M/S. Satyam Computer Services v. Directorate Of Enforcement - Synopsis
Ahir Mitra 26 May 2021

M/S. Satyam Computer Services v. Directorate Of Enforcement

Mr Ramalinga Raju founded the company in 1987 with only 20 people. During the years 2003-2008, the firm grew and prospered, and by the end of March 2008, Satyam's revenue had reached a high of USD$467, a 35 percent annual compound rate of growth, and it had many more accomplishments. On the 6th of January 2009, six months after team ‘Satyam' got the ‘Golden Peacock award,' suspicions of fraud were made, and it was claimed that he had been manipulating the company's accounts for years (Rs. 7,316 Crores). This crisis is a thorough show of one's carelessness with fiduciary responsibilities, a total collapse of ethnic standards; severe rivalry and the drive to impress stakeholders, particularly investors, analysts, shareholders, and the stock market; top management's low ethical and moral standards, and a higher emphasis on short-term performance.

The defendants were charged under several sections of the Indian Penal Code, including Sections 120 B, 406, 420, 467, 471, and 477 A, for breaking different income tax rules. Mr. Raju said in his declaration letter regarding his nefarious and fraudulent actions that the reason for his declaration was that he was manipulating income figures annually since he couldn't change expenditure figures as readily, and the difference between the "book" profit and "real profit" kept growing every year.

 He proceeded to purchase Maytas Infrastructure and Maytas Properties in order to close the difference and demonstrate a true profit for the company, or else the company would perish. His goal was to wipe away the phony gains by making a real deal, which he eventually failed at, prompting him to write the letter.

They were found guilty of falsifying the company's revenue, falsifying the company's records, falsifying the income tax return, and fabricating transaction invoices. Mr. Raju was granted bail since the CBI's statute of limitations for filing a charge sheet had expired. The Enforcement Directorate has filed a criminal complaint against Ramalinga Raju and 47 individuals and 166 corporate organizations. SFIO sentenced Ramalinga Raju and three others to six months in prison.

 Ramalinga Raju and nine others, including two members of his family, were sentenced to seven years in prison, in the country’s largest corporate fraud. They were found guilty of bogus inflation of the company’s revenue, accounts, income tax return, and invoices were falsified. There was a total of 10 accused person and all of them were found guilty under Section 120B, 420, 409, 406, 419, 467, 468, 471, 477A of Indian Penal Code, 1860. It is therefore stated that, in accordance with the SEBI decision of July 15, 2014, Mr. B. Ramalinga Raju and Mr. B. Rama Raju must jointly and severally disgorge Rs. 56,16,85,195, received from the sale/transfer of Satyam Computers shares. Within 45days of the date of this order, the aforementioned amounts, together with simple interest at the rate of 12 percent per year from January 07, 2009, to the date of payment, shall be paid by money order issued in favor of Securities and Exchange Board of India.


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