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TMI Blog2021 (2) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... de the report of the Registrar of Companies and the order passed by the Central Government and the consequential summons. Various complaints were received raising allegations against the petitioner / CSITA, which prompted the Central Government to order inspection of the Books of Accounts of the company on 08.08.2011 under Section 209A of the Companies Act, 1956 and the said inspection was conducted and a report pointing out various violations of the provisions of the 1956 Act, was submitted on 29.08.2012 to the Central Government, which inturn, instructed to launch prosecutions against the petitioner and its officers before the Economic Offences Court, Chennai. Subsequently, an inquiry under section 206(4) of the Companies Act, 2013 was conducted on 05.10.2015 and the Registrar of Companies, after completion of the inquiry, filed a report dated 12.01.2016 under Section 208 of the Act, 2013. Based on the same, the Central Government ordered investigation into the affairs of the petitioner by Serious Fraud Investigation Office (SFIO) under Section 212 of the Act, 2013, on 10.06.2016. The said order was challenged in W.P.No.38841/2016 before the High Court of Hyderabad. The Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the minutes of the Oversight Committee meeting held on 17.04.2018 reveal that upon considering the report of the Registrar of Companies and the direction of the High Court of Hyderabad, in view of the provisions of Section 212(1)(a) and (c) of the Act, 2013, a recommendation was made to investigate the affairs of the company by the SFIO, the mandate of the law under section 210, to form an opinion for ordering such investigation, was not complied with by the Central Government, before passing the impugned order dated 07.05.2018. Though it was argued on the side of the respondents that the report dated 13.12.2017 is in continuance of the earlier report dated 12.01.2016, which holds the field and no inspection / enquiry as per the provisions of law, is required, it was clearly stated in paragraph no.2 of the impugned order that the issues highlighted in the report of the Registrar of Companies, Chennai dated 13.12.2017 necessitated the Central Government to consider the order of investigation in public interest. That apart, the impugned order contains the mere extracts of the allegations referred to in the report of the Registrar of Companies and the same cannot be treated as suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reveal that the proceedings was initiated against the petitioner/ CSITA for the alleged misappropriation, mismanagement, fraud etc., in the year 2011. Since then, the respondent authorities have been simply exchanging the communications from one office to another, without complying with the statutory provisions, within a reasonable time - Taking note of the serious nature of the allegations raised, the inordinate and undue delay caused by the respondent authorities, cannot be simply wished away. Hence, this Court directs the respondent authorities to take action against the erring officials, departmentally. The petitioner / CSITA shall submit its detailed explanation/ objections along with documentary evidence to the report of the Registrar of Companies dated 13.12.2017, which is impugned in WP.No.32587 of 2019, treating it as a show cause notice under Section 206(4) of the Act, 2013, within a period of two weeks from the date of receipt of a copy of this order and thereafter, appear for enquiry between 17.02.2021 - 22.02.2021 - Petition disposed off. - Writ Petition Nos.25236 and 2 5419 of 2018 and 32587 of 2019 And WMP Nos.29340, 29341, 29575, 29577 and 31239 of 2018 1083, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e three writ petitions were clubbed together and posted before this Court as 'Specially ordered cases', as per the administrative orders of the Hon'ble Chief Justice. Accordingly, they were heard and are decided by this common order. Background facts: 4.Shorn of unnecessary details, the germane facts and circumstances leading to the filing of the present writ petitions, would run thus:- 4.1 The Church of South India (CSI) is an unregistered body governed by the Constitution of the CSI. It is a religious organization which was inaugurated on 26.09.1947, pursuant to union / agreement reached between the Protestant Churches of different traditions viz., Angilican, Methodist, Presbyterian and Congregational. There are 24 Dioceses under the CSI. Each Diocese is having its own Constitution. CSI is the largest congregation of Protestant Churches in Asia, which is entitled for protection under Articles 25, 26 and 30 of the Constitution of India. 4.2 The Church of South India Trust Association (CSITA) is a registered Company under Section 26 of the Companies Act, 1913; deemed to be a Company registered under Section 25 of the Companies Act, 1956; and now, under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , vide order dated 22.02.2018, against which, the petitioner / CSITA went on appeal in WA.No.844 of 2018. By judgment dated 18.06.2018, the said writ appeal along with WA.No.1036 of 2018, was disposed of, directing the appellants therein to challenge the report of the Registrar of Companies, Chennai dated 13.12.2017 and the consequential order dated 07.05.2018 passed by the Central Government. 4.6 According to the petitioner / CSITA, based on the report of the Registrar of Companies, Chennai, dated 13.12.2017, the Central Government passed the order dated 07.05.2018 assigning the investigation into the affairs of the CSITA to the Serious Fraud Investigation Office (SFIO). However, the said order and the report have not been served on them. Only during the hearing of the writ appeals, a copy of the order dated 07.05.2018 was served on the learned counsel for the CSITA. Thereafter, the CSITA has preferred the first writ petition viz., WP.No.25236 of 2018 to quash the said order dated 07.5.2018 passed by the Central Government. 4.7 Consequent to the order dated 07.05.2018, one Samuel Cornelius, Diocesan Treasurer of the CSI, Madras Diocese, was issued with a summons dated 19.09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the company, did not disclose the fact about the prior approval of the Central Government in consonance with Section 217 of the Act, 2013 and a copy of the order dated 07.05.2018 was not enclosed therein and therefore, the said summons is contrary to the relevant provisions of the Act, 2013 and in violation of the principles of natural justice. It is also stated that the Diocese of the CSI being unregistered body, coming under the control of the CSITA, cannot be subjected to investigation by the SFIO. 6. Denying the averments made in the writ petitions, the respondents 1 to 6 filed a detailed counter affidavit, wherein, it is inter alia stated as under: 6.1 The very purpose of creating the CSITA is to acquire, hold and administer properties of the CSI and its constituent churches, which inturn is part of the 24 Dioceses and hence, the averments of the CSITA that the 24 Dioceses of the CSI are unregistered bodies and the CSITA alone can be commanded in the facts and circumstances of the case to produce the documents, if any, and the Diocese cannot be subjected to investigation by SFIO, are untenable. According to the these respondents, the CSITA, CSI and its constituen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various allegations were raised against the petitioner / CSITA, which compelled the Central Government to order inspection of the Books of Accounts of the company on 08.08.2011 under Section 209A of the Companies Act, 1956. Accordingly, inspection was conducted and a report was submitted pointing out various violations of the Act. Based on the same, prosecution was launched against the company and its officers before the Economic Offences Court, Chennai. Subsequently, notice dated 05.10.2015 under section 206(4) of the Act, 2013 was issued, to which, the petitioner / CSITA submitted its explanation on 15.10.2015. After considering the same, the Registrar of Companies, filed the report dated 12.01.2016 under Section 208 of the Act, 2013. Pursuant to the same, the Central Government under Section 212, ordered investigation into the affairs of the Company by SFIO, which was quashed by the High Court of Hyderabad. Thereafter, the Registrar of Companies, submitted another report dated 13.12.2017 in continuation of the earlier report dated 12.01.2016 under Section 208. Based on the same, the Central Government passed the order dated 07.05.2018 under Section 212(1)(a) and (c) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her proceeds to state that the report of the Registrar of Companies filed before the Central Government would clearly disclose that the CSITA is found guilty of mismanagement of the trust properties and misappropriation of the trust funds through its officers and hence, appropriate action has to be initiated to safeguard the trust and its movable and immovable properties from the hands of the unworthy people. Thus, it is prayed that the writ petition may be dismissed and the investigation into the affairs of the petitioner / CSITA by SFIO may be ordered. Submissions of the Counsels: 10.1 Mr.Masilamani, learned Senior Counsel representing the counsel on record for the petitioner / CSITA submitted that the order dated 07.05.2018 impugned in WP.No.25236 of 2018, has been passed by the Central Government exercising its power under Section 212 of the Act, 2013, however, without forming an opinion as contemplated under Section 210, which is contrary to the order dated 16.11.2017 passed by the High Court of Hyderabad in WP.No.38841 of 2016 as well and hence, the same is non-est in law. It is also submitted that the impugned order has not been served on the petitioner / CSITA and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment was taken place on 05.03.2002 i.e., prior to the introduction of the Companies Act, 2013 and hence, 1956 Act only applies to the facts of the present case; further, Section 25 of the Companies Act, 1956, corresponds to Section 8 of the Companies Act, 2013, which deals with amendment and as per the said provisions, only for amending the objects, prior permission of the Central Government is required and hence, there is no violation of the provisions of Section 31 of the 1956 Act. As regards the second allegation relating to vacation of office by the Directors, he submitted that the prosecution was with respect to the non-filing of statutory returns and therefore, the comments of the Officer in this regard, is nothing but meaningless. In respect of the allegation against Bishops and their stooges for unauthorized usage of rent free bungalows, luxury cars and unwarranted free world tours, he submitted that the Registrar has usurped the power of the Civil Court and he does not have any power to raise such allegation and his power is restricted only to send a report under Section 206 (4) of the Act, instead he sent a report under Section 208 stating that the verification of bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar has to follow Section 206(4), which was not done in the present case. He further submitted that as per Section 208, the Registrar or Inspector shall, after inspection of the books of account or enquiry under Section 206 and other books and papers of the company under section 207, submit a report in writing to the Central Government along with documents if any, including recommendation about further investigation; and hence, the report under Section 208 should be made after complying with the provision of Section 206, where serious scrutiny is required. With these submissions, the learned counsel prayed to allow these writ petitions by setting aside the impugned proceedings. 12.1 Mr.G.Rajagopalan, learned Additional Solicitor General assisted by Mr.Venkataswamy Babu, learned Central Government Senior Panel Counsel appearing for the respondents 1 to 6 submitted that the issue raised before this Court is, whether there are sufficient materials on record to order SFIO investigation. Referring to sub section (1) of Section 212, he submitted that without prejudice to the provisions of Section 210, where the Central Government is of the opinion that it is necessary to investigate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt still say that in its opinion they exist or can the Government say the same thing where the circumstances relevant to the clause do not exist? The legislature no doubt has used the expression 'circumstances suggesting'. But that expression means that the circumstances need not be such as would conclusively establish an intent to defraud or a fraudulent or illegal purpose. The proof of such an intent or purpose is still to be adduced through an investigation. But the expression 'circumstances suggesting' cannot support the construction that even the existence of circumstances is a matter of subjective opinion. That expression points out that there must exist circumstances from which the Authority forms an opinion that they are suggestive of the crucial matters set out in the three sub-clauses. It is hard to contemplate that the legislature could have left to the subjective process both the formation of opinion and also the existence of circumstances on which it is to be founded. It is also not reasonable to say that the clause permitted the Authority to say that it has formed the opinion on circumstances which in its opinion exist and which in its opinion sugge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of subjectivity is always involved in the formation of such an opinion, but as was pointed out by this Court in Bariam Chemicals (ibid), the existence of circumstances from which the inferences constituting the opinion, as the sine qua non for action are to be drawn, must be demonstrable, and the existence of such circumstances , if questioned, must be proved at least prima facie. 60. Section 18AA(1)(a), in terms, requires that the satisfaction of the Government in regard to the existence of the circumstances or conditions precedent set out above, including the necessity of taking immediate action, must be based on evidence in the possession of the Government. If the satisfaction of the Government in regard to the existence of any of the conditions, (i) and (ii), is based on no evidence, or on irrelevant evidence or on an extraneous consideration, it will vitiate the order of 'take-over', and the Court will be justified in quashing such an illegal order on judicial review in appropriate proceedings. Even where the statute conferring the discretionary power does not, in terms, regulate or hedge around the formation of the opinion by the statutory authority in regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners are not at all aggrieved in any manner. 12.3 Adding further, the learned Additional Solicitor General submitted that though the petitioner / CSITA claimed that they had already submitted all the required documents for scrutiny, the documents produced did not disclose all the particulars. It is also submitted that to exercise its control over the properties of the church and diocese, the petitioner / CSITA is forming them as 'Society', which is evident from the Certificates pertaining to the 'Krishna Godavari Diocese' enclosed at Pages 316 and 317 (members of the society consisting of Bishops, clause 5 (a), and powers of the Treasurer); the Diocesan units are using separate PAN numbers, apart from CSITA having a PAN; as far as the allegation pertaining to Coimbatore CSI Diocese is concerned, the CSITA stood as guarantor for a sum of ₹ 3.5 crores and if that loan is defaulted, the properties belonging to the CSITA will be attached and SARFAESI action will be initiated against the guarantor also; in this regard, FIR has been registered on the file of the Thiruppur Police Station, which was stayed by this Court; and there were various proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 01.11.2019. Thus, according to the learned counsel, the petitioner has played fraud upon the Court and indulged in forum shopping and hence, the writ petition is hit by the principle of res judicata . 13.2 The learned counsel also submitted that the order dated 10.06.2016 passed under Section 212 of the Act, 2013 was quashed by the High Court of Hyderabad and the Central Government was directed to take note of the report filed by the Registrar of Companies under Section 208 and to consider the matter afresh under Section 212 alone. According to him, under Section 206(4) enquiry was conducted and records were called for from the CSITA and after receiving reply, the report under Section 208 dated 12.01.2016 was made and that report containing 45 pages, remains unchallenged and hence, the same is still in force. Even in the present writ petition, the petitioner / CSITA has not challenged the said report. He drew the attention of this Court to clauses (a) to (c) of Section 212(1) and submitted that SFIO investigation can be ordered by this Court, if not invoking by sub section (1)(a) or (1)(b) of section 212, but by Section 212 (1)(c), viz., in the public interest, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company law as well as other Regulations, which are overlapping. Hence, the learned counsel sought to dismiss the writ petition. 14.1 Reiterating the averments made in the counter affidavit, Mr.T.R.K.Kumarasingh, learned counsel for the eighth respondent in WP.No.25236 of 2018 submitted that the legal status of CSITA, by virtue of interpretation itself, is a company, but with respect to functions, it is a trust, as per the Memorandum of Association and the Articles of Association framed in the year 1947. In this regard, he drew the attention of this Court to MoA and AoA of the CSITA. He also raised a preliminary issue as regards the maintainability of the writ petition. According to him, the writ petition before the Hyderabad High Court was filed by one Dr.Vimal Sukumar, General Power of Attorney, representing the petitioner therein, as against the order dated 10.06.2016 passed by the Central Government, whereas the writ petition before this Court was filed by the CSITA itself and the order impugned herein is in pursuance of the order dated 16.11.2017 passed by the Hyderabad High Court in WP.No.38841 of 2016; and as such, no separate writ petition can lie before this Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts are authorized under Article 226 of the Constitution, to issue directions, orders or writs to any person or authority, including any Government to enforce fundamental rights and, for any other purpose . It was also observed that powers of judicial review conferred on the High Court undoubtedly are in a way wider in scope. At para 68(v) the Apex court has also observed as follows:- Para 68(v) Restriction on Parliament by the Constitution and restriction on the executive by Parliament under an enactment, do not amount to restriction on the power of the Judiciary under Article 32 and 226 of the Constitution . We are therefore of the opinion that in an appropriate case direction can be issued on the SFIO under Article 226 of the Constitution of India to enquire whether the case involves serious fraud or not into the affairs of the Company. At this stage we refrain from expressing any opinion whether it is case of serious fraud in the misuse and misappropriation of public money by the Agency or any other body or individuals with the aid of the authorities of Lender Bank and NHAI. It is to be enquired whether there has been a deliberate failure on the part of the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be complied with, pass appropriate orders recording sufficient and cogent reasons therefor as expeditiously as possible and not beyond a period of three months from the date of communication of this order. The High Court, if any proceeding is initiated in relation thereto, may deal therewith in accordance with law. The administration of the temple, it is stated, has been taken over by the State and the other statutory functionaries. They shall, we have no doubt in our mind, having regard to the fact that special treatment has been accorded to the temple by the State Legislature, carry out its activities in true letter and spirit thereof. The State and the statutory functionaries would be well advised to give full credence to the tenets and practices subject of course to the provisions of the statute. The State should furthermore make all endeavours to see that the sentiments of the devotees are respected. In view of our findings aforementioned, the adverse remarks made in the impugned judgment against the appellant in C.A. No. 2151/1994 shall stand expunged. 91. Before parting with this case, however, we must complement the High Court about the gigantic task undertaken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his office orany of his duties either to a co-trustee or to a stranger, unless (a) the instrument of trust so provides, or(b) the delegation is in the regular course of business, or (c) the delegation is necessary, or (d) the beneficiary, being competent to contract, consents to the delegation. 14.3 That apart, the learned counsel pointed out the report of the Independent Auditors appointed by the Income Tax Department, wherein it was clearly stated that the appointment of SFIO is a sine qua non for the CSITA. Taking this Court to the definition of the word mismanagement from law lexicon, he submitted that the petitioner / CSITA is involved in serious offence of mismanagement of the trust properties, which has to be tested by SFIO. 14.4 Referring to the decision of the Supreme Court in State v. N.S.Gnaneswaran [(2013) 3 SCC 594], the learned counsel submitted that infraction of law would not vitiate the order for investigation unless prejudice and injustice are made out by the accused persons. It is also submitted that whether the investigation is necessary or not, is based on the interest of both parties and in the case on hand, at paragraph no.31 of the affidavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company, is a false statement. 14.6 The learned counsel further submitted that the petitioner has buried the quagmire created by CSI; the Bishops, Clergy and CSI Synod which are to protect the truth and the downtrodden, started to imbibe the charity funds. It is also submitted that since the petitioner is the owner of the lands, the employees of the petitioner cannot do anything other than its regulations; even the Bishops are the employees of the company and getting salaries from the company, the commission of offences like fraud, misappropriation of funds, etc. should be termed as criminal offences. 14.7 It is further submitted on the side of the respondents that the petitioner / CSITA is a company registered under Section 8 of the Companies Act, 2013; after inspection of books of account of the company, the Registrar of Companies, Chennai, reported to the Central Government with a statement that the business of the company is for fraudulent / unlawful purposes and recommended for a thorough investigation by the Serious Fraud Investigation Office into the affairs of the company and its units; and hence, all the actions done by the petitioner without proper approval from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the jurisdiction under Section 212 and without adhering to the other provisions preceding to the same i.e., Section 210. Adding further, he submitted that each and every allegation made in the complaints were replied by the petitioner / CSITA to the Central Government and that is why, one of the Dioceses had approached the High Court of Hyderabad and obtained an order in their favour. It is also pointed out that while forwarding the original Report of the Registrar of Companies, dated 28.08.2012, under section 209A of 1956 Act, the Regional Director (SR), Chennai, in the communication dated 18.10.2012 addressed to the Central Government, was of the view that no serious fraud has been brought out warranting investigation by SFIO. As such, the contention of the learned counsel for the respondents 7 and 8 is contrary to the facts of the present case. However, the learned senior counsel submitted that W.P.No.32587 of 2019 came to be filed as per the directions of the Division Bench of this Court in Writ Appeal Nos.844 and 1036 of 2018, dated 18.06.2018. 16.1 In reply to the arguments made by the learned counsel for the private respondents, Mr.C.Selvaraj, learned counsel for the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: The medical needs of the masses are being attended to by Hospitals and Health Centres numbering about 50. The number of education institutions within the CSITA 94 colleges, 578 Secondary Schools, 1467 Elementary and Nursery Schools, 47 Technical Institutions, 24 Para Medical Institutions, others 44 continue to cater for the educational needs. The Boarding Homes, Hostels and Day care Centres cater to the needs of children, who are orphaned, poor, deserted and differently abled. The provision of drinking water facilities and other amenities are extended to the under privileged communities, professional Training Schools both formal and non-formal continue to provide skills to men and women. Assistance in Community Development, environmental concern and self-employment schemes are also being carried out. As per section 8 of the Companies, 2013, the CSITA is regarded as a limited company for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other object. Secondly, the CSITA company needs to apply its profits, if any, or other income in promoting its objects. It cannot distri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated that as per the directions of the Central Government, prosecutions were filed before the Economic Offences Court. It was ultimately suggested to order investigation into the affairs of the petitioner by the SFIO. The reasons for the same are (i) Continuous complaints; (ii) Amendment in MoA and AoA; and (iii) Mismatch in the consolidated financial statement, assumption that business of the company is carried on for a fraudulent / unlawful purpose. On 02.06.2016, the Regional Director, Southern Region, Chennai sent a letter to the Central Government recommending investigation by SFIO, based upon the report dated 12.01.2016. On 10.06.2016, the Central Government ordered investigation into the affairs of the CSITA by SFIO. Challenging the aforesaid order dated 10.06.2016 passed by the Central Government, Medak Diocese of CSITA filed a Writ Petition bearing No.38841 of 2016 before the High Court of Judicature at Hyderabad for the States of Telangana and Andhra Pradesh. On 16.11.2017, the High Court of Hyderabad set aside the order dated 10.06.2016 and the consequential proceedings dated 21.09.2016 and remitted the matter to the Central Government, to exercise its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined. 20.1 The relevant portion of the order dated 07.05.2018 impugned in WP.No.25236 of 2018 is, for better understanding, extracted hereunder:- WHEREAS the Central Government is empowered under section 212(1)(a) (c) of the Companies Act, 2013 to order investigation into the affairs of any company on receipt of a report of the Registrar or Inspector under section 208 and in the public interest. 2. AND WHEREAS the Registrar of Companies, Chennai vide its report 13.12.2017 highlighted following issues which necessitate the Ministry to consider ordering investigation in public interest:- i. Filing of different sets of Financial Statements with Income Tax Authorities and ROC till 31.03.2013 and as such the financial statements filed with the RoC till 2013 did not reflect the true and fair view of the affairs. ii. Misappropriation of funds of CSI Kalyani Hospital at Mylapore, Chennai - Laity Association of CSI Madras Diocese complained that huge amount of funds of CSI Kalyani have been misappropriated in purchase of medicines, equipment's and no proper accounts have been maintained. It is alleged that about Rupees Seven Crores of the Company's funds have been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to go into the preliminary objections raised by the private respondents. It is submitted that the writ petition filed by C.Robert Bruce claiming himself as Honorary Treasurer of the petitioner / CSITA, is not maintainable. According to them, the said C.Robert Bruce is not a validly elected Treasurer and as per the order dated 18.11.2016 passed by the National Company Law Tribunal in CA.No.12 of 2016 in CP.No.2 of 2016, which was confirmed by this Court vide order dated 20.12.2018 in CRP.No.3739 of 2016, he was removed from the said post and hence, he has no locus standi to file the writ petition on behalf of the CSITA and that, the entire election process is under the investigation of SFIO. It is also submitted that as per Section 8 of the Act, 2013, prior approval of the Central Government is required for amendment to Memorandum and Articles of Association, with respect to members of the CSITA, whereas no such approval was sought from the Central Government. Another objection raised by them is that the petitioner / CSITA is involved in the act of forum shopping; and the order impugned in W.P.No.25236 of 2018 is pursuant to the order dated 16.11.2017 passed by the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the availability of alternative remedy. Subsequently, the Division Bench of the National Company Law Tribunal, vide order dated 29.06.2018, in CP.No.13 of 2017, observed that the locus standi of the petitioner therein and his consenters as well as that of the persons representing the company could not be ascertained. Thereafter, considering the fact that the period of the Administrator expired on 08.12.2016 and a new Board having come into existence in the election duly held, the Division Bench of the NCLT by order dated 08.01.2019 in MA.Nos.19,20,21,22 and 23 of 2019 in CP.No.2 of 2016, permitted the newly constituted Board to discharge the functions of the company in its ordinary course of business without taking any major decisions in dealing with either the assets of the company or the policies of the company pending disposal of the company petition. Thus, it is clear that there was a cloud over the position of the said Robert Bruce to act as Treasurer. Such being the actual position, this Court is of the view that the issue involved is a mixed question of facts and law, which has to be decided along with other issues. 21.4 Further, taking note of the fact that variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Registrar within the time specified or extended by the Registrar: Provided that where such information or explanation relates to any past period, the officers who had been in the employment of the company for such period, if so called upon by the Registrar through a notice served on them in writing, shall also furnish such information or explanation to the best of their knowledge. (3) 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 subsection, the Registrar shall record hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registrar or inspector and furnish him with such statements, information or explanation in such form as the Registrar or inspector may require and shall render all assistance to the Registrar or inspector in connection with such inspection. (2) The Registrar or inspector, making an inspection or inquiry under section 206 may, during the course of such inspection or inquiry, as the case may be,- (a) make or cause to be made copies of books of account and other books and papers; or (b) place or cause to be placed any marks of identification in such books in token of the inspection having been made. (3) Notwithstanding anything contained in any other law for the time being in force or in any contract to the contrary, the Registrar or inspector making an inspection or inquiry shall have all the powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit in respect of the following matters, namely:- (a) the discovery and production of books of account and other documents, at such place and time as may be specified by such Registrar or inspector making the inspection or inquiry; (b) summoning and enforcing the attendanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interests of the shareholders and further to enable the Central Government to assume power to step in, where there is reason to suspect that a company may be conducting its affairs in a manner prejudicial to the public interest at large. The order impugned in the first writ petition viz., WP.No.25236 of 2018 was passed by the Central Government under section 212 of the Act, 2013. A reading of the aforesaid provision makes it clear that an investigation into the affairs of a company by SFIO, can be ordered by the Central Government either under Section 212 (1) (a) or (1) (b) or (1) (c) or (1) (d), however, without prejudice to the provisions of Section 210. This power is to be exercised, if the Central Government is of the opinion that it is necessary to investigate into the affairs of a company by the SFIO. That opinion has to be based on the report of the Registrar or Inspector under section 208. 24.As per the provisions of the Act, 2013, there is a power to conduct inspection under Section 206 and to conduct enquiry under section 207. Both these powers are to be exercised by the Registrar or Inspector and thereafter, the report has to be made. The Registrar or the Inspecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion about the necessity to investigate into the affairs of the company, but also, such investigation has to be assigned to the SFIO. Analysis: 27.In the light of the aforesaid legal principles, the submissions made by the parties are required to be considered. Though extensive arguments were made at the bar on various issues, yet, the issues germane for deciding the cases at hand alone are dealt with. 28.The main thrust of the contentions raised on the side of the petitioners are that despite the order of the High Court of Hyderabad, dated 16.11.2017 in WP.No.38841 of 2016, the Central Government passed the impugned order dated 07.05.2018 under section 212 of the Act, 2013, to investigate the affairs of the petitioner/ CSITA by the SFIO, without forming an opinion as envisaged under Section 210. Further, the said order is on the basis of the report of the Registrar of Companies dated 13.12.2017 filed under section 208, which was filed, without conducting any inspection or enquiry as provided under Section 206 / 207 and hence, the said report cannot be construed as a report under Section 208 of the Act, 2013. That apart, an opportunity of being heard as contemplated unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956 was introduced by repealing the Indian Companies Act 1913, then automatically the provisions of Section 25 of the Companies Act, 1956 would be applicable to the petitioner company (now section 8 of the Companies Act 2013). However, the petitioner vide its ordinary resolutions dated dated 05.03.2002 and 17.06.2005, changed the MoA and AoA, without obtaining the approval of the Central Government as well as without passing the special resolution as per sections 17, 21 31 of the Companies Act, 1956. It is also submitted that dehors the provisions of the Act, 2013, this Court has got ample powers to suo motu order investigation into the affairs of the petitioner / CSITA by SFIO. To fortify the same, the following rulings were relied upon: (i)In Parmeshwar Das Agarwal v. The Additional Director (Investigation) Serious Fraud Investigation office, Ministry of Corporate Affairs and others [2016 SCC Online Bombay 9276], a Division Bench of the High Court of Bombay, relying on the judgment of the Hon'ble Supreme Court in Barium Chemicals v. Company Law Board [(1966) Supp SCR 311] and Rohtas Industries v. S.D.Aggarwal [(1969) 1 SCC 325], held thus: 40. Thus, the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion such an investigation is necessary to safeguard public interest. It is true that the text of the statute does not contain an explicit right to challenge the opinion of the Central Government. However, this does not mean that the power confers absolute discretion over the decision and that its decision consequently attains unassailable finality. An order of investigation is an administrative order because, as explained in Barium Chemicals (supra) - The discretion conferred to order an investigation is administrative and not judicial since its exercise one way or the other does not affect the rights of a company nor does it lead to any serious consequences, as for instance, hampering the business of the company. 31. Being an administrative order, it is essential that the Government must form an opinion under the section and it has been repeatedly affirmed by the jurisprudence of courts that the certain defects in the formation of opinion is justiciable. ... 47. In the present case Sunair has challenged the order as being arbitrary and illegal primarily on the ground that the Central Government did not make the order on the basis of sufficient material. On this b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before such an investigation is ordered, the deciding authority must appraise itself of all the relevant facts. (iv)In Karvy Stock Brokers Ltd v. Union of India , the Telegana High Court held as under: The quintessence of the above judgments is that under Section 212(1) of the Act, the Central Government, on the sources referred to under clauses (a) to (d) of the said sub-section, is required to form an opinion that it is necessary to investigate into the affairs of the company by SFIO. It goes without saying that for formation of an opinion with regard to necessity for ordering investigation into the affairs of the company by SFIO, the necessary concomitant is existence of prima facie circumstances, which should be demonstrable before the court when questioned. As the investigation will have serious impact on the functioning of the company and its prospects, it is vital that before ordering investigation, the authority shall appraise itself all the relevant facts. Further, forming an opinion and ordering investigation, is an administrative act of the Central Government, and, therefore, it shall be on satisfactory grounds, and if the same are found to be defective, the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o investigate impose a jurisdictional duty on Central Government to form opinion on the necessity of investigation by SFIO. The material before Central Government is considered from the view point of necessity of such investigation by SFIO. Without again juxtaposing the operative portion of the order impugned in the writ petition, it can be held that the order impugned in the writ petition by itself does not show the existence of opinion, much less necessity for ordering investigation by SFIO. This Court hastens to add that no particular expression is suggested and it is accepted that the opinion depends upon case to case basis. But the subjective opinion, if is available in the order passed for investigation by SFIO, then the Central Government is satisfying the requirement for ordering investigation by SFIO. If the contention of Mr.Lakshman i.e., the report under section 208 is available, there is reference to report in the order impugned and that conforms to the requirement of section 212, is untenable, for if such is the intention of Parliament, then the syntax or structure of section 212 would have been otherwise. The section is interpreted as the section stands by following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the petitioner that the same cannot be treated as report under Section 208, unless it is preceded by an inspection / enquiry under Section 206 / 207; and that the ordering investigation by SFIO, will have serious effect on the prospects of the company and therefore, issuance of notice and opportunity of being heard, which are the cardinal principles of natural justice, cannot be dispensed with. Though the Division Bench of this Court vide judgment dated 18.06.2018 in WA.No.844 of 2018, granted liberty to challenge the said report, a copy of the same has not been served on the petitioner/CSITA. Only as per the direction of this Court, the copy of the same was furnished to them. Thus, the impugned report, based on which, the Central Government ordered investigation into the affairs of the company by the SFIO, without complying with the provisions of law, is non est in law, besides violating the principles of natural justice. 34.2 Per contra, the learned Additional Solicitor General appearing for the respondents submitted that after complying with the provisions of Section 206 and upon receipt of the explanation from the petitioner / CSITA, the Registrar of Companies filed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following the procedure under the sub section. Such being the legal position, it is to be examined whether the Registrar of Companies has complied with the said requirements, while submitting the report dated 13.12.2017 to the Central Government. 34.4 Admittedly, the earlier report dated 12.01.2016 was filed under section 208 of the Act, 2013, by the Registrar of Companies, after issuance of notice under section 206(4) dated 05.10.2015 and upon receipt of the information / explanation from the petitioner / CSITA, whereas the perusal of the report dated 13.12.2017 would not disclose the issuance of notice under section 206(4) to the petitioner / CSITA. It proceeds to state as if the same was in continuation of the report dated 12.01.2016. Apart from the averments as were stated in the report dated 12.01.2016, the impugned report dated 13.12.2017 also contained some other new allegations relating to the consolidated accounts from the financial year 2013-14, misappropriation in CSI Kalyani Hospital and fraudulent, and dubious sale of immovable property in CSI Coimbatore Diocese. It is to be noted here that the filing of the said report was brought to the notice of the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing such report, has to comply with the provision of section 206(4) and the failure to do so, in violation of the principles of natural justice, vitiates the Report filed under section 208. 34.5 The cardinal point that has to be borne in mind, is whether the person concerned should have a reasonable opportunity of presenting his case and the authority should act fairly, justly, reasonably and impartially. The procedure prescribed must be just, fair and reasonable, even though there is no specific provision in a statute or rules made thereu8nder for showing cause against action proposed to be taken against an individual, which affects the right of that individual. The authorities have a duty to proceed in a way which is free from even the appearance of arbitrariness, unreasonableness or unfairness. They have to act in a manner which is patently impartial and meets the requirements of natural justice. At this stage, it would be apt to refer to the observation of the Supreme Court in Automotive Tyre Manufacturers Assn. v. Designated Authority, [(2011) 2 SCC 258] , which reads as follows:- ''80. It is thus, well settled that unless a statutory provision, either specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short, this rule of fair play must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands. The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. But, the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise. 34.7 From the aforesaid legal proposition, it could be seen that the principle of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing; and secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction / enquiry as per the provisions of law, is required, it was clearly stated in paragraph no.2 of the impugned order that the issues highlighted in the report of the Registrar of Companies, Chennai dated 13.12.2017 necessitated the Central Government to consider the order of investigation in public interest. That apart, the impugned order contains the mere extracts of the allegations referred to in the report of the Registrar of Companies and the same cannot be treated as sufficient compliance by the Central Government for exercising its drastic power. Something more was required and to be established as circumstances or material enough for exercise of such power. Thus, it is manifest that there was no material available to show that the Central Government has formed the requisite opinion before passing the order to investigate into the affairs of the petitioner by the SFIO. 36.It is noteworthy to mentioning that already, the High Court of Hyderabad vide order dated 16.11.2017 in WP.No.38841 of 2016, set aside the order dated 10.06.2016 and remanded the matter to the Central Government for fresh consideration to exercise of its jurisdiction under Section 212 of the Act, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, within a reasonable time. The report of the Registrar of Companies dated 12.01.2016 addressed to the Central Government, pointed out various allegations levelled in the complaints received, such as (i)Amendment of MoA and AoA without the approval of Central Government; (ii)Allegation against Directors as to vacation of office; (iii)Allegation against Bishops and their stooges for unauthorised usage of rent free bungalows, luxury cars and unwarranted free world tour for Bishops; (iv)mismatch in the Audit report TDS; (v)Criminal cases filed against the Bishops; (vi)Criminal cases registered against the 19 persons including three Bishops of CSI Coimbatore Diocese; (vii)Election in 22 Dioceses has not been conducted properly; (viii)foreign contribution details; (ix)power of attorney; (x)consolidated cash flow statement and the balance sheet; (xi)election of office bearers; (xii)CSITA committee; (xiii)maintenance of bank account; (xiv)constitution of CSITA, Synod, Diocese; (xv)filing of statutory returns by CSITA; (xvi)tax deduction at source; (xvii)special audit of IT Department; (xviii)consolidated income and expenditure account; (xix)accounting system; (xx)PAN; (xxi)foreign cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But they themselves prepared bogus record and submitted to the Director of Collegiate Education and illegally acting as the correspondent /Secretary of the company's Higher Educational institutions. They are illegally withdrawing huge money from the company's different bank accounts and collecting money by appointing employees to all of its sub units like colleges, schools, hospitals etc. (v)Without the approval of the company, a vast extent of land and other properties were misused by the sub units of the company. (vi)There is constant change with respect to statutory auditors of the Company, only to camouflage accounts and conceal vital information in the balance sheets of the company. (vii)There is no control or monitoring mechanism in the petitioner / CSITA as to the end use of the money or the expenditure incurred by various units and sub units. So that, the Dioceses have sold / purchased properties and have gone to the extent of borrowing monies from the financial institutions without prior approval of the CSITA. The balance sheets of the CSITA do not disclose or reflect the details of fixed assets / immovable properties, secured loans, sale of properties, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic interest and order investigation into the affairs of the petitioner company. The decisions reproduced above would disclose that this Court has power to suo motu order investigation by SFIO. At this juncture, it is to be noted that there is no Civil Suit or Company Petition pending touching the issue involved herein. It is an admitted fact that the petitioner is now, available with all the impugned proceedings including the report of the Registrar of Companies. Their grievance is that the Central Government did not follow the relevant provisions as mandated under the Companies Act and they did not form an opinion, before ordering investigation by SFIO. It is also significant to point out that the petitioner stated in the affidavit filed in support of the writ petition in WP.No.25236 of 2018 that they are always ready and willing to face any enquiry conducted in accordance with law, besides the learned counsel for the petitioner during the course of argument, fairly submitted that the petitioner is inclined to cooperate with any kind of investigation to be done by the official respondents. 41.A repeated argument was made on the side of the respondents that there are suffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SITA s corporate personality. Therefore, regulatory requirements are very much essential to bring about good governance in such a non-profit association. 43.Be it noted, the files circulated by the official respondents would reveal that the proceedings was initiated against the petitioner/ CSITA for the alleged misappropriation, mismanagement, fraud etc., in the year 2011. Since then, the respondent authorities have been simply exchanging the communications from one office to another, without complying with the statutory provisions, within a reasonable time. Taking note of the serious nature of the allegations raised, the inordinate and undue delay caused by the respondent authorities, cannot be simply wished away. Hence, this Court directs the respondent authorities to take action against the erring officials, departmentally. Conclusion: 44.In the upshot of the aforesaid discussions and reasonings, this Court holds as under: (i)The petitioner / CSITA shall submit its detailed explanation/ objections along with documentary evidence to the report of the Registrar of Companies dated 13.12.2017, which is impugned in WP.No.32587 of 2019, treating it as a show cause not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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