The action came after Paras Kuhad, former additional solicitor general of India, had written to the Reserve Bank of India (RBI) and the Prime Minister’s Office (PMO) alleging financial irregularities within the firm.
EARC said it has not received intimation of any inspection being conducted by the MCA, in a statement on Thursday.
According to reports, the MCA initiated the probe under section 206 of the Companies Act, which permits the Centre to inspect the books of a firm if it feels that circumstances warrant it, but this does not imply guilt.
, EARC’s parent firm, opened at a lower circuit of Rs 76.5 on Friday after trading on a lower circuit of Rs 80.2 a day earlier when news of the MCA probe broke. The share price had recovered to Rs 83.3 by mid-day.
Kuhad and family have been stakeholders in the ARC since its incorporation, with a holding of about 14% stake.
A person aware of the development confirmed that the allegations mentioned in earlier reports were accurate as per the letters written to the authorities.
The whistleblower was seeking regulatory scrutiny of transactions that were allegedly not in compliance with the law and led to the diversion of funds from EARC as a result of investments made into the ARC by Edelweiss Group and Caisse de dépôt et placement du Québec (CDPQ).
“We deny each and every allegation, contention, statement and/or assertion against us…EARC is in full compliance with the applicable laws, and has been conducting its business and operations in a fair and transparent manner.,” the statement said.
The ARC is an RBI-regulated entity with the central bank approving any equity investments made in it.
The firm had over Rs 40,000 crore in assets under management at the end of December 2020