Premier Auto chief accused of embezzlement

The government has accused Premier Automobiles Ltd Managing Director M V Doshi of far out stepping his authority and selling the company's assets, besides embezzling funds and cheating shareholders.

The government contended before the Company Law Board that Doshi did not have the authority to sell the company's assets without the approval of Mumbai high court.

Appearing for the central government, counsel Sanjay Aggarwal said Doshi acted ultra vires (beyond the power granted to him by the Premier board) and entered into an alliance with Italian auto giant Fiat to manufacture its worldwide hit model Uno.

"The Board had authorised the MD only to enter into a memorandum of understanding with Fiat and despite that he not only signed the agreement for co-production but also to market Uno from Premier's dealers network," contended Aggarwal.

"Doshi and Premier's board cannot sell, dispose or transfer the company's assest at their own wish without the approval of Mumbai High Court under the Companies Act," Aggarwal said, adding they did not seek approval of financial institutions or shareholders.

And to cover it up, Doshi falsely argued that the board had authorised him to take such decisions in 1994 through a power of attorney.

"That power of attorney was for other purpose and not ot dispose company's assets," Aggarwal said, adding that Doshi tried to get backdated permission from shareholders.

Under the Companies Act, 1956, a listed company has to take approval from the high court to dispose its assets. Doshi also manipulated Rs 610 crore (Rs 6.1 billion) collected from booking and sales of Uno and did not bother to render the exact numbers in the company's annual accounts, Aggarwal claimed.

Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group