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Centre's crackdown on shell cos hits govt-backed recruitment firm; non-resident Keralites in a lurch

Fair and safe recruitment opportunities for Keralites looking for jobs in foreign countries and their welfare is likely to be hit as the Indian government has disqualified Non-Resident Keralites Affairs (NORKA) Roots board directors till 2021.

Norka-Roots, which is mainly in charge of recruitment of Keralites to Gulf countries, is a company in which the state government has a stake. The directors were disqualified when the Ministry of Corporate Affairs struck the down the registrations of 2,09,032 companies and disqualified 1,06,578 directors under Section 164(2)(a) of the Companies Act, 2013 all over India.

According to a statement issued by the ministry, the move is targeted to curb the menace of shell companies, money laundering and black money in the country and prevent misuse of the corporate structure by shell companies for various illegal purposes.

 Centres crackdown on shell cos hits govt-backed recruitment firm; non-resident Keralites in a lurch

Representational image. Reuters

The Norka-Root's company, which is reportedly under trouble, had 11 directors, including Gulf-based Indian business tycoons MA Yusuf Ali, Azad Moopen, Ravi Pillai, CK Menon and Kerala's ex-chief minister Oommen Chandy.

The other directors are Ismayael Rawther Abdulkhader, Rani George, Alexander Vadakkedam, Anirudhan Madhavan, Karuvelithara Chacko Joseph and Sudeep Prabhakaran. All 11 were directors of Nork-Roots (registered under Section 25 of the Indian Companies Act as a private incorporated company in 2002).

The disqualified directors will not be eligible for re-appointment as a director in that company or for appointment in other companies for five years from the date of non-compliance, which is 1 November, 2016, till 31 October, 2021.

According to Section 25, a company is established 'for promoting commerce, art, science, religion, charity or any other useful object', provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members.

An official from Norka, without providing much detail on the central government's move, said that they have taken up the issue seriously. "We are working on remedial measures. We can't say whether this will affect our operations. We cannot also say when this will be resolved," the official said requesting anonymity.

However, in a positive development, on Wednesday, the Kerala High Court has stayed the Centre's decision to disqualify Norka-Roots directors for one month. The court provided the stay after hearing a petition from Dr Azad Moopen, one of the directors of Norka-Roots.

In the petition, Moopen said that Norka Roots is a public sector undertaking which manages all the affairs of Norka. Moppen also added that he was appointed through a government order as a non-executive board director and has no role in Norka-Roots' day to day affairs. Moppen, who owns a chain of hospitals in Gulf and India, was nominated as a director in 2013.

The disqualified directors will not be able to hold directorship for five years in other companies too, which will be hampering their business operations. The Kerala government holds the majority of the shares in Norka-Roots.

The ministry said in the statement that the shell companies may have been formed to indulge in financial irregularities. Minister of State for Corporate Affairs PP Chaudhary said in the statement that the present government has vowed to fight 'black money' and fighting the menace of Shell Companies is an imperative element of such a fight.

"I am happy that all the concerned agencies are handling this issue on priority. The disqualification under Section 164 of the Act is by operation of law. We are identifying the defaulting directors of these shell companies," he added.

Meanwhile, a trade unionist said that there were concerns raised from different parts of society about the operations of Norka-Roots. "We have seen that when private recruitment agencies were doing recruitments of Keralite migrants in thousands, the Norka was doing so only in hundreds," Mini Mohan, the trade unionist, said adding that it's a worrisome situation to learn that Norka-Roots' company is reportedly in trouble.

Around four million Keralites work abroad and they remit around Rs one lakh crore annually. State statistics say that their remittances account for 35 percent of the Gross State Domestic Product (GSDP).

However, hundreds of Keralites are returning home from Gulf countries due to the economic crisis there. Around 80 percent of NRKs work in Oman, UAE, Saudi Arabia, Kuwait, Bahrain and Qatar – hundreds of Keralites have returned home following the oil price crisis in Gulf countries.

Recently, the Norka-Roots had launched several rehabilitation programmes for the Keralite workers returning from Gulf due to the crisis. The body was even offering 15 percent subsidy of the project cost to help the Gulf returnees.

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Updated Date: Sep 21, 2017 16:25:26 IST

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