Peepul Capital accused VSoft Technologies of fraud, but what is the truth???
Peepul Capital raised a complaint with Hyderabad police against VSoft Technologies. Latter is accused of frauding Rs 25 crores by transferring it to a staffing company since 2009. We contacted VSoft’s marketing team (Name cannot be revealed) on 21st September that handles media relations. The team is not aware of this development and have no statement for media.
Peepul Capital is the investor of VSoft Technologies. In 2012 the investor agreement has been revised, that entitles Peepul Capital of full transparency into VSoft accounts. Accounts shows a total of Rs 25 Crores has been transferred to Smart Staffing solutions. Investor claims that this is a fraudulent transaction and they were not aware of this transaction. While the accused says that the transaction has been informed to the investors.
To an expert view on this situation we contacted CA Vignesh Suresh, Partner at Sekhar and Suresh Chartered Accountants regarding his opinion on this situation.
“Related party transactions are covered in various Indian legislations such as Income Tax, Company Law etc. The law requires that the transactions between related parties be reasonable and in the ordinary course of business. The onus is on the Company to disclose its related party transactions in their financial statements and get them certified by their auditor. The onus, also is on the auditor to verify the reasonableness of the payments to the related parties and whether the transactions are at arm’s length. In this scenario, Vsoft has to prove the reasonableness of the payments to Smart Staffing Source and that the payments were made in the ordinary course of business. If this is not the case, the Company could be in for some serious trouble for non-compliance with Indian laws, thereby leading to further deterioration of it’s image.” Says CA Vignesh.
We will contact VSoft once again to check if these transaction have been posted in the company’s financial statements. If they are then Peepul Capital claims are false if not VSoft committed a fraud.
Do share your thoughts about this case.
*Note – Facts of this has been written based on Economic Times published article.
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