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TMI Blog2021 (12) TMI 1379X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Companies Act, 2013. There seems to be prima facie merit in the contention of the Petitioners that the Companies sought to be investigated under Section 219 ought to have an affiliation with the Company(s) under investigation, as provided for in the Statute. There is also prima facie merit in the contention of the Petitioners that the impugned orders dated 31.10.2018 and 27.10.2020 do not indicate the reasons or circumstances that compelled the Central Government to form an opinion to order investigation by the SFIO into the affairs of the Petitioners. All that the orders reveal is that the Central Government has the power under Section 212 of the Companies Act to direct investigation into the affairs of a Company and that it has formed an opinion to do so - nothing is discernible from the impugned orders as to what cogent material led to the formation of opinion by the Central Government that the affairs of the Petitioners were required to be investigated. The operation, implementation and execution of the orders dated 31.10.2018 and 27.10.2020 (Annexures P-1 and P-2 to the memo of this writ petition), passed by the Respondents as well as subsequent actions and proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the basis of a report dated 14.08.2018 rendered by ROC, Mumbai, investigation was directed into the affairs of three Companies, which are as follows :- (a) Sahara Q Shop Unique Products Range Limited, (b) Sahara Q Gold Mart Limited, and (c) Sahara Housing Investment Corporation Limited. (ii) It was categorically mentioned in para 4 of the said order that the Investigation Report shall be submitted by the Inspectors to the Central Government within a period of three months from 31.10.2018. However, no such report was rendered within three months and in fact even today, despite passage of more than three years, the investigation is still ongoing. Section 212(3) of the Companies Act stipulates that where the investigation into the affairs of a Company has been assigned by the Central Government to SFIO, it shall submit its report to the Central Government within such period as may be specified in the order, which in the present case was three months, in the order dated 31.10.2018. Thus, there is a clear violation of statutory mandate in the present case by Respondents No.3 and 4 in continuing the investigation after lapse of the period of three months commencing fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into, pursuant to the order dated 31.10.2018. Therefore, the investigation initiated pursuant to the impugned order dated 27.10.2020 (Annexure P-2 to the memo of this writ petition), is per se illegal, being contrary to the statutory provision. (vi) Under the provisions of Section 212(1) of the Companies Act, Central Government is required to form an opinion , based on the material facts and circumstances, mentioned in the report of the Inspector or the Registrar, that investigation by the Serious Fraud Investigation Office (SFIO), is necessary into the affairs of a Company. It is only once the opinion is formed that the Central Government can assign the investigation, into the affairs of the Company, to the SFIO. In the present case, the impugned order does not reflect any material or reason/circumstance, based on which an opinion was formed by the Central Government for ordering investigation by the SFIO. Forming an opinion, based on cogent material, which is a pre-condition and sine qua non for ordering investigation, is lacking in both the impugned orders. The impugned orders are thus passed in violation of provisions of Section 212 of the Companies Act, 2013. Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment within such period as may be specified in the order. Undisputedly, in the present case, a period of three months was granted by the Central Government for completing the investigation and submitting a report to the Central Government, which is evident from reading para 4 of the order dated 31.10.2018 (Annexure P-1). There was thus a clear mandate by the Central Government to complete the investigation within three months from the date of the issue of the order i.e. 31.10.2018. However, the investigation was not completed within the stipulated time and as asserted by the Petitioners, the same is still ongoing. Prima facie, there is violation of Section 212(3) and the direction of the Central Government. (ii) So far as investigation into the affairs of the six Companies by virtue of impugned order dated 27.10.2020 (Annexure P-2 to the memo of this writ petition) is concerned, which includes Petitioners No.2 and 3 herein, in our prima facie view, there is violation of provisions of Section 219 of the Companies Act, 2013. There seems to be prima facie merit in the contention of the Petitioners that the Companies sought to be investigated under Section 219 ought to have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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