TaxTMI 
TaxTMI 
2026 (8) TMI 1616
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....Mr. Kamaldeep and Mr. Rohan Khatana, Advocates for R-1. Mr. Kuber Dewan, Ms. Neeharika Aggarwal and Mr. Kaustubh Srivastava, Advocates for R-2. Mr. Aditya Sikka, Ms. Onshi Jakhar and Ms. Yuganshi Singh, Advocates for R-18. JUDGMENT JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL) This appeal is filed by the appellant against an impugned order dated 17.03.2026 passed by the Ld. NCLT, Mumbai Bench, Court - I in CA 234/2025 in CA 396/2021 in Company Petition No. 3638/2018. 2. It is submitted by the learned Sr. counsel for the appellant vide the impugned order the Ld. NCLT has erroneously rejected the maintainability challenge raised by the appellant is the Serious Fraud Investigation Office ("SFIO") has no power or locus to file any application before the Ld. NCLT seeking attachment/disgorgement of assets under Section 212(14A) of the Companies Act, 2013 (for short the "Companies Act"). 3. It was argued the impugned order is liable to be set aside as the same is rendered in violation of the principles of natural justice and otherwise is not sustainable in law being contrary to the express provisions of the Companies Act. It is argued if one perused Section 212(14A) read w....
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....t thereof, the SFIO is directed to place the Investigation Report before the Ld. NCLT Mumbai and to start the attachment/disgorgement proceedings under Section 447 of the Companies Act. 5. It is argued MCA and SFIO are represented by different counsels before this Tribunal which underscores the appellant's contention that MCA and SFIO are distinct from each other. SFIO in its Reply before Ld. NCLT at Para 6 and Para 12 has sought to justify its power to file CA No. 234/2025 on the ground such power emanates from Section 212(14) of Companies Act. It is argued Section 212(14) nowhere permits initiation of proceedings before the Ld. NCLT for attachment and disgorgement of assets, which are civil in nature and the power to apply before the Tribunal for attachment/disgorgement is exclusively vested in the "Central Government" under Section 212(14A) of the Companies Act. It is settled law that naming of a delegate to do an act involving a discretion indicates that the delegate was selected because of his peculiar skill and the confidence reposed in him, and there is a presumption he is required to do the act himself and cannot re-delegate his authority. In the present case, discretion....
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.... property or cash or in any other manner, the Central Government may file an application before the Tribunal for appropriate orders with regard to disgorgement of such asset, property or cash and also for holding such director, key managerial personnel, other officer or any other person liable personally without any limitation of liability.". It is clear from the bare reading of aforesaid provision that the power to file an application in terms of section 212(14A) is vested in the Central Government. 10. Rule 2 of Government of India (Allocation of Business) Rules, 1961 provides that "The business of the Government of India shall be transacted in the Ministries, Departments, Secretariats and Offices specified in the First Schedule to these rules (all of which are hereinafter referred to as "departments")." Entry 8A of the First Schedule lists 'Ministry of Corporate Affairs' as one of ministries. 11. Further, Rule 3(1) thereof provides that "The distribution of subjects among the departments shall be as specified in the Second Schedule to these Rules and shall include all attached and subordinate offices or other organisations including Public Sector Undertakings c....
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.... and Secretary, including the Special Secretary or Additional Secretary or Joint Secretary in independent charge is administrative head of the Ministry of Corporate Affairs. Further, it is noted that SFIO Director holds independent charge, hence, he assumes the role of administrative head of SFIO, however, SFIO falls within Ministry of Corporate Affairs. 17. It is noted that Letter dated 26.09.2023 was issued by Ministry of Corporate Affairs with approval of the competent authority, which is Hon'ble Minister of Corporate Affairs, who is authorised to issue special directions for all business allotted to Ministry of Corporate Affairs, and the powers vested in Central Government under Companies Act, 2013/1956 is one of business allotted to it. It is further noted that administration of SFIO as well as Companies Act, 2013 falls within its domain and it is vested with authority to issue directions to any of the officer under the department to discharge necessary functions representing Central Government. In view of this, we do not find that the Central Government could not have authorised Director, SFIO to file the present application in terms of Section 212(14A) of the Compan....
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.... with power to administer provisions of Companies Act, has directed Director SFIO to institute proceedings on behalf of Central Government in accordance with Allocation of Business Rules and Transaction of Business Rules, and such directions are merely administrative in nature. The delegation, as referred in Section 458 of the Companies Act, 2013, does not apply to administrative order(s) requiring the departmental head to do some act on behalf of central government, as the delegation of powers vested in Central Government occurred when the powers of Central Government are allocated in terms of Allocation of Business Rules and Transaction of Business Rules, and no delegation can said to have taken place from Hon'ble Minister to one of department head as such direction is merely an administrative in nature. 21. It is pertinent to note that the present application has been filed on behalf of Union of India by SFIO, and not by SFIO in its independent capacity, indicating clearly that the said application is filed by Union of India through one of its authorised person in the concerned ministry. 22. It is also contended that section 212(14A) cannot be applied retrospec....
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....report and to take further action as herein under: Charge No. Nature of charges Method Adopted Names of persons liable Relevant Section (Ref.) 1 to 3 4 The act of failure of statutory auditors during FY 2013-14 to FY 2017-18 to observe and report the aforesaid issues in Auditors Report for respective years. The auditors were aware of the fact that ISSL was using its surplus funds created out of TMDRs for placement of ICDs and that ISSL was providing interest to TMs for placing TMDRs with ISSL. They were aware about placement of ICDs in distressed group companies of IL&FS and inspite of that, they f ailed to assess the impairment on such investments. They failed to check compliance of F&O Regulations, SCRR and other applicable regulations arising out of providing interest on TMDRs, usage of TMDRs and placement of ICDs. Ravi Partharsarthy (since deceased) Section 447 of Companies Act, 2013 Hari Sankaran Ramesh Bawa Arun Saha Vibhav Kapoor S Rengarajan Shikha Bagai Rakesh Karande 5 to 12 x x x x x 2. As per r....
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....f 2025 was filed praying inter alia for permission to place on record the ISSL Report. Notably, the cause title and memo of parties both describe the applicant as the "Union of India". 12. Thus, from the above it is clear; (i) the SFIO submitted the Investigation Report to the Central Government. It did not itself take a decision to file proceedings; (ii) The decision to file CA 234/2025 (and even for that matter CA 396 of 2021) after considering the material before it, was of the Central Government and not the SFIO. SFIO was merely authorized to file proceedings before the Ld. NCLT; (iii) The Petition was filed with the Applicant as the "Union of India" and not the SFIO. Section 79 of the Code of Civil Procedure, 1908 would be relevant here as the principle it expounds is a proceeding by the Central Government, the authority which is to be named as plaintiff/applicant is the Union of India. 13. Therefore, the decision to file was of the Central Government and the proceeding too was filed with the Central Government as the applicant. The Director, SFIO/SFIO was merely authorized to present/execute the Petition that too in the name of Central Government in terms of the Allocat....
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.... transferred or assigned to the SFIO. So also, the eventual Application too was filed with the Central Government as the applicant and not by the SFIO in its own name. This as set out above in the decision of 'Sidhartha Sarawgi' (supra) does not constitute delegation of powers but instead is simply authorization to implement its decision. Under the circumstances, the appellant's contention is incorrect and untenable. 16. The appellants submit that SFIO could not have filed CA 234 of 2025 since it would lead to the SFIO being the prosecutor in criminal proceedings and Petitioner in the civil proceedings instituted on the basis of the ISSL Report. They further contend that it would cause them prejudice as the SFIO would be imposing civil and criminal liability on them. This argument is completely baseless since, as set out above, the Petitioner in the civil proceedings is the Central Government and not the SFIO. The institution of either CA 396/2021 and/or CA 234/2025 is not by the SFIO. Most pertinently, the argument that SFIO imposes civil and criminal liability thereby causing prejudice lacks foundation and is illusory as civil and criminal proceedings under the Act are filed b....