ABC & Associates

Chartered Accountants
AB Nagar, New Delhi-110012
Email: ABC@gmail.com
Tel.: 1234567890

Monday, 12th August 2017

PRIVATE & CONFIDENTIAL

To,
Mr. Ram and Shyam Jain
Directors
Jain Impexo Private Limited
123, Connaught Place
New Delhi-110001

Re: Forensic Investigation of Jain Impexo Private Limited

Dear Sirs,

Attached is the report of the results of our forensic investigation of the Jain Impexo Private Limited.
We have conducted our investigation pursuant to our engagement letter dated 12.06.2017 between the
Jain Impexo Private Limited and our firm.

Our procedures were performed with reasonable care and due diligence. Our conclusions and findings
are in confirmatory of our engagement letter. Our analysis and observations are based upon
information provided to us as of the date of this report. It is possible that additional information may
become available following the date of our report and, if so, our analysis and observations could be
affected by such information.

We are happy to discuss any questions at your convenience.

For Balram & Associates,

FRN : 012345N

(CA. AB)
M. No. : 123456

Date : 12.08.2017
Place : New Delhi

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Chartered Accountants
 Forensic Audit Report of Jain Impexo Private Limited
th
Date of report: 12 August, 2017

I. Background

1. Jain Impexo Private Limited [JIPL] was started by Mr. Ram Jain and Mr. Shyam Jain in
December 1974. They were its first shareholders. JIPL acquired a substantial property in
Rohtak admeasuring 15000 square meters during that period.

2. JIPL’s directors neglected the company’s affairs for quite some time. The name of the
company was struck off from the Register of Companies in 1981. However, in 1986 its name
was restored in the records. In the meantime, the property at Rohtak was developed and
tenanted.

3. Mr. Sachin Jain (S/o Ram Jain) was admitted as a director in 1990 and Mr. Mohan Jain and
Mr. Arun Jain (S/o Shyam Jain) became directors of the company in 1992. The three held the
entire equity share capital of JIPL.

4. From 2006 onwards, an amendment to the Companies Act required all filings with the
Registrar of Companies (ROC) to be in electronic form. All Companies were required to
obtain a Corporate Identity Number (CIN), and Directors were required to obtain a
corresponding Directors Identification Number (DIN). For the purpose of this e-filing, digital
signatures were required to be obtained in the manner prescribed by the Information
Technology Act, 2000 and the Rules made under it. Following this, in February 2007, all
directors were issued a unique DIN.

5. In April, 2010, Mr. Sachin passed away. Mr. Mohan Jain and Mr. Arun Jain then acquired his
entire shareholding and thus became the only two directors of JIPL. From then on, till date,
they have been operating its bank accounts, receiving rents from the tenants of the Rohtak
property and paying all the property taxes.

6. Early this year in January 2016, Mr. Arun showed an advertisement given by a potential
buyer in the newspaper for the Rohtak property of JIPL and announced that if anyone had any
legal rights or interest in the same should come forward within 15 days of the date of
advertisement.

7. Mr. Mohan and Mr. Arun Jain got concerned and immediately filed a police complaint.

8. They then decided to appoint a forensic auditor to look into the matter.

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II. Objective

The objective of the forensic audit was

1. To investigate the advertisement put up by a person in the newspaper about the purchase of
the Rohtak property where the legal owner is said to be JIPL.
2. To find out in whose name the property is today, i.e., the title of the property and whether
ownership documents have been falsified or not.

III. Use of Report

The forensic auditor is required to submit one copy each to Mr. Mohan Jain and Mr. Arun Jain for
internal purpose only. Such report cannot be used in any legal proceedings.

IV. Scope of forensic audit:

To Forensic audit scope is limited to finding and establishing true owners of the company and finding
the perpetrator or fraudster who has made an attempt of corporate hijacking.

V. Methodology and Key Findings

As there is every probability of falsification of documents and legal records in this case of corporate
hijacking, the forensic auditor applied the following methodology:

1. The investigation team prepared a chain of events from the available records of the company
which is as under:

JIPL sequence of events

Date Events

15-Oct-1974 The Company Jain Impexo Private Limited [JIPL] was formed by Mr. Ram Jain
and Mr. Shyam Jain who were its first shareholders
The Company acquired land admeasuring 15000 square meters at Rohtak new
15-Dec-1974
survey number, 126,127,129(Part),130

The name of the company was stuck off by ROC for non fulfilment of various
12-Jul-1981
filing requirements by the Company
16-Aug-1986 The name of the Company was restored with ROC
1983 The Rohtak Property was developed and tenanted
The son of Mr. Ram Jain, Mr. Sachin Jain was admitted as director and
7-May-1990
shareholder in a Company

The two sons of Mr Shyam Jain, viz, Mr. Mohan Jain and Mr. Arun Jain were
8-Feb-1992
admitted as directors and shareholders in the Company

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 Mr. Ram Jain passed away leaving his shareholding to his son Mr. Sachin Jain
5-Apr-1993

18-Sep-1994 Mr. Shyam Jain passed away leaving his shareholding to Mr. Mohan Jain and Mr.
Arun Jain
12-Nov-2006 The Company acquired CIN no. (Company Identification Number)
14-Dec-2006 Mr. Sachin Jain acquired DIN (Director Identification Number)

20-Dec-2006 Mr. Sachin Jain obtained class -2 digital signature from the authorise vendor K-
Rudhra
Mr. Sachin Jain passed away leaving his shareholding to Mr. Mohan Jain and
13-Apr-2010
Mr. Arun Jain

The advertisement appears in the newspaper ‘The Times of India’ by advocate

10-Jan-2016 Prakash Kamath regarding buying of the Rohtak property by his client Mr.
Jagmohan Gupta and others

Mr. Mohan Jain and Mr. Arun Jain filed a police complaint with local police
10-Jan-2016
station

2. The investigation team downloaded the company records from MCA (ROC) and the
following were found:

(i) On 5/12/2014 some Dhaval Sharma, Mohan Dadlani, Varun Sharma and Viay Gupta had
taken over all the shareholding of the company from Mr. Sachin and they now
collectively owned 96% of thecompany.

(ii) These four persons became the directors of the Company.

(iii) The registered office of the company was changed from Delhi to Harayna which was
again shifted to Mumbai.

(iv) A fake affidavit and a fake digital signature of Mr. Sachin Jain, a former director of JIPL
who had in fact passed away on 09/04/2010, were also uploaded.

(v) These falsified records were uploaded with the fraudulent digital signature certificate
having been issued to Sachin Jain and showed him as a present director.

(vi) The fraudsters at Jain Impexo Private Limited (JIPL) were able to reappoint former
director Mr. Sachin Jain and obtain a fake digital signature on his name in December,
2014, even though he had died in 2010.

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 3. The investigation team instructed Mr. Mohan Jain and Mr. Arun Jain to file a complaint with
the police station

4. Once the complaint was filed the investigation team requested police to arrange for interview
of Mr. K Parhshastri, the Chairman of certifying authority, K-Rudhra and the interview was
arranged for.

5. Interview of Mr. K Parhshastri, the Chairman of certifying authority,K-Rudhra

In an interview Mr. K Parhshastri provided information regarding issuing of digital signatures
by any issuing authority.

 A digital signature serves as identity confirmation in digital communication and

transactions. The Information Technology Act, 2000 legitimised the use of digital
signatures in India. It provides that certifying authorities issue digital signature
certificates under the supervision of the Controller of Certifying Authorities (CCA).
The six certifying authorities in India, including K-Rudhra, all issue three classes of
personal digital signature certificates. Class 1 has the lowest security standard and is
often used to secure e-mail messages. Class 2 has a higher standard of verification, it
requires identity and address proofs and Class 3 offers the highest security due to
physical verification of theapplicant.

 The Ministry of Corporate Affairs mandates e-filing for all companies and accepts
Class 2 certificates for all such corporatefilings.

 Up to year 2013, just based on a scanned copy of the application and scanned copy of
the KYC documents, the certifying authority could issue a digital signature. Later, in
a year 2013, the government revised the guidelines and said that it should not be
issued just based on scanned copy, Certifying authority have to receive the physical
copy of the application and also a Xerox copy duly physically signed by the applicant
and also attested by the appropriate person. That has to be received in the office of the
certifying authority before issuance of digitalsignature.

 Currently a Class 2 digital signature certificate can be obtained by providing attested

copies of a government issued photo identification and address proof. The certifying
authority is not required to check originals or physically verify the identity of the
applicant and that made it very easy for the fraudsters to obtain a digital signature
certificate for the company’s authentic director.

 He further added that they won’t know that the person is dead as long as the PAN
card is there since in the PAN card there is neither is there an expiry date nor is there
a provision to obtain a new PAN card every two years or so. So, if Mr. Sachin’s PAN
was in possession of someone and if that someone can obtain his address which is
easily available on a phone bill, then, it would not be very difficult to obtain a digital
signature.

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  He said that around 90 lakh digital signature certificates have been issued in India so
far, 25 lakh in the last year alone. A few cases of fraud may seem inevitable as in any
other system but there is no denying that verification standards need to be tightened
for digital signaturecertificates.

 He informed that new guidelines issued in April, 2015 proposed that for all digital
signature certificates, the PAN number, email address and mobile number provided
on the application be verified and that attestation of documents be done by a Gazetted
officer, Bank Manager or PostMaster.

6. The investigation team then requested Mr. K Parhshastri to provide the certified copies of the
application forms and the documents used by the fraudsters to obtain digital signature, which
he provided.

7. The investigation team then prepared in detail, evidential records which included the
followings and which can be used in court of law:
(i) Certified copies of the application forms and the documents used by the fraudsters to
obtain digital signature of Mr. Sachin Jain
(ii) Certified copy of the death certificate of Mr. Sachin Jain
(iii) Certified copies from MCA of the ROC returns filed
(iv) Certified copy from MCA of appointment of directors
(v) Certified copies from MCA of changes in registered office address

VI. Conclusions and Recommendations

1. The Company should check the status and documents uploaded by the company more
frequently with the Ministry of Corporate Affairs (MCA)website

2. Also, checking ‘of index 2’ entry in Municipal Corporation of Delhi (MCD) records at regular
intervals and exercising more caution would prove useful.

Professionally yours!

For ABC & Associates,

FRN: 012345N

(CA. AB)
M. No. : 123456

Date : 12.08.2017
Place : New Delhi

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Chartered Accountants