At a time when the Ministry of Corporate Affairs is striking out companies and limited liability partnerships, or LLPs, for not filing financial statements, it appears that a firm run by Jay Shah, the son of the Bharatiya Janata Party’s national president, Amit Shah, has not submitted its financial records and accounts for the last two financial years. The MCA database reveals that Kusum Finserve LLP, the firm run by Jay Shah, has not filed its financial statements for the financial years 2016–17 and 2017–18.
In the recent past, the MCA has pushed full steam ahead in its bid to crack down on companies that have not filed its financial statements consecutively for a period of two years or more. In June 2018, the Ministry of Finance issued a press release stating that, as part of a drive under the supervision of the MCA, the Registrars of Companies had struck off 2.26 lakh companies from the register of companies during the financial year 2017–18, for such non-filing. As part of the MCA’s drive, the ROCs also disqualified over 3 lakh directors for non-filing of financial statements and annual returns for the preceding three financial years. The press release further states that for the second drive, which will be launched in the ongoing financial year of 2018–19, “a total of 2,25,910 companies have been further identified for being struck-off ... along with 7191 LLPs.”
While the BJP government has opened this battlefront against companies and LLPs that have been non-compliant in meeting filing norms, Kusum Finserve continues to defy statutory requirements. LLPs are required to file their statement of accounts by 30 October each year—failing to do so is an offence under the Limited Liability Partnership Act, which invites the possibility of a fine of upto Rs 5 lakh. Even as the government cracks down on firms that have violated the act, Jay Shah’s Kusum Finserve has missed its deadline for filing its statements for two consecutive financial years. It is unclear whether any action has been taken against the LLP for failing to meet the requirements under the act.
In a story published by The Caravan in August this year, I reported that, going by the few financial statements uploaded by Jay Shah’s firm Kusum Finserve, it has secured credit facilities amounting to Rs 97.35 crore as of 2016—from one private bank, another co-operative bank, and a government enterprise under the aegis of the Ministry of New and Renewable Energy. Of this, Jay Shah’s firm secured Rs 25 crore on the basis of two properties in Ahmedabad that are owned by Amit Shah. As per a mortgage deed signed between Kusum Finserve and Kalupur Commercial Co-operative Bank in May 2016, Amit Shah is shown to be “Mortgagor no. II” and the “absolute owner” of the two plots. The BJP president, as the owner, has a contingent liability vis-à-vis Kusum Finserve’s business, but a mention of this was curiously absent from his election affidavit for a Rajya Sabha seat in 2017—an electoral offence punishable with rejection of the nomination under the Representation of People’s Act.