The Andhra Pradesh police have issued an "international lookout notice" against JM Financial chairman Nimesh Kampani and 17 others in a case involving Nagarjuna Finance, the non-banking finance company of the Nagarjuna group.
The Hyderabad-based finance company has been charged with defaulting on repayment of deposits worth Rs 100 crore (Rs 1 billion).
A lookout notice is issued in criminal cases and served at exit points of a country. Kampani is currently in Dubai on official work.
RS Praveen Kumar, deputy commissioner of police, Hyderabad, told Business Standard that a lookout notice is an alert message to all immigration counters, which are supposed to inform the police as soon as they locate any of the people mentioned in the notice. "We first detain the people mentioned in the notice and then take a call on whether to arrest them," he said.
Praveen Kumar said the police have nothing against the industry or Kampani in particular. "The issue involves the hard-earned money of 100,000 investors, of which 70 per cent are senior citizens," he said.
Kampani was a director of Nagarjuna Finance when the alleged default took place. He had resigned as a non-executive director in 1999. He was, however, on the board when the NBFC raised deposits from the public.
Police arrested Nagarjuna Finance chairman K S Raju, and PK Madhav, former director of Nagarjuna Finance and the then Maytas Infra CEO, on December 15.
Both were arrested under Section 5 of the Andhra Pradesh Protection of Depositors of Financial Establishments Act and also under Sections 420 and 406 of the Indian Penal Code.
Another director, GS Raju, was arrested on Saturday when he was awaiting immigration clearance at Indira Gandhi International Airport in New Delhi.
KS Raju was a promoter of Nagarjuna Finance before he divested his holding in favour of a Mumbai-based company, Mahalakshmi Factoring Services, in September 2000.
While JM Financial did not want to comment on the issue today, the company had in a statement released last Tuesday said Kampani is in Dubai and is expected to return to India when he completes his business meetings.
The statement also said police personnel from Hyderabad and Mumbai visited the company's offices on December 29, 2008, for a meeting with Kampani in connection with the Nagarjuna Finance case. Since Kampani was not in town, a senior police official spoke to him over the telephone.
Kampani told him that he was in no way involved with the matter, having resigned as a non-executive director in 1999. He responded to all the questions from the police officer and assured him that he would fully cooperate with the investigations on his return to India. After this, the police officer asked whether he could see Kampani's chamber. The police officer left after the company agreed to the request.
The statement also said the allegations that Kampani was an absconder were false and unfounded and that he was in no way involved in the alleged default offences committed by Nagarjuna Finance because he has had no connection with the company after his resignation in 1999.
Independent observers said the action against Kampani did not make any sense as Nagarjuna Finance's annual reports in 1999 and 2000 quoted the auditors as saying that the company's fixed deposits were fully serviced.
