Concurrent factual findings on account manipulation and fund diversion are not disturbed in writ jurisdiction absent perversity or prejudice.

Concurrent factual findings that a company's accounts were manipulated and funds diverted were not interfered with in writ jurisdiction because they were neither perverse nor unsupported by evidence. The court also held that no violation of natural justice or the BIFR Regulations was shown: the Regulations did not create a mandatory right to an independent Chartered Accountant, and procedural objections failed absent demonstrated prejudice or denial of a fair hearing. The AAIFR's remark on later references was treated as a rejection of references based on unreformed accounts, not as an absolute bar on future proceedings. The writ petition was dismissed with costs.

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Issues: (i) Whether the findings recorded by the BIFR and the AAIFR regarding manipulation of accounts, diversion of funds, and the resulting rejection of the reference were liable to be interfered with in writ jurisdiction; (ii) Whether there was violation of natural justice or of Regulations 21 and 40 of the BIFR Regulations, 1987 in not appointing an independent Chartered Accountant and in proceeding on the basis of the material relied upon; (iii) Whether the AAIFR's observation concerning later references on the basis of similarly tainted accounts amounted to a bar on all future references.

Issue (i): Whether the findings recorded by the BIFR and the AAIFR regarding manipulation of accounts, diversion of funds, and the resulting rejection of the reference were liable to be interfered with in writ jurisdiction.

Analysis: The writ court declined to reappreciate disputed questions of fact in exercise of article 226. The concurrent findings that the company's accounts were manipulated, that prior period adjustments and extraordinary items overstated losses, and that funds had been diverted and siphoned away were treated as factual findings based on material on record. Such findings were held not to be perverse, illogical, or unsupported by evidence, and therefore not open to interference in writ proceedings.

Conclusion: The factual findings of the BIFR and AAIFR were upheld and were not interfered with.

Issue (ii): Whether there was violation of natural justice or of Regulations 21 and 40 of the BIFR Regulations, 1987 in not appointing an independent Chartered Accountant and in proceeding on the basis of the material relied upon.

Analysis: Regulation 21 empowered the Board itself to make an inquiry or, if necessary, direct an operating agency to do so, and Regulation 40 used the permissive expression "may" regarding assistance from institutions and experts. No mandatory entitlement to an independent Chartered Accountant was shown. The court applied the principle that procedural violations are not fatal unless prejudice is demonstrated. On the facts, the company had been heard, the objections had been exchanged, and no prejudice or failure of justice was established. The plea of bias against the creditor institution was also found unsupported.

Conclusion: No violation of natural justice or of Regulations 21 and 40 was established.

Issue (iii): Whether the AAIFR's observation concerning later references on the basis of similarly tainted accounts amounted to a bar on all future references.

Analysis: The impugned observation was read as a rejection of references founded on unreformed and unreliable accounts, not as an absolute prohibition against any future reference. The court held that a subsequent reference could be examined if the accounting anomalies and practices criticized by the authorities were corrected.

Conclusion: The AAIFR's order did not impose an absolute bar on future references.

Final Conclusion: The challenge to the orders of the BIFR and AAIFR failed, and the writ petition was dismissed with costs.

Ratio Decidendi: In writ jurisdiction, concurrent factual findings of manipulation of accounts and diversion of funds under SICA will not be disturbed unless shown to be perverse, and procedural complaints will not vitiate the decision absent demonstrable prejudice or denial of a fair hearing.

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