LI Network
Published on: February 19, 2024 at 09:10 IST
The Karnataka High Court recently affirmed that the initiation of an investigation by government-appointed inspectors under Section 210 of the Companies Act, 2013 does not preclude the government from later assigning the probe to the Serious Fraud Investigation Office (SFIO).
The Court’s decision came in response to a petition challenging the SFIO investigation against Exalogic Solutions Private Limited, a one-person company owned by Veena Thaikkandiyil, the daughter of Kerala Chief Minister Pinarayi Vijayan.
Justice M Nagaprasanna, presiding over the case, dismissed the petition and rejected Exalogic’s argument that the concurrent initiation of an SFIO probe under Section 212 and an ongoing Section 210 investigation would lead to parallel proceedings.
The Court, after analyzing Chapter XIV of the Companies Act (Sections 206-212), emphasized that once the SFIO takes over an investigation, any previous inquiry is halted, and all related documents are transferred to the SFIO.
Addressing Exalogic’s contention that an SFIO probe under Section 212 requires a “report under Section 210” to be prepared first, the Court held that an “interim report” suffices for initiating the SFIO probe.
The Court clarified that Section 210 does not mandate a final report and emphasized that if inspectors uncover information during the Section 210 investigation that warrants a multi-disciplinary inquiry, the SFIO can be assigned the case.
Moreover, the Court acknowledged the Central government’s argument that a multi-disciplinary body like the SFIO is crucial for examining the allegations against Exalogic, especially in complex economic offenses.
Justice Nagaprasanna concluded that there were no grounds to interfere with the SFIO probe against Exalogic, stating that the decision to entrust the investigation to the SFIO was in line with public interest and not contrary to the law.