TaxTMI 
2026 (10) TMI 2033
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....r quashing of aforesaid order, wherein investigation under Section 212(1)(c) of the Companies Act, 2013 has been directed to be initiated against Petitioner-company. (ii) For issuance of further appropriate writ/order/direction for quashing/setting aside Notice issued vide DIN 2026202503197838Cx dated 22.07.2025 (Annexure-8) including all subsequent proceedings pursuant thereto, wherein investigation pursuant to direction of Respondent No.1 has been initiated under Section 212(1)(c) of the Companies Act, 2013 against Petitioner-company by Respondent-Serious Fraud Investigation Office (hereinafter referred to as 'SFIO' for short). (iii) For issuance of further appropriate writ/order/direction including Writ of Declaration declaring that passing of order under Section 212(1)(c) of the Companies Act, 2013 directing 'SFIO' to carry out investigation against Petitioner-company, is beyond the scope of Section 212 of the Companies Act, 2013, as formation of opinion is vitiated having been arrived at despite 'non-existence of any relevant circumstances'. (iv) For issuance of any other appropriate writ(s)/order(s)/direction(s) as Your Lordships....
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....revival of the project vide Sanction Order dated 29-01-2022. A pre-condition was prescribed in SWAMIH INVESTMENT FUND that any attachment order against the property passed by any court would be settled by the petitioner so that the funds can be disbursed for revival of the finance of the project. It has been stated that pursuant to the order passed by the National Consumer Dispute Redressal Commission, the project land of the petitioner-company was attached by the Office of the Tehsildar, Gurugram and the said attachment order was required to be withdrawn before any funds could be disbursed in favour of the petitioner-company under the SWAMIH INVESTMENT FUND. Recognizing the importance of release of funds through SWAMIH INVESTMENT FUND, several homebuyers had extended support to the petitioner-company, but a small group of dissenting allottees/homebuyers persisted in obstructing resolution of dispute including release of funds of SWAMIH INVESTMENT FUND. Certain orders of attachment were passed by the Tehsildar, Gurugram in the project land of the petitioner-company at Sector-III, Gurugram which was challenged before the Punjab & Haryana High Court and vide order dated 26-09-2022, t....
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....CEIB letter dated 28-01-2021 forwarding FIR No. 0200/2020. However, the said foundation had ceased to exist in law on 09-01-2024 when the High Court of Delhi had quashed the First Information Report and all consequential proceedings emanating therefrom and, therefore, the opinion formed was on the basis of a non-existent circumstance. Mr. Das, learned senior counsel has submitted that the impugned order dated 17-06-2025 is devoid of application of mind and is contrary to the safeguards which are intrinsic to Section 212(1)(c) of the Companies Act, 2013. In such context, reference has been made to the case of Nita Puri v. Union of India reported in 2025 SCC OnLine Del 5941. Mr. Das, while referring to the counter affidavit, has submitted that whatever grounds have been taken in the said affidavit cannot defeat the inherent flaws in the impugned order as they do not constitute the circumstances upon which the opinion was formed. In other words, according to Mr. Das, while taking a cue from the judgment of Nita Puri(supra), "boiler plate" language has been deprecated in the said judgment and precisely the same has been used by the respondent. It has been submitted that invocation of p....
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....hat "the necessary concomitant is existence of prime facie circumstances which should be demonstratable before the Court when questioned...... and if the same are found to be defective, the action contemplated is justifiable". The assertion that a notice under investigation cannot be interfered with at the threshold has no application when the very foundation of the investigation is assailed as non-existent. It has been submitted that the order of investigation into the affairs of the petitioner-company has jeopardized the construction of approximately 1000 residential flats. The project comprises of 18 towers, out of which only 5 towers have been completed and handed over, while the remaining 13 towers are yet to be completed and delivered to hundreds of home buyers. Any disruption of the project will seriously prejudice the interests of such home buyers from receiving possession thereby creating immense personal hardship for third party stakeholders and defeating the broader public objective of delivering affordable housing. The project of the petitioner-company is being financed by SWAMIH INVESTMENT FUND, a Category-II alternative investment fund anchored by the Ministry of F....
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....ion. Reliance in such context has been placed in the case of Adarsh Throughworks Pvt. Ltd. v. Union of India reported in MANU/GJ/0496/2019. While passing the order, the High Court has held that the declaring the material on which such opinion is formed would be detrimental to public interest. Mr. Prashant Pallav, learned ASGI has furthered his argument by submitting that no prejudice is caused to the petitioner if the investigation is allowed to continue as there are additional conditions for initiating prosecution which would be subject to the scrutiny of the Courts. It is not for the Courts to sit in appeal over the decision of the Central Government in ordering an investigation into the affairs of the company. The jurisdiction of the Courts is limited to examining the decision-making process and not the decision itself. In the present case, there is nothing to indicate that the decision-making process is, in any way, jeopardized and/or rendered inconceivable/illegal due to any deviation. The order itself shows that there is enough objective material for the Central Government to have arrived at a subjective opinion. The materials on the basis of which the opinion has been formed....
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....s before Hon'ble N.C.D.R.C. Commission, New Delhi. Hon'ble Commission heard the complaints of the complainants and while deciding the all complaints of the complainants, passed orders to refund the monies taken from each complainants along with 10% simple interest and Rs. 25,000/- legal expenses to each complainant for not completing the project and not handing over the flat as per the B.B.A. entered into between the both the parties. For compliance of the aforesaid Order, the complainants had filed a case in the Hon'ble N.C.D.R.C., New Delhi, in the year 2019, which is pending adjudication, in which the next date of hearing has been fixed as 13.10.2020. During the investigation, in relation to the allegations leveled in the complaint, the Bank Stateinent of Account No. 50513406111 of Kashish Media obtained from Allahabad Bank. In which Rs. 10,20,000/- have been transferred from the account of Kashish Developers Ltd. to the account of Kashish Media. In this regard, the respondent company in its reply has filed the bank statement of account No.00000032939897370 of SBI Bank of Kashish Developers Limited, in which the money has been received from Kashish Media. During the ....
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.... providing for payment of compensation and promising no increase in the cost of dwelling units/charging of additional developmental cost has also not been denied. It is also clear that barring a few, the remaining home buyers (including decree holders) are in support of revival of the project. According to learned senior counsel representing the petitioners in CWP-19174-2022 there are a total number of 280 home buyers. The record of CWP-16862-2020 shows that the objectors are only 12 in number. Thus, the majority is in favour of revival of the project. Hence, the refusal of the objectors to settle with the builder appears to be ill advised. The law also leans in favour of revival of the project as the same would be in the larger interest of the economy. It would generate employment, result in recovery of public money and provide returns for the money invested by the home buyers. The adamant attitude of a few cannot be permitted to stand in the way of larger good. Thus, the writ petitions are allowed and warrants of attachment dated 15.09.2020 are quashed." 10. In the said case, a plea of fraud was raised by the respondents regarding the loan transaction of Rs. 725 crores, but th....
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.... If no information or explanation is furnished to the Registrar within the time specified under sub-section (1) or if the Registrar on an examination of the documents furnished is of the opinion that the information or explanation furnished is inadequate or if the Registrar is satisfied on a scrutiny of the documents furnished that an unsatisfactory state of affairs exists in the company and does not disclose a full and fair statement of the information required, he may, by another written notice, call on the company to produce for his inspection such further books of account, books, papers and explanations as he may require at such place and at such time as he may specify in the notice: Provided that before any notice is served under this sub-section, the Registrar shall record his reasons in writing for issuing such notice. (4) If the Registrar is satisfied on the basis of information available with or furnished to him or on a representation made to him by any person that the business of a company is being carried on for a fraudulent or unlawful purpose or not in compliance with the provisions of this Act or if the grievances of investors are not being addressed....
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....mitted under Section 208 of the Companies Act, 2013 to the Central Government may include a recommendation that further investigation into the offences of the company is necessary giving reasons in support thereof. An investigation into the affairs of the company under various circumstances enumerated therein is contemplated in Section 210 which is quoted hereinbelow: "210. Investigation into affairs of company.- (1) Where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company- (a) on the receipt of a report of the Registrar or inspector under Section 208; (b) on intimation of a special resolution passed by a company that the affairs of the company ought to be investigated; or (c) in public interest, it may order an investigation into the affairs of the company. (2) Where an order is passed by a court or the Tribunal in any proceedings before it that the affairs of a company ought to be investigated, the Central Government shall order an investigation into the affairs of that company. (3) For the purposes of this section, the Central Government may appoint one or more....
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....oyment of the company shall be responsible to provide all information, explanation, documents and assistance to the Investigating Officer as he may require for conduct of the investigation. (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), [offence covered under Section 447] of this Act shall be cognizable and no person accused of any offence under those sections shall be released on bail or on his own bond unless- (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person, who, is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the Special Court so directs: Provided further that the Special Court shall not take cognizance of any offence referred to this sub-section except upon a complaint in writing made by- (i) the Director, Serious Fraud Investig....
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....t (and after taking such legal advice, as it may think fit), direct the Serious Fraud Investigation Office to initiate prosecution against the company and its officers or employees, who are or have been in employment of the company or any other person directly or indirectly connected with the affairs of the company. [(14-A) Where the report under sub-section (11) or sub-section (12) states that fraud has taken place in a company and due to such fraud any director, key managerial personnel, other officer of the company or any other person or entity, has taken undue advantage or benefit, whether in the form of any asset, 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.] (15) Notwithstanding anything contained in this Act or in any other law for the time being in force, the investigation report filed with the Special Court for framing of charges shall be deemed to be a report fil....
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....ds from the company by Sunil Choudhary which were deposited by the homebuyers. 18. The scope and extent of Section 212(1)(c) of the Companies Act, 2013 has been considered in the case of Nita Puri v. Union of India reported in 2025 SCC OnLine Del 5941, wherein it has been held as follows: "70. An order under section 212(1)(c) of the Act, 2013 directing investigation by the Serious Fraud Investigation Office is not a routine administrative measure. It is in the nature of an extremely serious statutory action having grave consequences and repercussions for the subject entities and individuals. It is therefore, imperative that such an order must be issued only after due application of mind, after examining all relevant circumstances. 71. The existence of "relevant circumstances" is sine qua non as for the purpose of formation of opinion under section 212(1)(c) of the Act, 2013. As held by the Supreme Court in Barium Chemicals Ltd. v. Company Law Board [[1966] 36 Comp Cas 639 (SC); 1966 SCC OnLine SC 53; AIR 1967 SC 295.], Rohtas Industries Ltd. v. S.D. Agarwal [(1969) 39 Comp Cas 781 (SC); (1969) 1 SCC 325; 1968 SCC OnLine SC 372.] and Rampur Distillery and Chemic....
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....into the affairs of a company by the SFIO. Therefore, the power to investigate into the affairs of company is common to both provisions. In the former there are three clauses (a) to (c) in sub-section (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 th....
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.... terms of its power conferred by section 212 to direct investigation into the affairs of the company in public interest. The foundation for reaching the opinion or satisfaction is the report of the Registrar. We have referred to the details in that report and we are of the firm opinion that based on that the Central Government could not have recorded a satisfaction or an opinion that investigation into the affairs of the company are necessary. There is no element of public interest which is projected, save and except some vague and general references to certain allegations in matters of bank finance and allotment of coal mines and alleged diversion of raw materials. There has been absolutely no details furnished nor referred in the report. Rather, the report proceeds on the basis that as far as these issues are concerned nothing can be done by the Ministry of Corporate Affairs or the Registrar of Companies. We fail to understand, therefore, how in the present facts and circumstances and based on allegations and counter allegations between two groups of shareholders can it be even held that it is necessary in public interest to direct an investigation into the affairs of the company....
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....esaid cases, it can be said that while exercising the powers under Section 212 of the Act by the Central Government the only thing which is required to be demonstrated prima facie is that the objective material is available with the Central Government for forming an opinion ordering for any investigation by SFIO and such opinion has to be subjective opinion which should be bona fide and genuine. It would not be permitted to be questioned either on the ground of propriety, reasonableness or sufficiency. There is no necessity of giving the details and particulars of such objective material either in the order issued by the Central Government under Section 212 of the Act or even in the counter affidavit filed by the Central Government before the Court. This Court is of the view that whenever it is an issue of investigation into any serious fraud, the disclosure of the particulars of the allegations/material upon which the allegations have been made, may itself be contrary to public interest and therefore if the material is disclosed, the same may defeat the entire purpose of the investigation itself." 22. A note of caution has been put to the effect that disclosure of the particula....
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....rovisions of law; (ix) Investigation under the relevant provisions of the Act, is exploratory in nature, and in the nature of a fact-finding, and must be ordered only on satisfactory grounds; (x) Since investigation is an inroad into the functioning of a company, it has to be ordered after the facts and circumstances in the material available with the competent authority necessitate such an investigation; (xi) Courts can consider the materials/circumstances on the basis of which the opinion to order an investigation is rendered; to ascertain whether the facts necessitating the investigation, in fact, existed, or whether extraneous considerations have weighed on the opinion formed by the Central Government; and (xii) Whilst considering a challenge to an opinion of a competent authority directing an investigation into the affairs of a company, the court has to exercise caution, inasmuch as, the court cannot sit in appeal over the opinion and cannot substitute its opinion for that of the competent authority of the Central Government." 24. In Exalogic Solutions (P) Ltd. v. SFIO and Ors. reported in MANU/KA/0680/2024, it has been held as under: ....
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....ompany under Section 212(1)(a) and (c) of the Act, and scope of this court under Article 226 of the Constitution of India, with regard to judicial review, is limited to the examination of decision making process, and not the decision. In the preceding paragraphs, this court, on examining the said process, found that ROC has followed the procedure envisaged under Section 206(4) of the Act and submitted the report; and the said report and the order of this court, and also the other material available on record, was examined by the Oversight Committee, and vide its minutes dated 25.02.2020, recommended for investigation. Eventually, the 2nd respondent, considering the report dated 24.02.2020, and in exercise of his jurisdiction under Section 212(1)(a) and (c) of the Act, and forming an opinion with regard to necessity for ordering investigation into the affairs of the company by SFIO, ordered investigation vide the impugned, as large public interest is involved. In these circumstances, no exception can be taken to the impugned order." 26. What emerges from the profusive judgments cited by both the sides is that formation of an opinion by the Central Government in terms of Section 2....