2020 (3) TMI 1441 - HC - Indian Laws

Cheating - siphoning off of funds - Seeking attachment of assets of the group companies and personal properties of respondent nos.1 to 10, till the investigation is completed by respondent nos.13 to 17 (police and income tax authorities) - it is alleged that the directors of the Development have siphoned off the monies collected from the petitioners and in doing so, have cheated them - approaching multiple forums seeking same relief - HELD THAT - It is apparent from the averments made in the present petition that there are serious allegations regarding siphoning of funds. In view of the above, SFIO is required to examine whether a forensic audit is required to be conducted into the affairs of the Ireo Group of Companies. If the concerned officer is of the view that such an audit is required to be conducted SFIO shall forthwith take steps, if not already done, for conducting a forensic audit of the companies. However, in the event the officer is of the view that no such forensic audit is necessary, he shall record his reasons for taking such a view - This Court does not consider it apposite to issue any directions in this regard as it is expected that SFIO shall conduct the enquiries/investigation and take all such necessary steps that it is required to take for the effective investigation in the matter. In so far as the petitioner s prayer that the properties of the Ireo Group of Companies be attached is concerned, this Court does not consider it apposite to pass any such orders for two reasons. First, the petitioner is unable to point out the legal framework within which such orders are required to be passed. And, second, that a Coordinate Bench of this Court has passed an interim order, restraining certain companies from creating interests in any third parties or parting with possession of their immovable properties. It is relevant to note that petitioners in the present petition are also the petitioners in that petition. Clearly, the petitioners cannot approach multiple forums seeking the same relief. Petition disposed off.

Summary

Issues:
1. Direction to attach assets of group companies and personal properties of respondents.
2. Allegations of siphoning off funds by directors of a development project.
3. Delay in completion of investigations by authorities.
4. Request for forensic audit of companies.
5. Concerns regarding petitions filed under the Insolvency and Bankruptcy Code.
6. Apprehension of directors fleeing the country.
7. Prayer for attachment of properties of the group companies.

Analysis:
1. The petitioners sought directions to attach assets of group companies and personal properties of respondents until investigations by authorities are completed, based on a Supreme Court order in a related case. The petitioners claimed to have invested in a project where funds were allegedly siphoned off by the directors, leading to petitions under the Insolvency and Bankruptcy Code.

2. Serious allegations of fund siphoning by directors were raised, prompting the need for a forensic audit of the companies involved. The court emphasized that SFIO should assess the necessity of a forensic audit and take appropriate steps for effective investigation, considering the gravity of the allegations.

3. Concerns were raised about delays in investigations and the possibility of preferential payments being made by the directors. SFIO assured that necessary actions would be taken in accordance with the law, emphasizing the ongoing inquiries by multiple agencies into the company's affairs.

4. The court clarified that the Supreme Court had directed agencies to conduct inquiries and take action based on their findings, without expressing any opinion on the allegations. It was emphasized that SFIO should address concerns of directors fleeing the country and take necessary legal steps to protect the interests of all involved parties.

5. Regarding petitions filed under the Insolvency and Bankruptcy Code, the court advised the petitioners to address their grievances through the appropriate legal channels and refrained from intervening in proceedings pending before the National Company Law Tribunal.

6. The court declined to order the attachment of properties of the group companies, citing a lack of legal framework provided by the petitioners and an existing interim order from a Coordinate Bench. The petition was disposed of with the observations made during the proceedings.