Children of Lord Swraj Paul battle it out in NCLT over mismanagement of Caparo finance company

The National Company Law Tribunal (NCLT) on Tuesday issued notice to Caparo Financial Solutions Limited and its directors in a plea filed by Caparo Mauritius Limited, both companies being a part of UK-based businessman and House of Lords peer Lord Swraj Paul’s Caparo Group. 

The plea was filed by Akash Paul, as a representative of Caparo Mauritius, against his siblings Ambar and Anjili Paul, who are directors of Caparo Finance.

Senior Advocate Satvik Varma, who appeared for Caparo Mauritius, argued that the company owns 26% share capital of Caparo Financial Solutions, which is a Non-Banking Finance Corporation (NBFC).

According to Varma, an internal audit conducted for Caparo Financial Solutions in 2021 showed glaring financial irregularities such as not provisioning for non-performing assets (NPAs) as per Reserve Bank of India regulations.

It was argued that a loan was sanctioned to a company in Pune called Bliss Diary for ₹3 crore, without any background check. It was later discovered that the papers given as surety did not belong to the person who was given the loan. The original owner of the property filed a first information report (FIR) and the case is currently under investigation by the Economic Offences Wing (EOW). 

When Akash Paul visited the office of Financial Solutions in April 2022, he claimed that it was sealed. In July 2024, Financial Solutions obtained an order against Akash Paul restraining him from entering the office premises.

Varma thus urged the NCLT to pass an interim order appointing an observer to observe the day-to-day activities of the management of the company and for restoration of Akash Paul's rights to access its books. He further urged the Tribunal to direct Financial Solutions to grant loans only after proper approval. 

A coram of Judicial Member S Shanmugasundaram and Technical Member Sanjeev Ranjan issued notice in the plea, but did not grant Akash Paul interim relief. The Tribunal opined that there was no urgency in passing the interim order, as the petitioner had known of these misgivings way back in 2022, but approached the NCLT only in 2024.

The plea was filed by Advocate Savya Garg.

Senior Advocate Krishnendu Dutta appeared for Caparo Financial Solutions and five of its officials. 

The case is now likely to come up for hearing on December 17.