9911796707
TMI Blog2022 (8) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... n Neeharika Infrastructure Pvt. Ltd. vsState of Maharashtra and Others [ 2021 (4) TMI 1244 - SUPREME COURT ] cautioned the High Courts against passing blanket interim orders directing no coercive steps to be taken by the investigating authorities as that might hamper the investigation at an early stage. Having due regard to the material which has been placed on record, it cannot be said that the Union Government had not indicated reasons for the exercise of its jurisdiction under Section 212 and Section 219 - At this stage, the Union Government was only ordering an investigation and it would be inappropriate to place a burden of recording elaborate reasons when the purpose of the investigation is to ensure that a full enquiry into the affairs of the companies is carried out. The High Court was not justified in staying the investigation and in passing the consequential directions which have been passed in the impugned orders at the interlocutory stage - Appeal allowed. - Civil Appeal No 4299 of 2022 (Arising out of SLP (C) No 531 of 2022) With Civil Appeal No 4300 of 2022 (Arising out of SLP (C) No 4685 of 2022) - - - Dated:- 26-5-2022 - Hon'ble Dr. Justice D.Y. Chand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O to the Ministry of Corporate Affairs seeking permission under Section 219 to investigate the affairs of six other companies, namely: (i) Aamby Valley Limited; (ii) Qing Ambay City Developers Corporation Ltd.; (iii) Sahara India Commercial Corporation Limited; (iv) Sahara Prime City Ltd; (v) Sahara India Financial Corporation Limited; and (vi) Sahara India Real Estate Corporation Limited 5 A challenge has been set up before the Delhi High Court to impugn the legality of the above orders dated 31 October 2018 and 27 October 2020. 6 The Division Bench of the High Court, while staying the operation of the above orders and all consequential steps pursuant to them, has recorded three reasons for coming to the conclusion that the investigation was prima facie required to be stayed: (i) Section 212(3) of the Companies Act, 2013 empowers the Central Government to direct that an investigation be conducted into the affairs of a company within a stipulated period and, in the present case, the period of three months which was stipulated in the order dated 31 October 2018 had expired; (ii) The order dated 27 October, 2020 which authorizes an investigation into t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 212(3) have been held to be directory in the judgment of this Court in SFIO vs. Rahul Modi (supra). However, it has been submitted that there are several substantive issues which would arise at the hearing of the writ petitions under Article 226 of the Constitution before the High Court. Mr Sibal has urged that either the petitions may be directed to be heard expeditiously by the High Court or they may be transferred for hearing before this Court. The issues which have been highlighted by the senior counsel include the following: (i) The Sahara Housing Investment Corporation Limited has deposited an amount of Rs 24,000 crores with SEBI in pursuance of a judgment delivered by this Court in 2012; (ii) The provisions of Section 212 and Section 219 are embodied in the Companies Act 2013 whereas the transactions in the present cases relate to the period 2010-2011 and the applicability of the Act to such transactions would merit consideration; (iii) Though extension orders were passed from time to time, it would appear that the extension was granted by the Central Government only in regard to the affairs of Sahara Q Shop Unique Products Range Limited; and (iv) There is ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, there is no fixed period within which the investigation under the Criminal Procedure Code must be completed. If the investigation proceeds for a longer period, under Section 167 of the Code, certain rights may flow in favour of the accused. But it is certainly not the idea that in case the investigation is not over within any fixed period, the authority to investigate would come to an end. 34. It is well settled that while laying down a particular procedure if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Furthermore, the provision has to be seen in the context in which it occurs in the statute. There are three basic features which are present in this matter: 1. Absolute transfer of investigation in terms of Section 212(2) of the 2013 Act in favour of SFIO and upon such transfer all documents and records are required to be transferred to SFIO by every other investigating agency. 2. For completion of investigation, sub-section (12) of Section 212 does not contemplate any period. 3. Under sub-section (11) of Section 212 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the six companies in respect of which an investigation has been ordered on 27 October 2020 are neither subsidiary nor holding companies of the three companies which were covered by the order dated 31 October 2018 nor is there a commonality of Managing Directors. These observations are evidently made in the context of clauses (a) and (b) of Section 219. Section 219 reads as follows: Power of inspector to conduct investigation into affairs of related companies, etc. -If an inspector appointed under Section 210 or Section 212 or Section 213 to investigate into the affairs of a company considers it necessary for the purposes of the investigation, to investigate also the affairs of- (a) any other body corporate which is, or has at any relevant time been the company's subsidiary company or holding company, or a subsidiary company of its holding company; (b) any other body corporate which is, or has at any relevant time been managed by any person as managing director or as manager, who is, or was, at the relevant time, the managing director or the manager of the company; (c) any other body corporate whose Board of Directors comprises nominees of the company or is acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons when the purpose of the investigation is to ensure that a full enquiry into the affairs of the companies is carried out. The third reason which weighed with the High Court is hence specious. 16 For the above reasons, we are of the view that the High Court was not justified in staying the investigation and in passing the consequential directions which have been passed in the impugned orders at the interlocutory stage. 17 We accordingly allow the appeals and set aside the impugned orders of the High Court dated 13 December 2021 and 5 January 2022. 18 However, since the writ petitions before the High Court are pending, we clarify that the reasons contained in the present judgment are confined to the issue as to whether an interim injunction was warranted and shall not affect the merits of the writ petitions which are pending before the High Court for consideration. 19 We request the High Court to take up the writ petitions for disposal expeditiously and to endeavour a disposal preferably within a period of two months after the reopening of the High Court upon the conclusion of the ensuing summer vacation. 20 Pending applications, if any, stand disposed of. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
