SC sets aside HC stay on SFIO probe against Sahara
NEW DELHI: The Supreme Court on Thursday set aside a Delhi high court order that stayed the Serious Fraud Investigation Office (SFIO) probe into nine companies of the Sahara Group, noting that stopping the probe was “not justified”.
Allowing appeals filed by the SFIO against the December 2021 order by the high court, a bench of justices Dhananjaya Y Chandrachud and Bela M Trivedi held that it was inappropriate on the part of the high court to place the burden on the corporate fraud investigating agency to present certain evidence even before the probe was over.
“It will be inappropriate at this stage to place the burden of reason on the SFIO till the complete probe is over. The high court was not justified in staying the investigation and passing consequent orders at an interlocutory stage. Therefore, we set aside the high court order,” said the court in its order.
The bench also found fault with the reasoning of the high court in recording that the probe ought to be stayed since the SFIO failed in completing its investigation within the stipulated time. “The first ground of the impugned order is contrary to this court’s judgment in SFIO Vs Rahul Modi (2022) in which the court has held that the time period mentioned under the Companies Act is directory and not mandatory,” stated the SC order. The court further clarified that its order is confined to the merits of the stay order by the high court and that it would have no bearing on a writ petition filed separately by the Sahara Group challenging the legality of the SFIO probe for transactions conducted prior to the enforcement of the 2013 Companies Act.
Appearing for the SFIO, solicitor general Tushar Mehta succeeded in persuading the bench that the high court order was not warranted in the facts of the case, and also that it was contrary to the Supreme Court rulings pertaining to investigation into corporate fraud cases.
The Sahara Group was represented in court through senior counsel Kapil Sibal.
The Supreme Court order may revive the SFIO probe against the Sahara Group companies as well as initiation of certain coercive processes against its promoters, directors and other officials.
According to the SFIO, the Registrar of Companies (ROC) received a large number of complaints in the last three years from investors about non-payment of their investment proceeds even after maturity.
ROC, Mumbai, inquired into the complaints and in a report dated August 14, 2018, recommended to the Union government to initiate a probe into affairs of Sahara Q Shop Unique Products Range Ltd, Sahara Q Gold Mart Ltd and Sahara Housing Investment Corporation.
On October 31, 2018, the Ministry of corporate affairs assigned the probe to SFIO, which during the investigations revealed that Sahara Group companies raised more than ₹50,000 crore from investors but did not pay them back.
The SFIO’S appeals were filed against the December 13, 2021 order of the Delhi high court staying all subsequent actions and proceedings, including coercive measures and lookout notices, against the Sahara Group chief Subrata Roy and others.
The high court also stayed the operation and implementation of the Union government’s two orders in 2018 and 2020 respectively, directing the SFIO to investigate into nine companies related to the Sahara Group.