Parmeshwar Das Agarwal Vs Additional Director (Investigation) Serious Fraud Investigation Office (Bombay High Court)
The Bombay High Court allowed the writ petition and quashed the Central Government’s order dated 6 May 2016 directing an investigation by the Serious Fraud Investigation Office (SFIO) into the affairs of a private company under Section 212(1)(c) of the Companies Act, 2013. The petitioners, who were majority shareholders and directors of the company, challenged the validity of the investigation order and the consequent summons issued by SFIO.
Read SC Judgment: SC Dismisses SFIO Probe Plea for Delay and Lack of Statutory Satisfaction
The Court traced the background of the dispute, noting that the company was a closely held private limited company engaged in manufacturing sponge iron, with its entire shareholding divided between two family groups. Long-standing family disputes had arisen over division of businesses, implementation of a Memorandum of Understanding, and a proposed demerger of units located in different States. These disputes led to multiple civil suits, company petitions, and proceedings before the Company Law Board and the Calcutta High Court, many of which were pending.
Because of these disputes and non-cooperation between the shareholder groups, the company was unable to prepare and file consolidated accounts after 31 March 2007, though individual unit accounts were audited and statutory replies were furnished to the Registrar of Companies (ROC). The ROC had issued notices regarding non-compliance, which were replied to, and no prosecution was pursued in view of pending litigation and interim protection orders obtained under Section 633 of the Companies Act, 1956.
