2020 (2) TMI 377 - Tri - Companies Law

Jurisdiction - power of SFIO to investigate the matter - diversion/siphoning of funds - HELD THAT - When there is siphoning and diversion of funds running into crores, directions issued to the SFIO to investigate should have been followed rather than filing of application for recalling the order, on account of any technical issue of obtaining permission from the Central Government. The same could be done by the SFIO itself as the siphoning of funds is in respect of public money which is noticed in the order dated 04.02.2019 and extracted in the aforesaid order. Needless to say that when huge public money and public interest are involved, Tribunal should in the interest of justice iron out procedural/Technical objections to advance substantial justice - Application dismissed.

Issues Involved:
1. Jurisdiction of NCLT to issue directions to SFIO under Sections 212/213 of the Companies Act, 2013.
2. Recall of order based on technical issues.
3. Handling of siphoning and diversion of funds involving public money.
4. Filing of report by liquidator and record maintenance.

Detailed Analysis:

1. Jurisdiction of NCLT to issue directions to SFIO under Sections 212/213 of the Companies Act, 2013:
The Tribunal addressed the issue of jurisdiction concerning the Adjudicating Authority-NCLT's power to issue directions directly to the SFIO under Sections 212/213 of the Companies Act, 2013. The application was filed for recalling an order dated 06.05.2019. The Tribunal noted abnormal financial transactions involving large sums of money, such as crores being transferred to various entities. It emphasized that in cases of siphoning and diversion of funds, directions to investigate by the SFIO should be followed promptly, especially when public money is involved. The Tribunal highlighted the importance of addressing such matters without being hindered by technical issues.

2. Recall of order based on technical issues:
The Tribunal underscored that in cases where significant public money and public interest are at stake, procedural or technical objections should not impede the advancement of substantial justice. The Tribunal emphasized the need to prioritize the resolution of issues related to the recall of orders to ensure that justice is served effectively, particularly in cases involving substantial financial implications and public interest.

3. Handling of siphoning and diversion of funds involving public money:
The Tribunal expressed concern over the siphoning and diversion of funds amounting to crores, emphasizing the seriousness of such financial misconduct, especially when it involves public money. It highlighted the necessity for immediate action by the SFIO to investigate such matters promptly to safeguard public interest and prevent further financial irregularities. The Tribunal dismissed the application for recalling the order, emphasizing the urgency of addressing issues related to the misappropriation of public funds.

4. Filing of report by liquidator and record maintenance:
In a separate application, the Tribunal acknowledged the report and documents submitted by the liquidator, directing the office to maintain the records and present them before the Bench for final disposal. The application was disposed of after the Tribunal accepted the documents subject to all just exceptions, indicating a procedural step in the ongoing proceedings related to the liquidation process.

This detailed analysis of the judgment provides insights into the Tribunal's considerations regarding jurisdiction, procedural issues, financial misconduct, and the role of the liquidator in the legal proceedings before the National Company Law Tribunal in New Delhi.

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