), Sri V.Srinivas(A-3}, Sri S.Gopala Krishnan(A-4}, Sri Talluri Srinivas (A-5), Sri B.Suiyanarayana Raju(A-S), Sri G.Ramakrishna(A-7), Sri D.Venkatapathi Raju(A-S) and Sri Srisailam Chetkuru{A-9) have committed offences of conspiracy, cheating, cheating by personation, generating forged valuable securities, forging the documents for the purpose of cheating and knowingly using these forged documents as genuine. Further they have falsified the accounts of the company and also

:-(-.: .. "L: .... Ll)· . .:~:~··-.;"~ ... ·~~ ... -; _.:...... . '. _ -. , ...... ~ ..... ~ •. ~-~._. ·,..:'-::'.~_I."·~'''~''-· JI"~ ,-., _ , ' , , ,

... : .. ~~~.. . .. . . caused disappearance. ·o"f 9vldelic·e··ofthe offence to scr~-1tle.tus~I~~~tR": .... <:

legal punishment. Therefore all the accused are liable for commission of offences punIshable under sections 120-6 r/w 420,419,467,468,471, 477A

and 201 of .Indian Penal Code and substantive offences thereof.

209. It is therefore prayed that the charge sheet be taken on file arid the accused persons be tried and dealt with in accordance with the law.

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210. .It is also prayed to permit the submission of Additional statements and documents as and when required .

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