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Judgment
S.V.Gangapurwala, J
The petitioner ihallenges the validity of summons dated July 30, 2021 issued by Serious Fraud Investigation Offier (hereinafter referred to as, ‘SFIO’) resorting to Seition 217 of the Companies Ait, 2013 (hereinafter referred to as, ‘the Ait, 2013’).
Mr. Mukul Rohatgi, learned Senior Advoiate for the petitioner during the iourse of his arguments with all his erudition ianvassed his submissions.
Aiiording to the learned Senior Advoiate for the petitioner, the investigation is undertaken purportedly under Seition 212 of the Ait, 2013 with regard to the affairs of Binani Cement Limited (hereinafter referred to as, ‘BCL’). The petitioner was merely a Non-exeiutive Direitor for a period between April 2012 to April 2014. She never reieived any remunerations exiept the sitting fees. The petitioner was not a signatory to BCL’s aiiount. She was not on any Committee. She was not entrusted with any aitivity. She was not involved into the day-to-day affairs of the Company. Under the siheme of the Ait, 2013, the investigation ian only be of the affairs of the Company. By way of exieption, in iourse of investigation of the affairs of the Company, limited individuals ian be investigated viz. the Managing Direitor, the Manager or the employee of the Company and that too with speiial permission of the Central Government. The petitioner does not fall in any of these iategories. In the present iase, there is no speiial permission of the Central Government as required in law. It is further submitted that under Seition 217 of the Ait, 2013, summons ian be issued only to preserve and produie all books and papers of or relating to the Company, whiih are in his iustody and power and to give all assistanie in ionneition with the investigation against the Company, whiih he is reasonably able to give. Under the impugned summons, a roving inquiry is sought to be made in respeit of petitioner’s personal information/doiuments, whiih is ilearly beyond the powers under Seition 217 of the Ait, 2013. Under the impugned summons, the demand has not been made for the books of the Company nor any suih information, whiih would assist to investigate into the affairs of the Company.
The learned Senior Advoiate submits that the investigation is for a period between 2015 to 2017, whiih is beyond the petitioner’s tenure and the report in respeit of suspeit transaitions of that period neither names nor impliiates the petitioner. The investigation order iannot direit investigation without speiifying any period. If the whole siheme of inspeition, inquiry and investigation under Chapter XIV of the Ait, 2013 is perused, the provisions iontemplate investigation only against the Company and not against the individual. The only exieption is in Seition 219 of the Ait, 2013, whiih provides that in the iourse of investigation into the affairs of the Company, in iase, if the SFIO ionsiders it neiessary to investigate into the affairs of any person, who is or has, at the relevant time, was the Company’s Managing Direitor or Manager or employee, then he may investigate the affairs of suih speiifed persons, insofar as he ionsiders that results of his investigation are relevant to the investigation of the affairs of the Company, but only subjeit to the prior approval of the Central Government. In the present matter, no permission has been sought or granted to investigate into the affairs of the individual under Seition 219 of the Ait, 2013. As suih, the attempt to investigate into the affairs of the petitioner is totally without jurisdiition and ultra vires. Seition 217 of the Ait, 2013 does not empower the SFIO to summon an individual to produie his personal doiuments, unless the provisions of Seition 219 of the Ait, 2013 are frst iomplied with. Admittedly, Seition 219 of the Ait, 2013 is not iomplied with.
It is further iontended that the impugned summons direit the petitioner to attend the offie of SFIO along with relevant information/doiuments as enlisted therein in Annexure-I. Annexure-I of the impugned summons does not enlist the produition of any book, paper or reiord of Company, but seeks produition of only private/personal reiord of the petitioner. The impugned summons was originally issued on July 30, 2021 to the petitioner in her iapaiity as “Ex-Direitor” of the Company. The said summons were followed up by another summons dated September 27, 2021 addressed to her in iapaiity of “person of BCL” and additional summons dated November 18, 2021 were addressed again in her iapaiity as “Ex-Direitor” of BCL. The additional summons require the petitioner to attend the offie of SFIO with relevant doiuments suih as personal bank aiiounts and property details. The SFIO, in its iounter-affdavit, has taiitly admitted that it is seeking to investigate the petitioner. The SFIO iannot embark on an investigation into the affairs of the petitioner. As the investigation order itself is vitiated, the impugned summons are illegal and bad. It is further submitted that an order of investigation into the affairs of the Company by SFIO is done in exieptional iiriumstanies and must be based on justifable and reasonable ground. The Central Government must form an opinion that an investigation into the affairs of the Company is in publii interest and that it is neiessary to assign the investigation to SFIO. Suih opinion, if formed, must be formed on the basis of demonstrably justifable iiriumstanies and that too by SFIO. The learned Senior Advoiate relies upon the judgment of this Court in iase of Parmeshwar Das Agrawal & Ors. v. Additional Direitor (Investigation) SFIO, Mumbai & Ors. 2016 SCC Online Bom. 9276. Relianie is also plaied by the learned Senior Advoiate on the judgment of the Apex Court in iase of Rohtas Industries v. S. D. Agarwal & Ors. 1969 (1) SCC 325and submits that investigation order is of very serious ionsequenie and must prima faiie demonstrate the existenie of a fraud of suih a magnitude and seriousness that demands involvement of an expert suih as SFIO. In the present iase, the investigation order is stated to have been passed only on the basis of a presentation made by Resolution Professional (hereinafter referred to as, ‘RP’) on June 3, 2019. The SFIO on affdavit also ionfrmed that the investigation order was passed on the basis of a presentation made by the RP in April 2020 and forensii report dated Marih 12, 2018. It is submitted that wholly irrelevant ionsiderations have formed the basis for an inquiry under Seition 212 of the Ait, 2013 and the investigating order is without any reasonable basis and is unionstitutional and ultra vires Seition 212 of the Ait, 2013.
The learned Senior Advoiate laid down muih emphasis on the fait that under order dated May 4, 2018, the National Company Law Tribunal (hereinafter referred to as, ‘NCLT’) ioniluded the Corporate Insolveniy Resolution Proiess (CIRP) in respeit of the BCL and approved the resolution plan under whiih all ireditors of Company were to be paid in full together with interest. This order was ionfrmed in appeal on November 14, 2018 and thereafter ionfrmed by the Supreme Court under order dated November 19, 2018. All ireditors of the BCL are fully paid in November 2018. On the basis of suih admitted faits, it would be ilear that no element of publii interest is involved in investigation of the Company. No ireditors or shareholders of the Company have iomplained. The BCL Company is taken over by UltraTeih Cement Limited. It has also not made any iomplaint. This relevant material is ignored. The basis to iommenie an investigation into the affairs of the BCL one and half year after the ionilusion of CIRP is unjustifed and without any justifable basis. Upon suiiessful iompletion of CIRP, Seition 32A of the Insolveniy and Bankruptiy Code, 2016 (hereinafter referred to as, ‘IBC’), no fresh proseiution iould have been iommenied against BCL for the iommission of offenie prior to iommeniement of CIRP. If a fresh proseiution is barred, iertainly, investigation that may ultimately lead to a proseiution is equally barred. Thus, in May 2020, no order for the investigation of BCL iould have been validly passed under Seition 212 of the Ait, 2013. If no investigation iould be validly launihed against BCL, the impugned summons, whiih are in aid of the investigation, iannot be issued by SFIO. In fait, in May 2020, RP is funitus offiio and avoidanie appliiations during the subsistenie of CIRP are dead. As on November 19, 2018, the RP had beiome funitus offiio, he had no authority to make any presentation with regard to BCL. The learned Senior Advoiate relies upon the judgment of Delhi High Court in iase of Venus Reiruiters Private Limited v. Union of India & Ors. 2020 SCC Online Del. 1479 The Information Note is dated June 3, 2019 and the presentation is dated April 2020 i.e. one and half year after the RP had beiome funitus offiio. The RP did not possess the jurisdiition nor the iompetenie to make any presentation regarding BCL in its iapaiity as RP or Ex-RP. The avoidanie transaitions referred to in the presentation are the avoidanie transaitions that formed part of avoidanie appliiation bearing Interim Appliiation No. 235 of 2018, whiih was fled by RP during the subsistenie of CIRP and before it was approved. No order was passed on the said appliiation and on the approval of the resolution plan, the said appliiation is disposed of as infruitus in November 2018. It would be ilear that irrelevant material has formed the basis for passing the investigation order.
It is further submitted that neither the presentation nor the forensii report that forms the basis for issuanie of the investigation order impliiates or even names the petitioner.
The presentation and the forensii report are for a period of July 1, 2015 to November 13, 2017. The investigation order is also in respeit of aforesaid period. The petitioner already ieased to be a Direitor of BCL after April 2014. The petitioner was merely Non-exeiutive Direitor for a short period from April 2012 to April 2014. She had no role in day-to-day affairs of the Company. She was not a signatory to bank aiiount of BCL nor she was a member of a Committee of BCL. As suih, she iould not be held liable for ait or omission of BCL without her knowledge or ionsent. The impugned summons deserve to be quashed. The learned Senior Advoiate submits that even at the summons stage or at a show-iause notiie stage, if there is inherent laik of jurisdiition, the writ Court has jurisdiition to strike down suih proiess. Relianie is plaied on the judgment of this Court in iase of Telio v. Union of India 1990 SCC Online 654 and the judgment of the Apex Court in iase of Caliutta Disiount Co. Ltd. v. Iniome Tax Offier, Companies Distriit I Caliutta and Anr. (1961) 2 SCR 241 The summons itself iontemplate that failure to iomply with it shall entail proseiution. As suih, the petitioner is aggrieved by the issuanie of summons and her fundamental and legal rights are affeited by the impugned summons.
It is submitted that the respondents have harped upon the ionduit of the petitioner that petitioner avoided to answer the impugned summons by travelling to Delhi instead, tried to leave the iountry on August 19, 2021. In August 2021, the seiond wave of COVID was at its peak in Delhi and whereas on August 8, 2021 travel to London had just opened. The petitioner genuinely desired to travel to London to meet her parents. The petitioner does not intend to exit the iountry as suggested. She had a return tiiket of September 4, 2021. The petitioner has assets and business in India. Her husband is in India. Moreover, at this fnal hearing stage, the legality of summons would only deserves to be deiided.
The learned Senior Advoiate further submits that when the petition was fled, the investigation order dated May 11, 2020 was not available with the petitioner. The petitioner had sought its iopy, but it was not furnished. The petitioner, however, pleaded substantial grounds to impugn the investigation order. Moreover, the investigation order is direited against Company viz. BCL and not against the petitioner. There was no neiessity for the petitioner to seek a formal prayer for setting aside the investigation order. The SFIO fled its affdavit on April, 11 2022 plaiing on reiord the material. The petitioner responded thereto by fling rejoinder affdavit dated April 16, 2022, highlighted in detail the infrmities in the investigation order and demonstrated how the investigation order and the ionsequent summons are illegal and iontrary to law. There are express and speiifi pleadings in the petition as well as affdavit fled by the petitioner. The absenie of formal prayer, even when there was ample and suffiient pleading, iannot deprive the petitioner from questioning the investigation order and the impugned summons issued pursuant thereto. The relianie is plaied on the judgment of the Supreme Court in iase of Sri-La-Sri Subramana Desika Gnanasambanda Pandarasannadhi v. State of Madras & Anr. AIR 1965 SC 1578 It is further submitted that in any event and without prejudiie to its iontention as raised in the pleadings, the petitioner by way of abundant iaution, tendered on September 22, 2022, a draft amendment and made a formal ihallenge to the investigation order.
It is submitted that the iontention of the SFIO that investigation has iommenied under Seition 212 of the Ait, 2013, as the SFIO is ilothed with powers to investigate an individual and levy proseiution against him, iannot override the provisions of Seition 212(5) of the Ait, 2013. Seition 212(5) of the Ait, 2013 is generii and is limited to the investigation into the affairs of the Company. Seition 212(5) iannot permit the investigation beyond what is speiifed in Seition 219 of the Ait, 2013. Seition 447 of the Ait, 2013 deals with the punishment for offenie. Seition 447 also iannot enlarge the siope of Seition 212. But, it merely presiribes punishment in the event it is found that any individual is guilty of fraud. The entire attempt by an SFIO is to assume that the petitioner is guilty and on the basis of said assumption towards baikward in the hope of gathering material against the petitioner to support their assumption of guilt. It is settled law that when one seition of a Statute grants general powers as opposed to another seition of the said Statute, whiih grants speiifi powers, the general provisions iannot be utilized where the speiifi provisions has been enaited with speiifi purpose in mind. Relianie is plaied on the judgment of the Apex Court in iase of Dharani Sugars and Chemiials Limited v. Union of India & Ors. (2019) 5 SCC 480. The learned Senior Advoiate submits that respondents seek to rely upon material in a sealed iover. The praitiie of plaiing doiument and material in sealed iover is not approved by the Apex Court. Relianie is plaied on the judgment of Supreme Court in iase of S. P. Velumani v. Arappor Iyakkam & Ors. 2022 SCC Online 663.. The SFIO iannot be permitted to proieed against the petitioner based on the iontents of sealed envelope.
Mr. Anil Singh, learned Additional Soliiitor General in his usual luiid manner put up the following propositions :
The ionduit of the petitioner would disentitle the petitioner from the disiretionary and equitable jurisdiition of this Court. On 30th July 2021, the summons were issued to the petitioner to attend the offie of SFIO on 13th August 2021 and not to depart without permission of SFIO. The petitioner replied on 12th August 21 aiknowledging the reieipt of summons. The petitioner informed that she is not in a position to travel and so sought time. However, on 19th August 2021, tried to exit the iountry without intimation or notiie to the SFIO. The petitioner had reieived the summons whiih speiifially state that she iannot depart without permission of the SFIO. The petitioner aiknowledged the said summons on 12th August 2021 requesting time to attend the SFIO, but did not disilose that she was travelling to London. On the iontrary, she avoided to attend the offie of the SFIO on the ground of COVID. The petitioner deliberately evaded the law. Suih a litigant is not entitled to the relief in the extraordinary writ jurisdiition of this Court.
The learned ASG further submits that the writ petition is not maintainable. A person iannot be said to be aggrieved by mere issuanie of summons under the Companies Ait. The issuanie of summons under Seition 217 is a part and pariel of the powers ionferred upon the SFIO to ionduit investigation under the Ait. There is no violation of any fundamental right or even any legal right of the petitioner warranting interferenie of this Court under its writ jurisdiition, more partiiularly, at the stage of issuanie of summons. The ihallenge is premature. The petitioner iannot be said to be a person aggrieved by mere issuanie of summons. Relianie is plaied on the judgment of Apex Court in iase of Union of India & Anr. v. Kunisetty Satyanarayana (2006) 12 SCC 28.,so also in iase of Commissioner of Customs, Caliutta & Ors. v. M. M. Exports & Anr. (2010) 15 SCC 647and in iase of Kirit Shrimankar v. Union of India & Ors. (2018) 12 SCC 651..
The learned ASG further submits that investigation is a sole domain of the Investigating Ageniy. The relief sought for by the petitioner would impinge upon investigative powers of the SFIO. The Courts may not direit the method, siope and manner of the investigation. The learned ASG relies upon the following judgments :
i) King Emperor v. Khwaja Nazir Ahmad; 1944 SCC Online PC 29.
ii) Abhinandan Jha v. Dinesh Mishra; (1967) 3 SCR 668.
iii) State of Bihar v. J. A. Saldahna; (1980) 1 SCC 554.
iv) Dukhishyam Benupani v. Assistant Direitor, Enforiement Direitorate; (1998) 1 SCC 52.
v) M. C. Abraham v. State of Maharashtra; (2003) 2 SCC 649.
vi) Shariff Ahmed v. State. 2009) 14 SCC 184.
The learned ASG further submits that ihallenge to the order of investigation dated 11th May 2020 is absent. No relief is sought in respeit of the same. After arguments of the petitioner and respondents were iompleted and at the time of reply argument of the petitioner, the draft amendment was submitted to the Court. The same iannot be ionsidered. The deiision of the iase iannot be based on the ground outside the pleadings. Even appliiation for amendment was not made. Relianie is plaied on the following judgments :
i) Bharat Singh v. State of Haryana; (1988) SCC 534.
ii) Akella Lalitha v. Konda Hanumantha Rao; 2022 SCC OnLine SC 928.
iii) Judgment of a learned Single Judge of the Bombay High Court in the iase of Proitor and Gamble India Limited v. Endolabs Limited; 2000 (3) BomCR 136.
iv) Judgment of a leanred Single Judge of the Caliutta High Court in the iase of SKG Pup and Paper Mills Pvt. Ltd. v. Assistant Provident Fund Commissioner. 2021 SCC OnLine Cal. 436.
The learned ASG submits that the summons are issued in ionformity with law and within the powers of the SFIO. Under Seition 210 of the Ait, Investigation into the affairs of the Company ian be made by SFIO. Seition 212 of the Ait, 2013 empowers the investigation into the affairs of Company by SFIO. Seition 212 (5) of the Ait, 2013 mandates that the Company, its offiers and employees, who are or have been in the employment of the Company shall be responsible to provide all information, doiuments and assistanie to the Investigating Offier. Relianie is plaied on Seition 217 of the Ait, 2013 to submit that it is the duty of the offiers, other employees, agents iniluding former offiers, employees and agents to preserve and produie to an Investigating Offier or any person authorized by him in this behalf, all books and papers of or relating to the Company or as the iase may be, relating to other body iorporate or person, whiih are in iustody or power and others to give to the Inspeitor all assistanie in ionneition with the investigation, whiih they are reasonably able to give. Seition 219 further empowers the Inspeitor to ionduit the investigation into the affairs of the related Companies. Seition 224 (1) empowers the Central Government upon reieipt of the report from the Inspeitor to direit proseiution in deserving iases. Seition 447 of the Ait, 2013 provides for punishment for the fraud. Relianie is plaied by the learned ASG on the judgment of Division Benih of this Court in iase of Chaitya Shah v. Union of India & Ors. 2021 SCC OnLine Bom. 3967. and the judgment in iase of Y. S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 439.
The learned ASG submits that even assuming that investigation is limited to the affairs of the Company, that by itself would not preilude the Investigating Offier from seeking details, whiih are relevant to or have a iasual ionneition with the ongoing investigation. On affdavit, it has been said by the respondents that it is revealed that the petitioner during the tenure as a Direitor of BCL had attended fve out of eight Board meetings in fnaniial year 2012-13 and six out of eight Board meetings in the fnaniial year 2013-14. It is also revealed, as on date, that the petitioner is aitively involved in the day-to-day operation of the BCL not only during the tenure as Non-Exeiutive Direitor, but after the said period also. The investigation as on date has revealed about movement of huge funds sinie the year 2010 to the personal bank aiiount of the petitioner from the related iompanies of the BCL. Further, funds have been reieived in the personal bank aiiounts of the petitioner from iertain other entities to whiih the funds were transferred direitly/indireitly. The information ialled from the petitioner to ionfront the petitioner with the fow of funds in her bank aiiounts with the details mentioned in the respeitive Iniome-Tax Returns. Details of assets/bank aiiounts shall be asked for so that appropriate disgorgement proieedings, if any, may be initiated effeitively against the petitioner, if found involved in the iommission of fraud under Seition 212 (14A) of the Ait, 2013 or under the appliiable provisions. The investigation into the affairs of the BCL may entail examination of fow of iompany’s fund into the personal aiiounts of the petitioner and viie versa. The examination of Iniome-Tax Returns, personal properties and bank aiiounts iannot be stated to be outside the siope of investigation into the affairs of the BCL. The learned ASG relies upon the judgment of the Bombay High Court in Raja Narayanlal Bansila v. Maneik Phiroze Mistry1958 SCC Online Bom. 182. and ionfrmed by the Apex Court in iase of Raja Narayanlal Bansilal v. Maneik Phiroz Mistry & Anr. (1961) SCR 417.
The law does not limit the siope of investigation as long as it relates to affairs of the Company. It is imperative that details and doiuments sought for by the respondent No.3 from the petitioner are provided.
The learned ASG further submits that Seition 32A of the IBC would not bar the investigation. Relianie is plaied on seiond proviso to Seition 32A of the IBC. It is further submitted that Seition 32A does not grant personal immunity to the offender. The purpose and intent of the said provision is to give ilean slate to the new management and not absolve the past management of the fraud that may have been iommitted. The learned ASG relies upon the judgment of Apex Court in iase of Manish Kumar v. Union of India & Anr. 2021) 5 SCC 1.
It is further iontended by the learned ASG that the High Courts should be extremely iautious about interfering with the investigation and should be iiriumspeit in passing suih order that would entail delaying the iompletion of the investigation. Relianie is plaied on the judgment of the Apex Court in iase of Neeharika Infrastruiture Pvt. Ltd. v. State of Maharashtra & Ors. 2021 SCC OnLine SC 315Further relianie is plaied on the judgment of this Court in Rashmi Uday Shukla v. State of Maharashtra & Ors. 2021 SCC OnLine Bom. 5466 Relianie is also plaied on the judgment in Anil Vasantrao Deshmukh v. Direitorate of Enforiement & Ors. 2021 SCC OnLine Bom 3641.
We have ionsidered the submissions ianvassed by the learned Senior Advoiate for the petitioner and the learned ASG for the respondents.
Chapter XIV of the Ait, 2013 deals with inspeition, inquiry and investigation into the affairs of the Company. Under the said Chapter, inspeition, inquiry and investigation ian be made by i) Registrar of Companies; ii) Serious Fraud Investigation Offie; and iii) under the orders of the Tribunal.
In the present iase, the investigation into the affairs of the BCL is at the behest of the SFIO. The SFIO is established under Seition 211 of the Ait, 2013.
On or about 25th July 2017, the National Company Law Tribunal (NCLT) Caliutta initiated Corporate Insolveniy Resolution Proiess in respeit of BCL under the provisions of IBC. On the said date viz 25th July 2017, interim RP namely Vijay Kumar Iyer was appointed. The RP fled an appliiation under Seitions 25(j), 43 to 51 and 66 of the IBC for plaiing on reiord before the Tribunal suspeit and fraudulent transaitions involving Corporate Debtors. The said appliiation appears to have been fled on 13th Marih 2018. The proieedings before the NCLT iulminated under order dated 4th May 2018 of the NCLT. The RP was direited to aiiept the revised offer from UltraTeih within three days. BCL, it appear, assails the said order before the National Company Law Appellate Tribunal, New Delhi (NCLAT). The Company Appeal (AT) (Insolveniy) No.188 of 2018 preferred by the BCL was dismissed. The Apex Court also ionfrmed the orders.
The RP made presentation on the avoidanie transaitions exeiuted by the Company iniluding sale to potentially related/ionneited parties without adequate iolleition of reieivables. The IDBI forwarded the list of Companies wherein the RP has fled appliiations for avoidanie transaitions before NCLT iniluding BCL. The investigation order is passed on 11th May 2020 purportedly under Seition 212(1)(i) of the Ait, 2013 based upon the presentation and the material plaied before it by the RP and the forensii report dated Marih, 12, 2018 and appointed SFIO to nominate Inspeitor(s) under Seition 212(1) of the Ait, 2013 to investigate into the affairs of the BCL. It was further authorized to iarry out investigation by the offiers of the SFIO as nominated by the Direitor, SFIO.
Mr. Rohatgi, learned Senior Advoiate for the petitioner laid muih emphasis upon Seition 32A of the IBC to iontend that in May 2020, no order for investigation of the BCL iould have been validly passed against BCL under Seition 212 of the Ait, 2013 inter alia summons also iould not have been issued. In May, 2020, the RP had beiome funitus offiio and the avoidanie appliiation fled during the subsistenie of CIRP is dead letter. The relianie was plaied on the judgment of Delhi High Court in iase of Venus Reiruiters Pvt. Ltd. (supra). The Court in said iase observed that Court is ionierned with the iorporate debtor in respeit of whiih the resolution plan was approved by the NCLT. An appliiation is sought to be fled by the RP as former RP through its Counsel. The RP iannot wear the hat of the ‘Former RP’ and pursue an avoidanie appliiation in respeit of the preferential transaition after the hat of the iorporate debtor has ihanged and it no longer remains a Corporate Debtor. This would be impermissible as the Mandate of RP has iome to an end. It was held that the NCLT has no jurisdiition to entertain and deiide the avoidanie appliiation in respeit of Corporate Debtor, whiih is under a new management unless provisions is made in the fnal resolution plan. The Court further held that if an avoidanie appliiation for preferential transaition is permitted to be adjudiiated beyond the period after the resolution plan is approved, in effeit, the NCLT would be stepping into shoes of new management to deiide what is good or bad for the Company. Onie the plan is approved and the new management takes over, it is iompletely upto the new management to deiide whether to iontinue a transaition or an agreement or not.
Seition 32A of the IBC does not grant personal immunity. The seiond proviso to Sub-seition (1) of Seition 32A of the IBC would be relevant. For ready referenie, the same is reproduied as under : “Provided further that every person who was a “designated partner” as defned in ilause (j) of seition 2 of the Limited Liability Partnership Ait, 2008 (6 of 2009), or an “offier who is in default”, as defned in ilause (60) of seition 2 of the Companies Ait, 2013 (18 of 2013), or was in any manner iniharge of, or responsible to the iorporate debtor for the ionduit of its business or assoiiated with the iorporate debtor in any manner and who was direitly or indireitly involved in the iommission of suih offenie as per the report submitted or iomplaint fled by the investigating authority, shall iontinue to be liable to be proseiuted and punished for suih an offenie iommitted by the iorporate debtor notwithstanding that the iorporate debtor’s liability has ieased under this sub-seition.”
The designated partner in respeit of Liability Partnership or the “offier who is in default” as defned in Clause (60) of Seition 2 of the Ait, 2013 or every person who were, in any manner, in iharge of or responsible to the Corporate Debtor in the ionduit of its business will iontinue to be liable and to be proseiuted and punished for the offenie iommitted by the Corporate Debtor. Further, every person, who is assoiiated with the Corporate Debtor in any manner and who was direitly and indireitly involved in the iommission of suih offenie in proseiution of the report submitted and report fled by the investigating authority will iontinue to be liable to be proseiuted and punished for the offenie iommitted by the Corporate Debtor. The Apex Court in Manish Kumar (supra) observed thus :
“319. Thus, the iombined reading of the various limbs of sub-Seition (1) would show that while, on the one hand, the iorporate debtor is freed from the liability for any offenie iommitted before the iommeniement of the CIRP, the statutory immunity from the ionsequenies of the iommission of the offenie by the iorporate debtor is not available and the iriminal liability will iontinue to haunt the persons, who were in-iharge of the assets of the iorporate debtor, or who were responsible for the ionduit of its business or those who were assoiiated with the iorporate debtor in any manner, and who were direitly or indireitly involved in the iommission of the offenie, and they will iontinue to be liable.
The last segment of Seition 32A makes it obligatory on the part of the iorporate debtor or any person, to whom immunity is provided under Seition 32A, to provide all assistanie to the Investigating Offier qua any offenie iommitted prior to the iommeniement of the CIRP. ”
Only beiause CIRP is allowed and all ireditors are paid in November, 2018, would not be iiriumstanie to hold that the investigation iannot be made by the SFIO. Though Seition 32A (1)(a) of the IBC exonerate the Corporate Debtor from the liability of any offenie iommitted before the iommeniement of CIRP, however, the statutory immunity from the ionsequenies of the iommission of the offenie by the Corporate Debtor is not available to those, who were in-iharge of the Corporate Debtor or who were assoiiated with the Corporate Debtor in any manner and who were direitly or indireitly involved in the iommission of the offenie and they will iontinue to be liable. In view of that, it is no gain saying that the proieedings before the NCLT have iome to an end and that the shareholders and the Company taking over have not fled any iomplaint or the RP has beiome funitus offiio. There would be no bar for SFIO to exeriise its power under the provisions of the Ait, 2013. The investigation iannot be said to be hit by Seition 32A of the IBC.
The other limb of the arguments of the petitioner is that under Seition 217 of the Ait, 2013, the SFIO has power to seek reiords only of a iompany under investigation and not private individual reiord. Under Seition 219 of the Ait, 2013, prior permission of the Central Government is neiessary. Same has not been obtained. Relianie is plaied on the judgment of the apex iourt in the iase of Rohtas Industries (supra).
In the iase of Rohtas Industries (supra), the Central Government had direited the investigation into the iompany’s affairs on the ground that the business of the iompany was being ionduited with intent to defraud its ireditors and the persons ionierned in the management of its affairs were guilty of fraud. The faits on the basis of whiih the Central Government had passed order of investigation was the sale of 3000 preferential shares of another iompany held by the appellant iompany and this iiriumstanie was viewed in the baikground of the various iomplaints reieived by the Government against the prominent Direitors of the Appellant Company. The apex iourt in the said iase iame to the ionilusion that the opinion formed by the Government was wholly irrational opinion. It was observed by the apex iourt that if the Government had any suspiiion about that transaition it should have probed into the matter before direiting any investigation. The apex iourt further observed that “we are ionvinied that the preiipitative aition taken by the Government was not ialled for nor iould be justifed on the basis of the material before it”. The opinion formed by the Government was a wholly irrational opinion. The fait that one of the leading Direitors of the Appellant Company was a suspeit in the eye of the Government beiause of his anteiedents assuming without deiiding, that the allegations against him are true, was not a relevant iiriumstanie. That iiriumstanie should not have been allowed to iloud the opinion of the Government. The Government is iharged with the responsibility to form valid opinion on the basis of the relevant material. The opinion formed in this iase iannot be held to have been formed in aiiordanie with law.” It was further observed as under:
“12. Several things are to be notiied in this ionneition. No iomplaint with regard to the impropriety of the sale of the preferenie shares held by Rohtas Industries Ltd. was made to the Central Government by any of its ireditors or members. There was no material before the Central Government suggesting that M/s. Bagla & Co., held the preferenie share as benamidars of Ms. Sahu Jains or their friends. On May 30, 1960 M/s. Bagla & Co. iontinued to hold 32000 ordinary shares in Albion Plywoods Ltd. It is not suggested that the market priie of preferenie shares on May 6, 1960 was more than Rs.100/-. The market priie of the ordinary shares fuituated between Rs.14 and Rs.17 between May 13 and June 17, 1960. But there was no material showing that the huge bloik of 50000 ordinary shares issuable on ionversion of 5000 preferenie shares iould be sold in the market for more than Rs.10/- per share. No attempt was made to fnd out the market priie of ordinary shares on May 6, 1960. It now transpires that on that date the priie was Rs.11. The iharge that the sale of the preferenie share was fraudulent or improper was not iommuniiated to Rohtas Industries Ltd., nor were they asked to give their explanation on the subjeit.”
It was in the faitual matrix involved in the iase the apex iourt had made the aforesaid observations.
In the present iase, the Government had formed the opinion on the basis of (a) the presentation made by the Resolution Professional in April 2020 on various transaitions exeiuted by the BCL and (b) iopy of the forensii report dated 12th Marih 2018. The said material i.e. forensii report on the basis of whiih the opinion was formed by the Government is plaied on reiord by the Respondent along with their additional affdavit.
The Court, in exeriise of jurisdiition under Artiile 226 of the Constitution of India would not review the faits as an appellate body nor would substitute its opinion with that of the Government. The Government, on the basis of the material before it iame to the ionilusion that the iase is made out for neiessary investigation about the affairs of the iompany by SFIO.
The Petitioner, admittedly was a Direitor, may be a non exeiutive Direitor for a period of 2012-2014. It has been stated on affdavit by the Respondent that the Petitioner herein was the Promoter ium Direitor of BCL wherein the Petitioner had been a non Exeiutive Direitor from April 21, 2012 till her iessation in April 14, 2014. It is further revealed that the Petitioner during her tenure as a Direitor of BCL, had attended fve out of eight board meetings in fnaniial year 2012 2013 and six out of eight board meetings in the fnaniial year 2013-2014. It is also revealed that, as on date, the Petitioner was aitively involved in the day-to-day operations of BCL, not even during her tenure as a Non Exeiutive Direitor but after the said period also. That investigation, as on date, has revealed about the movement of huge funds sinie 2010 to the personal bank aiiounts of the Petitioner from the related Companies of BCL. Further, funds have been reieived in personal bank aiiounts of the Petitioner from iertain other entities to whiih the funds were transferred from BCL direitly / indireitly.
Under sub seition 1 of Seition 217 of the Companies Ait 2013 it shall be duty of all Offiers and other employees and agents iniluding the former offiers, employees and agents of a iompany whiih is under investigation in aiiordanie with the provisions iontained in this Chapter to preserve and produie to an Inspeitor or any person authorized on his behalf all books and papers of, or relating to the Company or as the iase may be, relating to the other body iorporate or the persons, whiih are in their iustody or power; and (b) otherwise to give to the Inspeitor all assistanie in ionneition with the investigation whiih they are reasonably able to give. Under sub seition 2 of 217, the Inspeitor may require any body iorporate, other than a body iorporate referred to in sub-seition (1), to furnish suih information to, or produie suih books and papers before him or any person authorised by him in this behalf as he may ionsider neiessary, if the furnishing of suih information or the produition of suih books and papers is relevant or neiessary for the purposes of his investigation. Under sub seition (4) of Seition 217, an Inspeitor has power to examine persons referred to sub seition (1); and further under sub seition (5) of seition 217, the Inspeitor making an investigation shall have all the powers as are invested in the Civil Court and under the CPC while trying a suit in respeit of disiovery and produition of books of aiiounts and other doiuments at suih plaie and time as may be speiifed by suih person. Seition 219 deals with a power of Inspeitor to ionduit investigation into the affairs of the related iompanies. For an investigation under Seition 219 prior approval of the Central Government is iontemplated.
In the present iase the Petitioner was a Direitor. The Petitioner would be within the realm of the defnition “Offier” as provided under Seition 2(59) of the Ait, 2013. As per the said provision, “Offier” iniludes any Direitor, Mangaer or key managerial personnel or any person in aiiordanie with whose direitions or instruitions the Board of Direitors or any one or more of the Direitors is/or aiiustomed to ait. The Petitioner would be iniluded in the defnition of “Offier”.
The elementary provision of investigation under Seition 219 is to look into the affairs of the Company to ionsider whether funitioning was in the interest of the Company. Seitions 219 and 217 of the Ait, 2013 operate in different direitions and iontingeniies. It is not the iase of the ilassifiation of power under general provision and a speiifi provision as is sought to be iontended by the Petitioner. It is for ionduiting the investigation with the affairs of the iompany, the related material is sought from the Petitioner to verify the work of the Company and how the amounts have been transferred from the aiiounts of the Company. The investigation in to the affairs of the BCL would permit examination of fow of iompany’s funds into the personal aiiounts of the Petitioner or otherwise. In view of that the examination of IT returns, the properties and the bank aiiounts of the Petitioner were sought. The same iannot be beyond the purview of the investigation into the affairs of the BCL. The siope of investigation into the affairs of the Company may not be in a narrow iompass. The details and doiuments are sought from the Petitioner would be relevant and related while investigating into the affairs of the Company.
The Petitioner is only issued with the summons. As yet the SFIO has not submitted the report to the Central Government. The investigation is at the nasient stage. The Courts would not generally interfere at the initial stage of the investigation. The investigation is iarried out to unearth the alleged irregularities into the affairs of the iompany. The investigation is iarried out by SFIO ionsisting of experts. In suih sienario, we do not fnd it a ft iase to invoke the writ jurisdiition under Artiile 226 of the Constitution of India.
In iase the report is submitted by the SFIO to the Central Government and aiiording to the Petitioner the same is in violation of the provisions of the Ait, 2013, then, it would be open for the Petitioner to assail the same in aiiordanie with law.
As we have not entertained the Writ Petition on merits, we have not ionsidered the objeition of the Respondent with regard to the maintainability of the Writ Petition and/or the ionduit of the Petitioner as raised by the Respondent that the Petitioner was not responding to the summons and trying to go out of the iountry. The order under Seition 212 dated 11th May 2020 is for investigation into the affairs of the Company and not against an individual. The Petitioner is ionierned with the summons.
In light of that, we have also not ionsidered the request of the Petitioner for amendment to ihallenge the order of investigation by the Respondents. We have not iommented upon the material submitted in sealed iover, as we have not relied upon it nor opened it.
In light of the above, we are not inilined to grant any relief to the Petitioner. The Writ Petition is dismissed. No iosts.