Quest Net India MD sentenced to 3 months in jail for false company filings

Mumbai: A special court in Chennai convicted Pushpam Appala Naidu, managing director of Quest Net Enterprises India, for making false statements and omitting material particulars in the company's statutory filings, in connection with a probe by the Serious Fraud Investigation Office (SFIO) into the affairs of Gold Quest International and Quest Net Enterprises India.

The Special Court for Economic Offences-I, Egmore, on Monday sentenced Naidu to three months' rigorous imprisonment and imposed a fine of ₹10,000 under Section 628 of the Companies Act, 1956. In default of payment, she will undergo a further two weeks' simple imprisonment. Section 628 deals with the penalty for false statement.

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"..the prosecution has proved that the accused had deliberately omitted to mention the material fact as to the investment in the shares of M/s.Pallava Resorts Private Limited and the correct details as to the loan receivable from M/s.Pallava Resorts Private Limited in the balance sheet of M/s. Questnet Enterprises India Private Limited and also the subsidiary status of M/s.Pallava Resorts Private Limited in the returns filed by M/s.Questnet Enterprises India Private Limited as on 31.03.2009 knowing the same to be material fact beyond reasonable doubt from the facts and circumstances exhibited before this Court through oral and documentary evidence and the accused isfound guilty of offence u/s 628 of the Companies Act 1956 and is liable to be punished," the court observed.

The court, however, acquitted Naidu of charges under Section 629 of the Companies Act and Section 409 of the Indian Penal Code, holding that the prosecution had failed to establish beyond reasonable doubt that she had given false evidence on oath before the investigating officer or siphoned off ₹15.25 crore belonging to Quest Net.

The case stems from an SFIO investigation ordered by the ministry of corporate affairs in 2010 into Gold Quest International and Quest Net. The investigation examined, among other issues, transactions between Quest Net and Pallava Resorts.