Madras High Court Orders Church Of South India Trust To Appear Before RoC, Respond To Charges Of Irregularities

The Madras High Court has asked the Church of South India Trust Association (CSITA) to submit a detailed explanation to a Registrar of Companies (RoC) notice within two weeks on various allegations of irregularities by it.

The CSITA should also appear for enquiry at ROC, Chennai, between 17 February and 22 February without seeking any adjournment.

Following the completion of the enquiry, the ROC should submit a consolidated report to the Union government within two weeks without any delay.

On receipt of the RoC report, the Ministry of Corporate Affairs can form an independent opinion in accordance with the provisions of the Companies Act and proceed further in accordance with Section 212 of the Act, which paves the way for a probe by the Serious Fraud Investigation Office.

Justice R Mahadevan of the High Court, giving his ruling on three petitions filed by CSITA and CSI Diocesan Treasurer against the government ordering an SFIO probe, said these steps were necessary to ensure "principles of natural justice".

CSITA, a registered organisation under Article 25 of the Companies Act as a non-profit organisation to manage the church’s properties, argued in its petition that it was not issued a show-cause notice and no reason was given for the government’s conclusion to order the SFIO probe.

The judge, however, rejected the petitioners’ plea to quash the government order to institute an SFIO probe in view of the serious nature of the allegations against CSITA “in the interest of justice”.

The petitions were filed based on a 2 June 2016 letter from the RoC regional director in Chennai recommending an SFIO probe. The Centre ordered the probe on 10 June 2016.

The order was challenged by the CSITA Medak Diocese in the Telangana and Andhra High Court, which set it aside and referred it back to the Union government to exercise its jurisdiction.

Before the Telangana and Andhra High Court order could be passed, the Madras High Court was also moved over the order. However, the Madras High Court dismissed the petitions on 22 February 2018 as premature.

Thereafter, the Centre issued an order on 7 May 2018 based on the RoC report highlighting certain issues requiring it to order the SFIO probe in public interest.

This was challenged by CSITA, arguing that it had not been heard nor provided the reasons.

On 19 September 2018, the CSI Madras Diocesan Treasurer was issued summons, leading to it being challenged along with other petitions against the SFIO probe.

The High Court found some of the allegations such as misappropriation of funds of SCI Kalyani Hospital in Chennai, CSI Christ Church at Gandhipuram in Coimbatore, various hospitals and educational institutions and sale or mortgage of the church’s land serious.

Other allegations were that “the CSI and its constituent Diocesan Units, taking advantage of the corporate personality of the CSITA, have availed bank loans by creating charges on the immovable and movable properties, tax benefits, suing the property disputes, etc.,” the judge observed.

The functioning of CSITA has proved to be CSI’s nemesis as church members have utilised the provisions of the Companies Act to question the various irregularities within the CSI.

The CSITA is registered as a non-profit organisation to help the organisation get tax exemptions to the tune of Rs 2,000 crore every year.

The CSI has a huge amount of money and properties, besides managing over 5,000 educational institutions across southern India.

Its assets in southern India are valued at about Rs 1 lakh crore and the church reportedly receives at least Rs 1,000 crore annually in the form of donations and various other offerings.

A tug of war among the administrators resulted in the tribunal removing all directors and the managing committee on 18 November 2016.

Findings by the Registrar of Companies (RoC), submitted through a report on 12 January 2016, showed a few irregularities in CSITA’s functioning.

One of the complaints against CSITA was that the memorandum of association (MoA) and articles of association (AoA) were amended without the approval of the Union government.

The RoC also found that 21 CSITA officials of Coimbatore and Kanyakumari dioceses, including bishops, were facing criminal charges for misappropriation of funds, including the illegal sale of lands, and yet, were involved in financial administration.