TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 815
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....rd party to the Company Petition and a shareholder in the company. 3. The prayer in Comp.A.No.128 of 2019 is as follows: 'This Company Application praying that this Hon'ble Court be pleased to permit the learned Official Liquidator to take over the affairs of the company only after such audit by the independent auditor is over and the real status of the company is ascertained and to relieve the directors of their responsibilities, only thereafter, should be passed by this Hon'ble Court.' 4. The application has been kept pending before the learned Judge and under the impugned order, the matter has been referred to the Serious Fraud Investigating Office (SFIO) under the Ministry of Corporate Affairs, for detailed and in-depth enquiry. 5. The Official Liquidator has been directed to place the complete papers, including reports filed by the learned Administrator before the SFIO within a period of three (3) weeks from that order and SFIO directed to file a written report within a period of four (4) weeks thereafter. 6. The present OSAs have been filed with a delay that was condoned on 07.02.2025. By an order dated 24.02.2025, the parties were heard and it has been recorded that bo....
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....not been managed very well. Looking at the applications filed by the promoters/ directors alleging misfeasance and malfeasance, I am of the view that the entire functioning of the Company from the period before these winding up petitions came to be filed before this Court till this date would have to be undertaken. Considering the fact that certain of the subsidiaries are functioning outside India and also considering the fact that various Investigating Agencies namely the SEBI, CBI, EOW and ED had also filed cases against the Company, subsidiaries and also the promoters. Such an audit of the Company, in my view cannot be considered in a normal course by appointing an independent auditor or a Forensic Auditor for that purpose. The reason for coming to such a conclusion is that they may not be able to accesses the files or records that had been collected by the Investigating Agencies pursuant to the complaints that it had received including the complaints from the banking companies. This Court takes judicial notice of the fact of an establishment namely the Serious Fraud Investigating Office which has been established by the Ministry of Corporate Affairs, Union of India. It is also ....
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.... SFIO with which we are not really concerned with in this appeal. 15. Section 212 provides for the investigation into the affairs of Company by the SFIO and states as follows: '212.Investigation into affairs of Company by Serious Fraud Investigation Office.-(1) Without prejudice to the provisions of section 210, where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company by the Serious Fraud Investigation Office- (a) on receipt of a report of the Registrar or inspector under section 208; (b) on intimation of a special resolution passed by a company that its affairs are required to be investigated; (c) in the public interest; or (d) on request from any Department of the Central Government or a State Government, the Central Government may, by order, assign the investigation into the affairs of the said company to the Serious Fraud Investigation Office and its Director, may designate such number of inspectors, as he may consider necessary for the purpose of such investigation. ............' 16. In Vijay Pal Garg and Others v. Pooja Bahry (Liquidator in the matter of Gee Ispat Private Limited [2020 SCC OnLine....
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....r a Tribunal requiring that the affairs of the company require investigation, then such investigation shall be ordered by the Central Government. The word used is 'shall' and hence the order of the Court in this regard is binding upon the Central Government, apart from other avenues enumerated under Sections 210 and 212 of the Act. 22. Under Section 2(29), the Court is defined to be the High Court having jurisdiction in relation to the place at which the registered office of the company is situated and hence the direction passed by the Company Court in this case can be taken to be a direction under Section 210(2), which binds the Central Government as well. 23. We are thus of the categoric view that there is no infirmity in the order of the Company Court in directing investigation into the affairs of the Company. Since we have confirmed that direction, we see no necessity to advert to the other instances or allegations of misfeasance and malfeasance, as no doubt, they will all be looked into by the SFIO. 24. As the hearing of these appeals was drawing to a close, the Official Liquidator has circulated a copy of order dated 18.06.2025, where the Central Government has dir....
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....nbsp; Date: 18.06.2025 Subject - Investigation u/s. 212(1)(c) of the Companies Act, 2013 into the affairs of ZYLOG SYSTEMS LIMITED (In Liquidation) - reg. 1. Whereas the Central Government is empowered under section 212(1)(c) of the Companies Act, 2013 to order an investigation into the affairs of a company by the Serious Fraud Investigation Office in the Public Interest. 2. Whereas SFIO's Eoffice File No.SFIO/INV-6/0023/2024-OTR (Computer No.265963) and OL, Chennai's letter dated 4.12.2024 forwarding order dated 18.10.2024 passed by High Court of Madras in C.P. No. 372/2013 received against the company. As per the said order, the Ofticial Liquidator was directed to place all the papers including the reports filed by the Ld. Administrator before the SFIO and on receipt of the complaint, SFIO shall file an interim report in the matter. As per the directions of High Court of Madras and on examination, an opinion was formed that it is necessary to investigate the company and its subsidiaries, in the public interest. 3. Now....
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....ems Limited (under liquidation) and its subsidiaries, and has assigned the same to Serious Fraud Investigation Office. 2. And whereas the officers are required to be designated as Inspectors to carry out the investigation u/s 212(1) and Investigating Officer u/s 212(4) of the Companies Act, 2013. 3. Now, therefore, in exercise of powers conferred under Section 212(1) of the Companies Act, 2013, the following officers are designated as Inspectors to carry out investigation into the affairs of the abovementioned company/companies and shall exercise all the powers available to them under the Companies Act, 2013:- i. Sh. VDSS Nagarjun Grandhi, Jt. Dir. ii. Sh. T.Yashwanth Rao, DD iii. Sh. Paramveer Bhati, Sr. AD iv. Sh. MV Saikumar, Sr. AD v. Ms. Anika Agrawal, AD vi. Sh. Dushyant Kumar, AD 4. And further, in exercise of powers conferred u/s 212(4) of the Companies Act, 2013 Sh. MV Saikumar, Senior Assistant Director, is appointed as Investigating Officer to carry out investigation into the affairs of above-mentioned company/companies. 5. The Inspectors and Investigating Officer shall complete the investigation and submit their report to the Central Government withi....
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....mystery and there are no proper information or documents to trace the destination of this money. Mr.Ramanujam was also the then Managing Director of ZSL Inc, USA and Mr.Sudarshan, the then President of ZSL Inc, USA. 11. From then on, the promoters of ZSL's only motive was to ensure that ZSL gets wound-up and the two independent directors appointed to help me, Mr. P. Srikanth and Mr. S.P. Srihari gets out of ZSL for their personal safety so that it will not create problems for them in future. Till such time the Promoters of ZSL did not have any issues with Mr.P. Srikanth and Mr. S.P. Srihari. The promoters of ZSL were having issues / fights only between themselves as is evident from the various complaints filed by Mr.Sudarshan through his brother Mr. V. Sridharan and through his Father/Brother-in-Law viz. Mr.. V. Jayaraman against Mr. Ramanujam filed with Official Liquidator office. These various complaints till March 2016 were all against Mr. Ramanujam only. 12. During the forensic audit process, it was revealed that a couple of employees of ZSL Inc, USA were also involved in various financial irregularities of the Company and accordingly I had ordered for the removal of th....
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..... 39. Part V of the report gives the status of various immovable assets of Zylog Systems Limited as well as its subsidiaries located in New Jersey, USA. In part VI dealing with status of movable assets of Zylog Systems Limited and its subsidiaries, learned Administrator refers to three other entities Zylog Systems (Canada) Limited, Zylog Systems BV Limited, British Virgin islands and Zylog Systems Asia Pacific Pte Limited, Singapore as subsidiaries of Zylog Systems Limited, Chennai. 40. In part VIII of the report captioned 'negative campaign against ZSL and its subsidiaries' he refers to the campaign by R.Ramachandran, the respondent before us, as being solely responsible for the losses suffered by ZSL and its subsidiaries. 41. Part VIII deals with litigation initiated by an ex-employee of ZSL incorporated New Jersey, USA, in the course of which, learned Administrator refers to an interim report on the forensic audit of financial transactions of ZSL incorporated USA. He says that the forensic report revealed numerous unsubstantiated financial transactions carried out by ZSL, Inc USA with other companies owned and controlled by the various individuals associated by Zylog Systems ....
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....50 Million (Rs.30 Cr.) at the time of such transfer to Techno. The Board resolution giving effect to the transfer of shares of Zylog Switzerland to Techno is seen to be signed by Mr. Shivkumar as director of Zylog Europe. 23. ZSL Inc, USA attorneys, M/s Singh Law LLC while defending the claims made by Mr. Shivkumar in the USA Courts also made a counter claim on Mr. Shivkumar for the unsubstantiated financial transactions, he had committed along with the Promoters of ZSL. Copy of such filings by M/s. Sing Law LLC is enclosed as Annexure AC. 24. ZSL then filed a Criminal complaint in November 2018 in Judicial Magistrate Court, Alandur, Chennai against the Promoters of ZSL, Mr.Ramanujam and Mr.Sudarshan and 3 other employees including Mr. Shivkumar seeking for return of an amount of Rs 375 crores which they had transferred from the books of ZSL and ZSL Inc, USA. Copy of the criminal complaint is attached as Annexure AD. In a recent hearing in this matter the Judicial Magistrate Court Alandur was pleased to pass a direction to DGP, Central Crime Branch Chennai to conduct an investigation in this matter and report to the Court. A Copy of the said Court order is enclosed as Annexur....
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....of this settlement proposed by Mr. Shivkumar attorney is attached as Annexure AG. 29. M/s. Archer and Greiner, PC has advised ZSL Inc, USA that a more detailed forensic audit in compliance with USA local laws has to be conducted immediately by hiring a suitable USA based expert in forensic audit. Further they have mentioned that the approximate cost for the detailed exercise would be between USD 100,000/- to USD 150,000/-. As a matter of fact, ZSL Inc has already spent a considerable amount as legal fees in this case till date which is approximately USD 102,000/-, the breakup of which is given in Annexure AH. 30. I am of the view that if ZSL agrees for a settlement in the USA courts with Mr. Shivkumar it would go against ZSL in the Indian courts in the Criminal case filed against the Promoters of ZSL and few ex-employees including Mr. Shivkumar. Hence the settlement proposal offer of Mr. Shivkumar has to be rejected and a more elaborate forensic audit in compliance with USA Laws should be initiated forthwith to enable ZSL and SL Inc to recover an amount of Rs. 375 crores siphoned away from its bank accounts by the promoters of ZSL, Mr. Ramanujam and Mr Sudarshan in collusion wi....