TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 1911
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....ies Act, 2013 (for short, the Act). The submissions of counsel substantially centered around Section 212 of the Act. Therefore, the circumstances relevant for dealing with these submissions alone are adverted to. The Medak Diocese of Church of South India Trust Association, Church House, Old Lancer Line, Secunderabad, Telangana, represented by its Director and also the Power of Attorney Holder i.e., Vimal Sukumar is the petitioner. The petitioner is one of the units of Church of South India Trust Association (CSITA), which is registered under the provisions of the Act and it is averred that CSITA is recognized as a charitable company under Section 8 of the Act. On 21.09.2016, the 4th respondent issued notice to Dr.Vimal Sukumar, deponent of the writ affidavit, to produce the registers, documents etc., before 4th respondent on or before 03.10.2016. It is further averred that the 1st respondent has taken up report of the Registrar of Companies under Section 212 (1)(a) and through impugned order dated 10.06.2016, the 1st respondent ordered investigation into the affairs of CSITA by the Serious Fraud Investigation Office (SFIO). The 4th respondent in continuation of the order under S....
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....tion 210 of Companies Act, 2103, can order for investigation, which shall be carried out by the SFIO only under Section 212 of Companies Act 2013. It is submitted that in the present matter as per the recommendation of the Registrar of Companies (RoC) under Section 208 of the Companies Act, 2013 and considering the material on record such as the complaints of serious nature, the central government ordered for investigation by the SFIO under Section 212 of Companies Act 2013. On the sake of repetition, it is submitted that the petitioner was incorporated on 26.09.1947 under the Company Identification Number (CIN) U93090TNPL000346 under the Indian Companies Act 1913 as provided under Section 26 Company limited by Guarantee and when the Companies Act, 1956 was introduced by repealing the Indian Companies Act 1913, then automatically the provisions of Section 25 of the Companies Act, 1956 would be applicable to the petitioner company. (now section 8 of the Companies Act 2013). However, the petitioner company vide its ordinary resolution i.e., dated 05.03.2002 & 17.06.2005, changed the MOA and AOA and without obtaining the approval of the Central Government as well as without passing th....
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.... Section 212 of the Act and the objection raised by petitioner is purely technical. The counsel for respondents 6 and 7 have adopted the submissions of Mr.Lakshman in this behalf. For brevity, the contentions are not referred once again. I have perused the record and noted the submissions made on behalf of counsel appearing for the parties. Now, the points for consideration are (i) whether impugned order No.07/131/2011-CL II (SR) dated 10.06.2016 of 1st respondent conforms to the requirement of Section 212 of the Act or not; and (ii) to what relief? To appreciate the rival submissions, this Court considers it appropriate to excerpt order dated 10.06.2016 and also Section 212(1) a to d: Order dated 10.06.2016: Government of India Ministry of Corporate Affairs No.07/131/2011-CL II (SR) 5th Floor A Wing, Shastri Bhawan, Dr.R.P.Road, New Delhi 110001 Dated: 10th June, 2016 ORDER Whereas the Central Government is empowered under section 212 of the Companies Act, 2013 to order investigation into the affairs of any company and to appoint one or more competent persons as Inspectors to investigate the affairs of the company. 2. And whereas RoC (Chennai)/RD, Southern Region, vide ....
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....xistence of circumstances relevant to the inference as to the sine qua non for action must be demonstrable. It is not reasonable to hold that the clause permits the Government to say that it has formed an opinion on circumstances which it thinks exist. Since existence of circumstances is a condition fundamental to the making of the opinion, when questioned the existence of these circumstances have to be proved at least prima facie. In that light if one peruses the powers conferred under the 2013 Act, they are also identical. By section 206, there is a power to conduct inspection and enquiry by section 207. Both these powers are to be exercised by the Registrar. Then, the report has to be made by the Registrar and the Registrar or the Inspector after inspection of the Books of account or inquiry under section 206 and other books and papers of the company under section 207, shall submit a report in writing to the Central Government along with such documents, if any, and such report may, if necessary, include a recommendation that further investigation into the affairs of the company is necessary. For that, reasons in support have to be set out. We are not concerned with the power of....
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....ection (1) of section 210 and the investigation is to be carried out by the Central Government by appointing Inspectors and there is a discretion in that behalf. This power is stated to be akin to section 235 of the 1956 Act. The latter enables investigations into the affairs of a company by the SFIO and there is one more clause (d) in sub-section (1) of section 212 where the Central Government can act on a request from any department of the Central Government or a State Government. Therefore, in a given case there could be an action initiated on the request of the Central Vigilance Commission or based on its recommendations. However, by its very title, the investigation under section 212 by the SFIO ought to be on the basis of the opinion of the Central Government that it is necessary to investigate into the affairs of the company by SFIO. That opinion has to be based on the report of the Registrar or Inspector under section 208; on intimation of a special resolution passed by a company that its affairs are required to be investigated; in the public interest or on the request from any department of the Central Government or the State Government. By section 211, the SFIO is establi....
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....under Section 208, the Central Government may by order, assign the investigation into the affairs of said company to SFIO. The words without prejudice to provisions of Section 210 in this context mean that the Central Government in a given case by forming opinion on the necessity of investigation by SFIO orders accordingly. Section 212 deals with a different situation than the situations covered by Section 210. In cases warranting investigation by SFIO, the Central Government forms opinion that it is necessary to order investigation by SFIO. The opinion is formed from the sources referred in clauses (a) to (d). Section 212(1) further refers to formation of opinion that it is necessary to investigate into affairs of company by SFIO. The contention of Mr.K.Lakshman is that it is one thing, if investigation by SFIO is ordered without material or report, but it is altogether different if basing on material/report which is adverted to in the order. In other words, according to him, the reference to what is available on record is sufficient satisfaction of requirements of formation of opinion on the necessity of investigation by SFIO. This Court is in agreement with the reasoning in PAR....