IFCI, Atul Kumar Rai under legal scruitny; SC issues notice

IFCI's top boss Atul Kumar Rai has been facing some serious heat. The Supreme Court today issued notice to the central government on a plea challenging Rai's appointment as the managing director and chief executive officer of the financial services major.

This notice was issued after the centre for public interest litigation filed a PIL alleging financial irregularities on the part of Rai. This PIL slams the government for not taking any action despite its authority over IFCI.

The government has been asked to reply in six weeks' time.

A bench of justices Aftab Alam and RM Lodha asked the Centre, the CBI and Rai to file their response on a PIL alleging that the appointment of present CMD(CEO cum Managing Director) was against the norms.

Rai, a 1985 Indian Economic Services officer, had taken voluntary retirement from his job to join IFCI.

"There have been in recent past serious allegations of administrative and financial irregularities in IFCI like purchase of 5% stake in the MCX-SX by IFCI management on a much higher price of Rs. 35 per share whereas the Union Bank of India and the Bank of India acquired the shares of the
same company at Rs 10 per share," advocate Prashant Bhushan, appearing for the petitioner contended.

He contended that several complaints were filed before different authorities including the Finance Minister and the Prime Minister but no action was taken for conducting an independent enquiry into those allegations.

"The inaction of the authorities in taking any action on the aforesaid complaints of corruption is clearly arbitrary and unreasonable, thus, violative of Article 14 of the Constitution," the petition said.

"Rai, who was working in Ministry of Finance and simultaneously functioning as nominee Director in IFCI ensured release of thousands of crores rupees in its favour which was already converted into a company under Companies Act in 1992, then abandons his Government job and becomes the CEO & MD of IFCI flouting all the prevalent Rules and thereafter, indulges in serious corrupt practices involving various financial
irregularities in IFCI," the petition said.

"The Petitioner by way of the present writ petition is seeking an independent investigation into various financial irregularities which have come into light in recent past in IFCI and also seeking a writ of quo-warranto for removal of Rai from the post of CEO & MD of IFCI as his induction as whole time member is in total breach of prevalent rules and
regulations," the petition said.

The IFCI was originally established as a statutory Corporation under Industrial Finance Corporation Act, 1948 to cater to the medium and long-term finance needs of the industrial sector but it was later converted into a company.

(With inputs from PTI)