The Supreme Court on Thursday set aside a Delhi High Court order to put a stay on an investigation into financial irregularities in nine companies related to the Sahara Group, reported Bar and Bench.
The Delhi High Court had passed the stay order in December, saying that the reasons to order the investigation were not satisfactory, reported Live Law. It had said that the investigation agency did not complete the inquiry within the stipulated time period of three months.
The inquiry is being conducted by Serious Fraud Investigation Office, a central agency that looks into cases of corporate fraud.
The High Court had also said that the decision to launch the inquiry prima facie appeared to be contrary to the provisions of the Companies Act as six of the firms which were added to the investigation later were not holding companies or subsidiary companies or being managed by the other three that were first brought under the scanner.
At Thursday’s hearing, Solicitor General Tushar Mehta told the Supreme Court that that the inquiry could not be completed in three months and instead took three years as the amount under investigation was Rs 1 lakh crore and many companies were involved in the alleged fraud.
“There is no such mandate under the [Companies] Act that if probe is not completed within three months, the probe itself will come to an end,” Mehta said.
On the investigation into six companies, he said that the High Court had ignored Section 219(c) of the Companies Act.
The section states that an investigation officer can conduct inquiries into any other firm whose Board of Directors are nominees of the companies already under investigation.
Senior Advocate Kapil Sibal, representing the Sahara Group, submitted that the Companies Act, 2013 should not be applicable in this case as the transactions under investigation took place in 2011.
The Supreme Court, however, said it was inappropriate to stay the investigation at the interim stage.
“High Court has completely scuttled an investigation which is extraordinary,” it said. “It is an extraordinary order. It needs to be stayed.”