Yet, in a large number of cases, over the years, bureaucrats at the MCA have chosen to 'compound' the offence instead of prosecuting and removing the management - so, in many cases, companies that saw several hundred crore rupees being siphoned off got away with fines running into a few thousand rupees.

The problem, and hence the advice, is that there is no way of knowing whether this practice is still prevalent today. While MCA officials proudly proclaim that, unlike in the 1990s, no company is 'vanishing' after raising IPO money, they're a lot less sanguine about vanishing funds.

A good example of just how little comes to light are the series of serious allegations made by the Ambani scions in their fight over the years of wrongdoing by each other - none of these are anything that the MCA came up with, nor have they been seriously investigated afterwards.

The Delhi Electricity Regulatory Commission, to cite another example, has accused two ADAG-owned firms of inflating their costs by several hundred crore rupees (which they hoped to recover from electricity consumers in Delhi) by entering into over-invoiced transactions with a group firm - whether this is true will be decided in court, but who examines related-party transactions in the MCA?

Ditto for the allegations that have now surfaced about a major promoter whose investment companies have invested thousands of crores of rupees in raising holdings in the parent company - the allegation is this money was siphoned off from the parent company, but no one in the MCA is looking at this.

A great blow-by-blow account of how the MCA process works is the story of the Shree Krishna group of companies.

In this case, group firms 'lent' money to affiliates for a variety of purposes, including buying shares of companies.

Since nearly Rs 300 crore (Rs 3 billion) had been diverted in this manner, various MCA (it was known as the Department of Company Affairs then) officials recommended criminal prosecution and removal of the directors. The DCA, however, decided to 'compound' the errors.

For instance, Rs 46.4 crore (Rs 464 million) invested in the shares of a group company in violation of Section 372 of the Companies Act (this prescribed norms for inter-corporate investments) was described as 'inadvertent' and 'unintentional' - at the end, fines of Rs 58,000 were paid in 2002 to regularize Rs 300 crore of funds which were diverted!

The Regional Directorate in Mumbai, which wanted formal permission to petition the ICAI to act against the auditors who certified the fake accounts, was asked who gave it permission to write to the ICAI on its own, even if informally!

The point is that, even today, there is no way of knowing what offences are being 'compounded' in this manner.

Take the case of a company that 'lends' money to an affiliate without taking the necessary permissions - in all likelihood, it will be booked under some section where the penalty is just a few thousand rupees (the penalty for audit failure is a Rs 10,000 fine!).

Even today, believe it or not, a company can raise money from the public for one purpose and then, after an AGM, change the purpose for which it raised the funds. So let's say it doesn't have an AGM or holds it in a faraway place so that shareholders don't get there.

What's the penalty? A few thousand rupees. Ironically, in the aborted Satyam-Maytas deal, the company never even needed to get the MCA's approval as Satyam was buying shares (in Maytas) and that doesn't require any government permission. An audit, a serious one, of all the cases of compounding of offences over the years would surely throw up interesting results.

Even if you assume that all of this is in the past, or does not apply to the SFIO which, by its very nature, examines only a handful of cases, the problem does not stop - how seriously the SFIO with just 10-12 officers (that's a fourth of its sanctioned strength) can examine even the limited cases it gets is another matter.

The problem here is that the National Company Law Tribunal (NCLT) has been stuck in the courts for more than six years, so whenever the SFIO is able to wrap up the Satyam case, it will have to be heard by ordinary courts - going by past experience, this could take several decades.

Which is why, though the SFIO has filed 737 cases (till December 2007) against various persons in 29 companies, it hasn't got a single conviction. The NCLT was a means to fast-track all of this with special courts dealing only with company law-related cases.

All appeals would first go to a dedicated appellate tribunal and only after this would they go to the Supreme Court - this is exactly the model used in other areas such as telecom and the power sector.

The SFIO, by the way, is not even a statutory body and so does not have powers of search and seizure and can't even interrogate people freely - perhaps why it is seeking the court's permission to be able to interrogate Ramalinga Raju and Satyam CFO V Srinivas.

Even the documents from Satyam's offices have not been shared with the SFIO. This is the real serious fraud.