Court Invalidates Order for Investigation by SFIO under Companies Act 2013

The court held that the impugned order did not meet the requirements of Section 212 (1) of the Companies Act, 2013, as it failed to demonstrate the Central Government's opinion on the necessity of an investigation by the Serious Fraud Investigation Office (SFIO). Consequently, the court set aside the impugned order, consequential communication, and notice. The matter was remitted to the 1st respondent for reconsideration based on the Registrar of Companies' report within three weeks. The court clarified that it did not assess the merits and ordered a fresh consideration in line with Section 212.

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Issues Involved:
1. Conformity of the impugned order with Section 212 of the Companies Act, 2013.
2. Relief sought by the petitioner.

Detailed Analysis:

1. Conformity of the Impugned Order with Section 212 of the Companies Act, 2013:

The petitioner sought a Mandamus declaring the impugned orders and communications as illegal and unconstitutional, challenging their conformity with Section 212 of the Companies Act, 2013. The core argument was that the impugned order failed to reflect the formation of an opinion by the Central Government, a requirement under Section 212 for ordering an investigation by the Serious Fraud Investigation Office (SFIO). The petitioner contended that the order merely referenced a report by the Registrar of Companies without demonstrating the Central Government's subjective opinion on the necessity of such an investigation.

The respondents argued that the impugned order was based on sufficient material, including the report from the Registrar of Companies under Section 208, and thus conformed to Section 212. They contended that the Central Government had formed an opinion based on the material available and that the order was valid.

The court referred to the judgment in PARMESHWAR DAS AGARWAL's case, which emphasized that the formation of an opinion, though subjective, must be demonstrable and based on relevant circumstances. The court noted that the impugned order did not explicitly show the existence of an opinion or the necessity for an investigation by SFIO, as required by Section 212.

2. Relief Sought by the Petitioner:

The court held that the impugned order did not satisfy the requirements of Section 212 (1) of the Act, as it failed to demonstrate the Central Government's opinion on the necessity of an investigation by SFIO. Consequently, the court set aside the impugned order dated 10.06.2016, the consequential communication dated 02.08.2016, and the notice dated 21.09.2016. The matter was remitted to the 1st respondent for reconsideration based on the report of the Registrar of Companies within three weeks from the receipt of the court's order.

The court clarified that it had not examined the merits of the matter and that the issue was remitted back to the 1st respondent for fresh consideration in accordance with Section 212 of the Act. The writ petition was ordered accordingly, with no order as to costs, and any pending miscellaneous petitions were closed.

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