Exalogic Solutions Private Limited vs The Director, Serious Fraud … on 16 February, 2024

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Karnataka High Court

Exalogic Solutions Private Limited vs The Director, Serious Fraud … on 16 February, 2024

Author: M. Nagaprasanna

Bench: M. Nagaprasanna

                           1



Reserved on   : 12.02.2024
Pronounced on : 16.02.2024
                                                      R
       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

         DATED THIS THE 16TH DAY OF FEBRUARY, 2024

                          BEFORE

         THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

          WRIT PETITION No.4268 OF 2024 (GM - RES)

BETWEEN:

EXALOGIC SOLUTIONS PRIVATE LIMITED
A COMPANY REGISTERED UNDER
THE COMPANIES ACT, 2013,
HAVING ITS REGISTERED OFFICE AT
NO.343, 9TH MAIN ROAD,
HSR LAYOUT, SECTOR-7,
BENGALURU - 560 102
REPRESENTED BY ITS DIRECTOR,
MS. VEENA T.,
AGED ABOUT 41 YEARS.
                                              ... PETITIONER

(BY SRI ARVIND DATAR, SR.ADVOCATE A/W
    SRI MANU PRABHAKAR KULKARNI,
    SRI MRINALSHANKAR, SRI DHARMENDRA CHATUR AND
    SMT.ISHA PRAKASH, ADVOCATES)

AND:

1.   THE DIRECTOR,
     SERIOUS FRAUD INVESTIGATION OFFICE
     2ND FLOOR, PANDIT DEENDAYAL
      ANTYODAYA BHAVAN,
                               2




     CGO COMPLEX, LODIROAD,
     NEW DELHI - 110 003.

2.   UNION OF INDIA
     MINISTRY OF CORPORATE AFFAIRS,
     KOTA HOUSE ANNEXE,
     1, SHAHJAHAN ROAD,
     NEW DELHI - 110 001
     REPRESENTED BY
     THE DIRECTOR GENERAL OF
     CORPORATE AFFAIRS.
                                                 ... RESPONDENTS

(BY SRI K.ARVIND KAMATH, ADDL.SOLICITOR GENERAL A/W
    SRI H.SHANTHI BHUSHAN, DSGI)


     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO A) CALL FOR
ALL RECORDS IN RELATION ORDER DATED 31/01/2024 BEARING
NO. SFIO/INV/AOI/2023-24 PASSED BY THE R1 (AT ANNEXURE-A);
b) QUASH THE ORDER DATED 31/01/2024 BEARING NO.
SFIO/INV/AOI/2023-24 PASSED BY THE R1 (AT ANNEXURE-A) AS
BEING ARBITRARY, ILLEGAL AND BAD IN LAW.



     THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 12.02.2024, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-


                             ORDER

The petitioner is before this Court seeking a direction to call

for records and quash order dated 31-01-2024 passed by the 1st
3

respondent/Director, Serious Fraud Investigation Office (‘SFIO’ for

short).

2. Shorn of unnecessary details, facts in brief, as borne out

from the pleadings, are as follows:

The petitioner claims to be a one person company

incorporated in the year 2014, under the provisions of the

Companies Act, 2013 (‘the Act’ for short) with the Registrar of

Companies, Bangalore (hereinafter referred to as ‘the Registrar’

for short). The petitioner, is represented through its Director –

Share Holder. On 28-07-2020, the 2nd respondent/Ministry of

Corporate Affairs, Union of India addressed a communication to the

petitioner/Company observing that a complaint has been received

by it in respect of certain alleged incorrect address mentioned in

Form No.10 filed by the petitioner/Company with Registrar. The

communication never reached the petitioner. A show cause notice

also comes to be issued against the petitioner, invoking Section 12

of the Act for the alleged non-maintenance of the registered office

at the address mentioned in Form No.10 filed before the Registrar.

The petitioner appears to have given its reply contending that
4

owing to COVID-19 pandemic engulfing the nation, the Company

began to work from home and, therefore, the registered office of

the petitioner had been shifted. This results in another notice dated

19-08-2020 issued by the Registrar directing the petitioner to file

adjudication application under Section 454 of the Act for the alleged

non-maintenance of the office. The petitioner then submits an

adjudication application before the Registrar who initiates

adjudication proceedings against the petitioner for the alleged

violation under Section 12 of the Act, with regard to non-intimation

of change in address of the registered office as mandated under

Section 12(4) of the Act. An order was later passed on 09-02-2021

imposing a penalty of `1,00,000/- each on the petitioner and the

Director for the alleged violation of Section 12 of the Act. The

petitioner prefers an appeal against the said order, which results in

reduction of the amount of penalty to `20,000/-. The issue in the

subject lis does not concern the aforesaid proceedings initiated

under Section 12 of the Act.

3. On 29-01-2021 the Registrar addresses a communication

of enquiry under Section 206 of the Act to the petitioner in respect
5

of certain transactions between the petitioner and another company

in the name and style of ‘Cochin Minerals and Rutile Limited’

(‘CMRL’ for short). The petitioner was directed in the

communication to furnish various documents and details and annual

reports, audited bank statements for the years 2014-15 to 2019-20

of the transactions of the aforesaid Companies. The petitioner, in

response to the said communication, is said to have furnished all

the documents sought for, which results in another communication

being issued by the Registrar alleging that the copy of the trial

balance furnished by the petitioner was not proper and further

directed submission of several documents. It is said that the

petitioner has from time to time furnished all the documents that

were being sought by the Registrar through several

communications.

4. On 24-06-2022, the Registrar issues a notice directing the

petitioner to appear in person at the office of the Registrar. The

petitioner is said to have represented through various

representations along with all the documents and clarifications after

which the Registrar had again directed the petitioner to be
6

personally present on the next date of hearing. The next date was

on 14-07-2022 and the proceedings were on before the Registrar in

terms of the aforesaid communication which began under Section

206 of the Act. It is the averment in the petition that despite the

petitioner providing all the relevant documents and details, the

Registrar issues a show cause notice on 11-08-2023 alleging inter

alia that a related party transaction has appeared between the

petitioner and Kerala State Industrial Development Corporation

(‘KSIDC’ for short) which owns 13.4% share of the Company which

had transaction with the petitioner.

5. Then comes a communication/notice to the Director of the

petitioner/Company seeking details of several transactions were

sought in respect of certain agreements with CMRL, the notice also

indicated that failure of the petitioner to furnish all the details would

become open to prosecution under Sections 447 and 448 of the Act.

The petitioner is stated to have complied with all the necessities

that were demanded in the show cause notice contending that

KSIDC was a government Company functioning independently with
7

its Board of Directors and had nothing to do with the family

members of the Director of the petitioner/Company.

6. The further averment in the petition is that the petitioner

comes to know of a Writ Petition filed before the High Court of

Kerala seeking a direction to the Central Government to initiate

investigation into the affairs of the petitioner/Company, CMRL and

KSIDC. The said writ petition is said to be pending before the High

Court of Kerala, at Ernakulum. The petitioner then avers that it

comes to know from various media and newspapers that an order

under Section 210 of the Act is passed by the 2nd respondent

directing initiation of investigation into the affairs of the entities –

CMRL, KSIDC and the petitioner on the reports of the Registrar,

Bengaluru and Registrar at Ernakulum. It is the case of the

petitioner that no order to that effect is even served upon the

petitioner. The narration again is that, the petitioner comes to know

of the order dated 31-01-2024 passed by the 2nd respondent

assigning the investigation to the SFIO under Section 212 of the

Act. Pursuant to the impugned order, the petitioner receives a

notice on 02-02-2024 and 06-02-2024, from the SFIO which is
8

constituted to investigate into the affairs of the petitioner and two

other Companies. The notice directed the petitioner to provide

details of several documents that were sought in the said notice.

The petitioner, on the said date, replies seeking extension of time

upto 15-02-2024, and has filed the subject writ petition on 08-02-

2024.

7. Heard Sri Arvind Datar, learned senior counsel along with

learned counsels Sri Manu Prabhakar Kulkarni, Sri Mrinal Shankar,

Sri Dharmendra Chatur and Smt Isha Prakash appearing for the

petitioner and Sri K.Arvind Kamath, learned Additional Solicitor

General of India along with Sri H.Shanthi Bhushan, learned Deputy

Solicitor General of India appearing for the respondents.

SUBMISSIONS:

Petitioner:

8. The learned senior counsel representing the petitioner,

Sri Arvind Datar would contend that the proceedings, under Chapter

XIV of the Act which deal with inspection, inquiry and investigation

begin against the petitioner, after issuance of notice under sub-
9

Section (4) of Section 206 of the Act. The same results in an order

being passed under Section 210 which deals with investigation into

affairs of a Company. The documents are sought by the competent

officer under Section 210 and the petitioner has submitted, all the

necessary documents, the proceedings are yet to conclude. During

the pendency of the proceedings under Section 210, the learned

senior counsel would submit, the SFIO could not have been

assigned with the investigation, under Section 212 of the Act. He

would submit that only after a report is made under Section 210, it

can perhaps lead to commencement of proceedings under Section

212 of the Act, as the circumstances that would warrant

investigation by the SFIO are only four which are listed in clauses

(a), (b), (c) and (d) of sub-section (1) of Section 212. He would

submit that Section 210 also has the same conditions for initiation

of investigation except clause (d) that is found in Section 212.

Therefore, he would submit that in the name of public interest, the

2nd respondent cannot go on assigning investigation, to other

entities when there is already an investigation pending under

Section 210 of the Act. He would contend that it is gross misuse of

power conferred, on the Government of India under the Act.
10

8.1. The learned senior counsel would further submit that the

basis of invoking the power under Section 212 should be formation

of an opinion that it is necessary to have the investigation

concluded into the affairs of the Company, there is no such opinion

formed, in the case at hand, is the emphatic submission of the

learned senior counsel. The other submission is that the petitioner

is neither served with a copy of the order of the 2nd respondent

dated 12-01-2024 ordering investigation under Section 210 of the

Act, nor is made aware of the assignment of investigation to the

SFIO under Section 212 of the Act. Therefore, the order suffers

from violation of principles of natural justice, as well as, malice in

law. In effect, the following are the submissions of the learned

senior counsel:

(i) Once having commenced investigation under Section
210 of the Act, the investigation midway cannot be
changed/ordered to be assigned under Section 212
of the Act to SFIO;

(ii) Formation of opinion to invoke Section 212 is
imperative. No such opinion is formed or notified.
Therefore, the order suffers from non-application of
mind;

(iii) That no order either initiating investigation under
Section 210 of the Act or assigning investigation to
the SFIO under Section 212 of the Act is served upon
11

the petitioner. Therefore, it is in violation of the
principles of natural justice and resultantly, it is a
product of malice in law.

The Union of India/SFIO:

9. Per contra, Sri.K.Arvind Kamath, the learned Additional

Solicitor General of India would vehemently refute the submissions

to contend that the SFIO is a multidisciplinary body. The

investigation that began under Section 210 resulted in the

Inspector who had taken up investigation submitting an interim

report. The interim report necessitated assignment of investigation

to the SFIO. Since it is a multidisciplinary body, it can call for

information from any quarter which would ease completion of

investigation against the petitioner. It is his contention, by taking

this Court through the statement of objections that, it is not a case

where `1.70 crores is the subject matter of investigation as is

contended by the learned senior counsel for the petitioner but it is `

135/- crores transaction between CMRL and the Company of the

petitioner and others and those funds have been handed over to
12

the accounts of several political entities. It is, therefore, the

investigation for assimilation of information is assigned to the SFIO.

9.1. The Additional Solicitor General would contend, the

moment investigation under Section 212 of the Act commences, all

other investigations pending preceding to the said assignment

would cease to operate. Therefore, the submission that once

Section 210 is invoked, Section 212 cannot be invoked, cannot be

accepted. He would contend that no right of the petitioner is taken

away and no prejudice is caused to her, as it is only an

investigation conducted by different investigating entity within the

Act. At the stage of investigation, it is no law that the appointment

of Investigating Officer or assignment thereto should be made

known to the person against whom the investigation is sought to be

conducted or taken up. Natural justice, at this stage, would not be

applicable to the fact situation. He would, therefore submit that the

petition has to be dismissed on the ground that it projects no

ground for entertaining the petition.

13

10. The learned senior counsel for the petitioner would join

issue to contend that the SFIO was established in the wake of huge

scams like the Sahara India or the Jet Airways. It is not a scam in

the case at hand, but it is only alleged transactions of `1.70 crores,

at this point in time. He would submit that he would have no

objection for continuation of investigation under Section 210 of the

Act, but and seeks quashment of investigation entrusted to the

SFIO.

11. I have given my anxious consideration to the submissions

made by the learned senior counsel and the learned Additional

Solicitor General of India appearing for the respective parties and

have perused the material on record.

12. The afore-narrated facts are not in dispute. The genesis

of the problem is, as narrated hereinabove, but would require a

little elaboration, as the issue that merits consideration is on the

interpretation of the provisions of law.

14

THE PROTOGONISTS:

13. There are four protagonists in the lis. First is, the one

person Company, registered under the Companies Act, before the

Registrar of Companies, Karnataka. The petitioner/Company is

represented through its Director-Share Holder. The second

protagonist is one Cochin Minerals and Rutile Limited, having

registered office in Kerala, a dormant protagonist. The third is the

Union of India, Ministry of Corporate Affairs, in control of corporate

affairs of companies coming within its ambit. The fourth

protagonist is the Serious Fraud Investigation Office-SFIO, a

multidisciplinary body, under the Ministry of Corporate Affairs,

constituted under the Act for detecting and recommending

prosecution of crimes by the Companies. The aforesaid are the four

protagonists in the lis.

THE GENESIS:

14. The petitioner, as observed hereinabove, is a one person

Company. This is a matter of record. The genesis of the issue

appears to be that, on 28-07-2020 a communication comes about
15

from the Registrar at Bangalore to the Director of the

petitioner/Company on the score that a complaint is received at the

office of the Registrar in respect of incorrect address mentioned in

Form No.10 filed by the petitioner/Company with the Registrar.

The communication reads as follows:

“No.ROCB/Complaint/EXALOGIC/2020, Date: 28-07-2020
To
Ms. Veena Thaikkandiyil
Pravik, Pandialamukku Pinarayi P.O.,
Thalassary,
KANNUR – 670 741,
KERALA
e-mail: [email protected]

Sub: Complaint dated 22-05-2020 received from
Mr. Vijay.J – in the matter of Exalogic Solutions
Pvt. Ltd (OPC) – reg.

Madam,
Whereas this office has received a complaint stating
that the address of the subscriber/first director and in
form 10 mentioned as “AKG Centre, Palayam,
Thiruvananthapuram, Kerala-695 034”. Letter dated 16-
06-2020 was issued to the company at the registered
address calling for the explanation. However, the letter
addressed to the company returned unserved with
remarks “Unclaimed, Return to sender”. A copy of the
said letter along with the complaint is enclosed herewith.

You are directed to offer your comments/ explanations on
the complaint and also state as to why action should not be
taken against the company and its director u/s 12 of the
Companies Act, 2013 for non-maintenance of registered office
at the address specified in the MCA portal, within 10 days
hereof.”

(Emphasis added)
16

The petitioner was directed to offer explanation on the complaint,

as to why action should not be taken under Section 12 of the Act

for non-maintenance of registered office at the address specified.

The petitioner then submits its reply justifying the change of

address or no address being maintained on the score that due to

the onset of COVID-19 from March, 2020 and in terms of the

notification issued by the Government of Karnataka, directing IT

companies to work from home, the registered office of the

petitioner was shifted to work from home. On 19-08-2020, the

office of the Registrar directed the Company to file an adjudication

application under Section 454 of the Act for non-maintenance of

registered office of the Company.

15. The petitioner then submits an application on 02-09-

2020. Based upon the said application, the Registrar initiated

adjudication proceedings for imposition of penalty for alleged

violation of Section 12 of the Act. An order of penalty comes about

on 09-02-2021 imposing penalty of ` 1,00,000/- each upon the

Company and its Director for the aforesaid violation of Section 12 of

the Act. The petitioner files an appeal before the Regional Director,
17

Ministry of Corporate Affairs assailing the aforesaid order of

imposition of penalty. The Appellate Authority reduces the penalty

from ` 1,00,000/- to ` 20,000/-. This is one set of proceeding

against the petitioner.

16. Around the same time, a communication is sent by the

Registrar on 29-01-2021 calling for information under Section 206

of the Act. Proceedings under Section 206 of the Act, therefore,

was sought to be initiated against the petitioner. It did not spring

from air, but it was due to the information received from the

Enforcement Directorate regarding the transactions between CMRL

and the petitioner. The communication sent to the petitioner on

29-01-2021 reads as follows:

“Sir,
With reference to the above subject, I am to state that
this office has received a reference from Directorate of
Enforcement, Bengaluru regarding the transactions between
COCHIN MINERALS AND RUTILE LTD. (CMRL) and EXALOGIC
SOLUTIONS PRIVARTE LIMITED. Hence, in order to examine
the matter to see the compliance of various provisions of
the Companies Act, 2013, this office has decided to
conduct inquiry u/s 206 (4) of the Companies Act, 2013.
In this connection, you are hereby directed to submit the
following documents/information within 07 days hereof:

01. Certified copies of the printed Annual Reports/
financial statements since incorporation till date
18

with Director’s Report, Audit Report and notes to
accounts (three sets).

02. Details of all Bank accounts maintained by the
Company with account numbers and name of the
bank and branch address.

03. Bank statements till date for all the accounts.

04. Duly Certified copy of all the Statutory registers
i.e., register of contracts with related party,
register of charges, register of Loan & Guarantee
given and received etc. maintained by the
company as per Companies Act,, 2013,if any.

05. Copy of the party wise Trail balance showing
opening balance, debit, credit closing balance for
the year 2014-15 to 2019-20.

Yours faithfully,
Sd/-

(B. BHUVANESWARI)
ASST. REGISTRAR OF COMPANIES
KARNATAKA”

(Emphasis added)

The petitioner replies to the same enclosing certain documents with

regard to transactions between CMRL and the petitioner.

17. On 01-10-2021, the Competent Authority again

communicates seeking information under sub-section (4) of Section

206 of the Act directing submission of complete trial balance
19

showing opening balance, debit and credit for the last five years.

The communication reads as follows:

“No.ROCB/INQ/ARBB/Exalogic/004243/2021/3037,
Date: 01-10-2021
To

Exalogic Solutions Private Limited (OPC),
No.21, 2nd Floor, PID 98-50-21,
New No. 020-W0181-40, 1st Main Road,
Hebbal Ganganagara Layout,
Bangalore-560 032
EK 761014705IN

Sir,
Sub: Inquiry u/s 206(4) of the Companies Act, 2013 in
the matter of EXALOGIC SOLUTIONS PRIVATE
LIMITED (OPC) – Reg.

Ref: 1) This office letter of even number dated 29.1.2021

2) Your reply dated 22.02.2021

With reference to the subject cited, I am directed to state
that the trial balance submitted by you alongwith your letter
under reference (2) is not proper. You are requested to submit
the Complete Trial balance with Opening balance, Debit and
Credit and closing balances with all entries yearwise duly
certified cy the Statutory Auditors of the company for the last 5
years.

2. Please furnish the Minutes of the Board meetings and
General Meetings since incorporation as required under Section
118 read with Section 173(2) of the Companies Act, 2013.

3. Please furnish the details with respect to the following
points:-

(a) As per the financial statement for the year endings
2017-18, 2018-19 and 2019-20, the company has
taken unsecured loan from Empower India Capital
Investments Private Limited, a Kerala based company
20

in which Shri S.N. Sasidharan Kartha, is the Managing
director and major shareholders.

Year 2015-16 2016-17 2017-18 2018-19 2019-20
Amount 25,00,000 37,36,000 10,36,000 4,88,569 NIL
Received(Rs)

You are requested to furnish the details of loans taken from
Empower India Capital Investments Private Limited or from its
directors, purpose of loan, due date of repayment, interest paid,
outstanding as on date. Further, from the bank statement, it could
be seen that during the year 2016-17 only a sum of Rs.25 lakhs
has been received from the said entity, however, as per bank
statement no amount of Rs.12,36,000/- had been received. Please
state whether the amount has been received in cash or
cheque/online.

(b) The company has given donation of Rs.1,30,000/- in
the year ending 31.03.2019, you are requested to
furnish the break up details of such donation, name of
the Donee, interest of the director, etc.

(c) From the Bank Statements produced, it could be
seen that the company has been regularly
(almost every month), receiving amount from
various Charitable organizations, Institutions
etc. Please state the name of the donor and
amount received, yearwise and relationship
between the company and donors.

(d) Further, the Bank Statement also revealed the
following receipts from Cochin Minerals and
Rutile Limited:

                    Date          Amount credited
                 04-05-2017           3,15,000
                 12-06-2017           3,15,000
                 10-07-2017           3,15,000
                 08-08-2017           3,24,000
                 11-09-2017           3,24,000
                 13-10-2017           3,24,000
                                 21



                 07-11-2017             3,24,000
                 04-12-2017             3,24,000
                 06-01-2018             3,24,000
                 17-07-2018             3,24,000
                 20-09-2018             3,24,000
                 29-01-2019             3,24,000
                 06-06-2018             6,48,000
                 29-10-2018             6,48,000
                 18-05-2019             6,48,000
                 03-04-2019             3,24,000
                 03-10-2018             9,72,000

You are requested to furnish the details of transactions between the
company, nature of transaction(s), purpose of the receipt of the
amount, agreement or contracts entered into, terms and
conditions, interest of the director.

(e) Submit partywise break up of trade payables
and trade receivables as at 31-03-2017, 31-03-
2018, 31.03.2019 and 31-03-2020.

(f) Please submit list of employees working in
the office since 1-04-2017 and
remuneration/salary paid to them (yearwise).

The hardcopy of reply to be submitted in
‘QUADRUPLICATE’ and also send the soft copy (word
document) by email.

Yours faithfully,
Sd/-1/10/2021
(B.BHUVANESWARI)
ASST.REGISTRAR OF COMPANIES
KARNATAKA”

(Emphasis added)

In the said communication, transactions between CMRL and the

petitioner were highlighted. The receipt of amount and agreement
22

of contracts between CMRL and the petitioner were directed to be

furnished. The query was replied to by the petitioner on

17-11-2021 contending that donation of `1,30,000/- in the financial

year 2018-19 was paid to the Chief Minister’s Distress Relief Fund

and the agreement between CMRL and the petitioner was in

subsistence and was sought to be attached to the communication.

This, after scrutiny of documents, results in a direction to the

petitioner to appear in person before the Registrar. Proceedings go

on. On 11-08-2023, on completion of scrutiny of financial

statements, several violations are noticed. The heads of

violations noticed are as follows:

1. “VIOLATION OF RULE 16 OF COMPANIES
(ACCEPTANCE OF DEPOSITS RULES, 2014 R/W
SECTION 73 OF THE COMPANIES ACT, 2013
… … …

2. VIOLATION OF SECTION 137 r/w 134(2) R/W OF
THE COMPANIES ACT, 2013 FURTHER R/W RULE 12
OF COMPANIES (ACCOUNTS) RULES, 2014
… … …

3. VIOLATION OF SECTION 129 R/W SCHEDULE III OF
THE COMPANIES ACT, 2013:

… … …

4. VIOLATION OF SECTION 134 COMPANIES ACT, 2013
R/W RULE 8A OF COMPANIES (ACCOUNTS) RULES,
2014:

… … …

23

5. VIOLATION OF SECTION 179 OF THE COMPANIES
ACT, 2013:

… … …

6. VIOLATION OF SECTION 129 R/W SCHEDULE III OF
THE COMPANIES ACT, 2013:

… … …

7. VIOLATION OF SECTION 118 OF THE COMPANIES
ACT, 2013:

… … …

8. VIOLATION OF SECTION 143 OF THE COMPANIES
ACT, 2013:”

(Emphasis added)

The allegations on the aforesaid heads of violations are narrated

after indicating the transactions between CMRL and the petitioner.

When things stood thus, noticing that it requires an investigation,

the investigation under Section 210 of the Act would commence.

Therefore, the proceedings under Chapter XIV qua Section 210 of

the Act commenced by an order dated 12-01-2024. It reads as

follows:

“GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF DIRECTOR GENERAL OF CORPORATE AFFAIRS
CL-II-17/39/2023-O/o DGCoA-MCA
… … …

                                               ...    ...         ...

                                               Date; 12-01-2024.
                            ORDER
                               24



Whereas the Central Government is empowered
under Section 210 (1)(c) of the Companies Act, 2013 (the
Act) to order an investigation into the affairs of company
in Public Interest.

2. Whereas, on the basis of the complaint, an inquiry of
EXALOGIC SOLUTIONS PRIVATE LIMITED was conducted by the
ROC, Bangalore under the provisions of Section 206(4) of the
Companies Act, 2013, which highlighted various violations and
offences under the Act while recommending an investigation
into the affairs.

3. Whereas, further, on the basis of the report of
ROC, Ernakulam submitted to the Central Government, on
the complaints, it emerged that either replies furnished
by COCHIN MINERALS AND RUTILE LIMITED are vague
and evasive in nature, to the allegations or the reply is
not furnished by KERALA STATE INDUSTRIAL
DEVELOPMENT CORPORATION LIMITED with respect to
the notices issued by the ROC on the basis of the
complaints.

4. Now, therefore, in exercise of powers conferred under
Section 210(1)(c) of the Companies act, 2013 the Central
Government has formed an opinion that the affairs of the
COCHIN MINERALS AND RUTILE LIMITED (CIN
L2429KL1989PLC005452), KERALA STATE INDUSTRIAL
DEVELOPMENT CORPORATION LIMITED (CIN
U45309KL1961SGC001937) AND EXALOGIC SOLUTIONS
PRIVATE LIMITED (OPC) (CIN U72200KA2014OPC076509) are
to be investigated.

5. Further, the Central Government is empowered
to appoint Inspectors u/s 210(3) of the Companies Act,
2013 to investigate into the affairs of the Company and to
submit its report thereon to the Central Government.

6. Accordingly, in exercise of the powers conferred u/s
210(3) of the Companies Act, 2013 the Central Government
hereby appoints following Inspectors:

Sl.No.    Name        of           the        Designation
          Inspector(s)
                                  25



  1.           Shri Varun BS                 Dy.ROC, Karnataka
  2.           Shri    K.M.    Shanker       Dy. Director, O/o
               Narayan                       RD (Chennai)
  3.           Shri A.Gokulnath              ROC, Puducherry.

7. The Inspector(s) as appointed above, shall
exercise all the powers available to them under the
provisions of Companies Act, 2013. The Inspector(s) shall
complete the investigation and submit the report to the
Central Government within 4 months.

This order is issued for and on behalf of the Central
Government.”

(Emphasis added)

The order is passed under Section 210(1)(c) of the Act. It observes

that there were several violations under Section 206(4) found,

which are quoted supra, and in the light of those violations, a

recommendation is made for an investigation into the affairs of the

Company, as the justification of the Company was said to be vague

and evasive. It was, therefore, observed that under Section

210(1)(c) of the Act, the Central Government had formed an

opinion to get the issue investigated. A team of Inspectors were

appointed, as found in the order supra and the Inspectors

appointed were directed to complete the investigation and submit a

report to the Central Government within 4 months. The

investigation commenced.

26

18. During the course of investigation, it was found necessary

to assign the investigation to SFIO under Section 212 of the Act on

the basis of an interim report, is what is averred in the statement of

objections, filed by Union of India. The relevant justification in the

statement of objections is that an interim report was handed over

to the Competent Authority by the Inspectors who were appointed

under Section 210 of the Act. The interim report necessitated

assignment of investigation to SFIO, as the submission of the

learned Additional Solicitor General of India is that `135/- crores is

given away to political entities without any accounting and the

transactions are found when the documents of Income-Tax Interim

Settlement Board, were noticed. According to the learned

Additional Solicitor General of India, it is an offence grave in nature,

which directly affects public interest and, therefore, it was handed

over to SFIO. The decision of assigning the investigation to SFIO on

31-01-2024 reads as follows:

“No. SIFO/Inv/AOI/2023-24 Dated January 31, 2024.

ORDER

The Central Government has ordered (dated
31.01.2024) investigation u/s 212 (1)(a)&(c) of
Companies Act, 2013 into the affairs of Exalogic Solutions
Private Limited, Cochin Minerals and Rutile Limited and
27

Kerala State Industrial Development Corporation Limited
and has assigned the same to Serious Fraud Investigation
Office (SFIO).

2. And whereas the officers are required to be
designated as Inspectors to carry out the investigation
under Section 212(1) and Investigating Officer under
Section 212(4) of the Companies Act, 2013.

3. Now, therefore, in exercise of powers conferred under
Section 212(1) of the Companies Act, 2013, the following
Officers are designated as Inspectors to carry out the
investigation into the affairs of abovementioned companies and
shall exercise all the powers available to them under the
Companies Act, 2013.

Shri Prasad Adelli, Additional Director,
Shri M.Arun Prasad, Dy. Director,
Shri K.Prabhu, Sr. AD
Shri A.Gokulnath, ROC,
Shri KMS Narayan, Deputy Director,
Shri Varun, B.S., Dy.ROC.

4. And further in exercise of powers conferred under
Section 212(4) of the Companies Act, 2013, Sri M.Arun Prasad,
Dy.Director is appointed as Investigating Officer to carry out the
above noted investigation. The Inspectors shall exercise all the
powers available to them under the Companies Act, 2013.

5. The Inspectors and the Investigating Officer shall
complete the investigation and submit their report within
eight months to the Central Government.

Sd/-

(Anuradha Thakur)
Director.”

(Emphasis added)

After the assignment to SFIO, a notice is issued on 02-02-2024 to

the petitioner to produce several documents, as SFIO has been
28

assigned to investigate into the affairs of the petitioner/Company

and Inspectors had been assigned for conduct of such investigation.

It was directed that the notice be treated as a notice under Section

217(2) of the Act. It is then the Company on 7-02-2024 seeks time

to produce documents and contends that it has not been served

with an order of handing over investigation to SFIO. Immediately,

thereafter i.e., the next day, the subject writ petition is filed before

this Court, calling in question the order dated 31-01-2024,

assigning the investigation to SFIO. In the light of the submissions

made by the learned senior counsel for the petitioner, as quoted

hereinabove, it becomes necessary to notice the statutory frame

work.

THE STATUTORY FRAME WORK:

19. Chapter-XIV of the Act deals with inspection, inquiry and

investigation. It runs from Sections 206 to 229. What is germane

to be noticed, in the case at hand is, Sections 206, 207, 210, 211

and 212 and they read as follows:

“206. Power to call for information, inspect books
and conduct inquiries.–(1) Where on a scrutiny of any
document filed by a company or on any information received by
29

him, the Registrar is of the opinion that any further information
or explanation or any further documents relating to the
company is necessary, he may by a written notice require the
company–

(a) to furnish in writing such information or
explanation; or

(b) to produce such documents,

within such reasonable time, as may be specified in the notice.

(2) On the receipt of a notice under sub-section (1), it
shall be the duty of the company and of its officers concerned to
furnish such information or explanation to the best of their
knowledge and power and to produce the documents to the
Registrar within the time specified or extended by the Registrar:

Provided that where such information or explanation
relates to any past period, the officers who had been in the
employment of the company for such period, if so called upon
by the Registrar through a notice served on them in writing,
shall also furnish such information or explanation to the best of
their knowledge.

(3) If no information or explanation is furnished to the
Registrar within the time specified under sub-section (1) or if
the Registrar on an examination of the documents furnished is
of the opinion that the information or explanation furnished is
inadequate or if the Registrar is satisfied on a scrutiny of the
documents furnished that an unsatisfactory state of affairs
exists in the company and does not disclose a full and fair
statement of the information required, he may, by another
written notice, call on the company to produce for his inspection
such further books of account, books, papers and explanations
as he may require at such place and at such time as he may
specify in the notice:

Provided that before any notice is served under this sub-
section, the Registrar shall record his reasons in writing for
issuing such notice.

(4) If the Registrar is satisfied on the basis of
information available with or furnished to him or on a
30

representation made to him by any person that the
business of a company is being carried on for a
fraudulent or unlawful purpose or not in compliance with
the provisions of this Act or if the grievances of investors
are not being addressed, the Registrar may, after
informing the company of the allegations made against it
by a written order, call on the company to furnish in
writing any information or explanation on matters
specified in the order within such time as he may specify
therein and carry out such inquiry as he deems fit after
providing the company a reasonable opportunity of being
heard:

Provided that the Central Government may, if it is
satisfied that the circumstances so warrant, direct the Registrar
or an inspector appointed by it for the purpose to carry out the
inquiry under this sub-section:

Provided further that where business of a company has
been or is being carried on for a fraudulent or unlawful purpose,
every officer of the company who is in default shall be
punishable for fraud in the manner as provided in Section 447.

(5) Without prejudice to the foregoing provisions of this
section, the Central Government may, if it is satisfied that the
circumstances so warrant, direct inspection of books and papers
of a company by an inspector appointed by it for the purpose.

(6) The Central Government may, having regard to the
circumstances by general or special order, authorise any
statutory authority to carry out the inspection of books of
account of a company or class of companies.

(7) If a company fails to furnish any information or
explanation or produce any document required under this
section, the company and every officer of the company, who is
in default shall be punishable with a fine which may extend to
one lakh rupees and in the case of a continuing failure, with an
additional fine which may extend to five hundred rupees for
every day after the first during which the failure continues.

207. Conduct of inspection and inquiry.–(1) Where
a Registrar or inspector calls for the books of account and
31

other books and papers under Section 206, it shall be the
duty of every director, officer or other employee of the
company to produce all such documents to the Registrar
or inspector and furnish him with such statements,
information or explanations in such form as the Registrar
or inspector may require and shall render all assistance
to the Registrar or inspector in connection with such
inspection.

(2) The Registrar or inspector, making an inspection or
inquiry under Section 206 may, during the course of such
inspection or inquiry, as the case may be,–

(a) make or cause to be made copies of books of account and
other books and papers; or

(b) place or cause to be placed any marks of identification in
such books in token of the inspection having been made.

(3) Notwithstanding anything contained in any
other law for the time being in force or in any contract to
the contrary, the Registrar or inspector making an
inspection or inquiry shall have all the powers as are
vested in a civil court under the Code of Civil Procedure,
1908 (5 of 1908), while trying a suit in respect of the
following matters, namely:–

(a) the discovery and production of books of account
and other documents, at such place and time as
may be specified by such Registrar or inspector
making the inspection or inquiry;

(b) summoning and enforcing the attendance of
persons and examining them on oath; and

(c) inspection of any books, registers and other
documents of the company at any place.

(4)(i) If any director or officer of the company disobeys
the direction issued by the Registrar or the inspector under this
section, the director or the officer shall be punishable with
imprisonment which may extend to one year and with fine which
32

shall not be less than twenty-five thousand rupees but which
may extend to one lakh rupees.

(ii) If a director or an officer of the company has been
convicted of an offence under this section, the director or the
officer shall, on and from the date on which he is so convicted,
be deemed to have vacated his office as such and on such
vacation of office, shall be disqualified from holding an office in
any company.

… … …

210. Investigation into affairs of company.–(1)
Where the Central Government is of the opinion, that it is
necessary to investigate into the affairs of a company,–

(a) on the receipt of a report of the Registrar or
inspector under Section 208;

(b) on intimation of a special resolution passed by a
company that the affairs of the company ought to
be investigated; or

(c) in public interest,

it may order an investigation into the affairs of the company.

(2) Where an order is passed by a court or the Tribunal in
any proceedings before it that the affairs of a company ought to
be investigated, the Central Government shall order an
investigation into the affairs of that company.

(3) For the purposes of this section, the Central
Government may appoint one or more persons as inspectors to
investigate into the affairs of the company and to report thereon
in such manner as the Central Government may direct.

211. Establishment of Serious Fraud Investigation
Office.–(1) The Central Government shall, by notification,
establish an office to be called the Serious Fraud Investigation
Office to investigate frauds relating to a company:

Provided that until the Serious Fraud Investigation Office
is established under sub-section (1), the Serious Fraud
33

Investigation Office set up by the Central Government in terms
of the Government of India Resolution No. 45011/16/2003-
Adm-I, dated 2nd July, 2003 shall be deemed to be the Serious
Fraud SFIO for the purpose of this section.

(2) The Serious Fraud Investigation Office shall be
headed by a Director and consist of such number of
experts from the following fields to be appointed by the
Central Government from amongst persons of ability,
integrity and experience in,–

      (i)    banking;
      (ii) corporate affairs;
      (iii) taxation;
      (iv) forensic audit;
      (v)    capital market;
      (vi) information technology;
      (vii) law; or

(viii) such other fields as may be prescribed.

(3) The Central Government shall, by notification, appoint
a Director in the Serious Fraud Investigation Office, who shall be
an officer not below the rank of a Joint Secretary to the
Government of India having knowledge and experience in
dealing with matters relating to corporate affairs.

(4) The Central Government may appoint such
experts and other officers and employees in the Serious
Fraud Investigation Office as it considers necessary for
the efficient discharge of its functions under this Act.

5) The terms and conditions of service of Director,
experts, and other officers and employees of the Serious Fraud
SFIO shall be such as may be prescribed.

212. Investigation into affairs of Company by
Serious Fraud Investigation Office.–(1) Without prejudice
to the provisions of Section 210, where the Central
Government is of the opinion, that it is necessary to
investigate into the affairs of a company by the Serious
Fraud SFIO–

(a) on receipt of a report of the Registrar or inspector
under Section 208;

34

(b) on intimation of a special resolution passed by a
company that its affairs are required to be
investigated;

(c) in the public interest; or

(d) on request from any Department of the Central
Government or a State Government, the Central
Government may, by order, assign the investigation
into the affairs of the said company to the Serious
Fraud SFIO and its Director, may designate such
number of inspectors, as he may consider necessary
for the purpose of such investigation.

(2) Where any case has been assigned by the
Central Government to the Serious Fraud SFIO for
investigation under this Act, no other investigating
agency of Central Government or any State Government
shall proceed with investigation in such case in respect of
any offence under this Act and in case any such
investigation has already been initiated, it shall not be
proceeded further with and the concerned agency shall
transfer the relevant documents and records in respect of
such offences under this Act to Serious Fraud
Investigation Office.

(3) Where the investigation into the affairs of a company
has been assigned by the Central Government to Serious Fraud
Investigation Office, it shall conduct the investigation in the
manner and follow the procedure provided in this Chapter; and
submit its report to the Central Government within such period
as may be specified in the order.

(4) The Director, Serious Fraud Investigation Office
shall cause the affairs of the company to be investigated
by an Investigating Officer who shall have the power of
the inspector under Section 217.

(5) The company and its officers and employees, who are
or have been in employment of the company shall be
responsible to provide all information, explanation, documents
and assistance to the Investigating Officer as he may require for
conduct of the investigation.

35

(6) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), offence covered under
Section 447 of this Act shall be cognizable and no person
accused of any offence under those sections shall be released on
bail or on his own bond unless–

(i) the Public Prosecutor has been given an opportunity to
oppose the application for such release; and

(ii) where the Public Prosecutor opposes the application, the
court is satisfied that there are reasonable grounds for
believing that he is not guilty of such offence and that he
is not likely to commit any offence while on bail:

Provided that a person, who, is under the age of sixteen
years or is a woman or is sick or infirm, may be released on
bail, if the Special Court so directs:

Provided further that the Special Court shall not take
cognizance of any offence referred to this sub-section except
upon a complaint in writing made by–

(i) the Director, Serious Fraud Investigation Office; or

(ii) any officer of the Central Government authorised, by a
general or special order in writing in this behalf by that
Government.

(7) The limitation on granting of bail specified in sub-

section (6) is in addition to the limitations under the Code of
Criminal Procedure, 1973 (2 of 1974) or any other law for the
time being in force on granting of bail.

(8) If any officer not below the rank of Assistant Director]
of Serious Fraud Investigation Office authorised in this behalf by
the Central Government by general or special order, has on the
basis of material in his possession reason to believe (the reason
for such belief to be recorded in writing) that any person has
been guilty of any offence punishable under sections referred to
in sub-section (6), he may arrest such person and shall, as soon
as may be, inform him of the grounds for such arrest.
36

(9) The officer authorised under sub-section (8) shall,
immediately after arrest of such person under such sub-
section], forward a copy of the order, along with the material in
his possession, referred to in that sub-section, to the Serious
Fraud Investigation Office in a sealed envelope, in such manner
as may be prescribed and the Serious Fraud Investigation Office
shall keep such order and material for such period as may be
prescribed.

(10) Every person arrested under sub-section (8) shall
within twenty-four hours, be taken to a Special Court or Judicial
Magistrate or a Metropolitan Magistrate, as the case may be,
having jurisdiction:

Provided that the period of twenty-four hours shall
exclude the time necessary for the journey from the place of
arrest to the Special Court or Magistrate’s court.

(11) The Central Government if so directs, the
Serious Fraud Investigation Office shall submit an interim
report to the Central Government.

(12) On completion of the investigation, the Serious
Fraud Investigation Office shall submit the investigation
report to the Central Government.

(13) Notwithstanding anything contained in this Act or in
any other law for the time being in force, a copy of the
investigation report may be obtained by any person concerned
by making an application in this regard to the court.

(14) On receipt of the investigation report, the
Central Government may, after examination of the report
(and after taking such legal advice, as it may think fit),
direct the Serious Fraud Investigation Office to initiate
prosecution against the company and its officers or
employees, who are or have been in employment of the
company or any other person directly or indirectly
connected with the affairs of the company.

(14-A) Where the report under sub-section (11) or
sub-section (12) states that fraud has taken place in a
company and due to such fraud any director, key
37

managerial personnel, other officer of the company or
any other person or entity, has taken undue advantage or
benefit, whether in the form of any asset, property or
cash or in any other manner, the Central Government
may file an application before the Tribunal for
appropriate orders with regard to disgorgement of such
asset, property or cash and also for holding such director,
key managerial personnel, other officer or any other
person liable personally without any limitation of liability.

(15) Notwithstanding anything contained in this Act or in
any other law for the time being in force, the investigation
report filed with the Special Court for framing of charges shall
be deemed to be a report filed by a police officer under
Section 173 of the Code of Criminal Procedure, 1973 (2 of
1974).

(16) Notwithstanding anything contained in this Act, any
investigation or other action taken or initiated by Serious Fraud
Investigation Office under the provisions of the Companies Act,
1956 (1 of 1956) shall continue to be proceeded with under that
Act as if this Act had not been passed.

(17)(a) In case Serious Fraud Investigation Office
has been investigating any offence under this Act, any
other investigating agency, State Government, police
authority, income tax authorities having any information
or documents in respect of such offence shall provide all
such information or documents available with it to the
Serious Fraud Investigation Office;

(b) The Serious Fraud Investigation Office shall
share any information or documents available with it,
with any investigating agency, State Government, police
authority or income tax authorities, which may be
relevant or useful for such investigating agency, State
Government, police authority or income tax authorities in
respect of any offence or matter being investigated or
examined by it under any other law.”

(Emphasis supplied)
38

Section 206 deals with power to call for information, inspect

books and conduct of inquiries. It is where on a scrutiny of any

document filed by a Company or any information received, if the

Registrar is of the opinion that further information is required, he

may summon all such information or direct production of all

documents. Sub-section (4) of Section 206 permits the Registrar, if

he is satisfied, that there has been certain activities carried on

which are fraudulent or unlawful purpose or not in compliance with

the provisions of the Act, initiate such inquiry against the Company;

Section 207 deals with conduct of inspection and inquiry. Sub-

section (3) of Section 207 permits the Registrar or Inspector

making an inquiry to have certain powers akin to civil Court under

the Civil Procedure Code; Section 208 deals with mandate of the

report of inspection that is made under Sections 206 and 207 of the

Act. Section 209 deals with search and seizure; Section 210

forms the first part of the fulcrum in the lis. It deals with the

investigation into the affairs of the Company. Section 210 permits

the Central Government, if it is of the opinion that it is necessary to

investigate into the affairs of the Company, on three circumstances

it may order investigation into the affairs of the said Company and
39

they are, (a) on receipt of a report of the Registrar or Inspector

under Section 208; (b) on intimation of a special resolution passed

by a Company itself and (c) in public interest. For the purpose of

investigation under Section 210, sub-section (3) permits the

Government to appoint one or more persons as Inspectors to

investigate into the affairs of the Company and to report thereon to

the Central Government; Section 211 deals with establishment of

Serious Fraud Investigation Office which comes to be established in

the year 2015.

20. Section 212 completes the fulcrum of the lis, it deals

with investigation into the affairs of a Company by the SFIO, on

four circumstances. Investigation can be assigned to the SFIO –

(a) on receipt of a report of the Registrar or Inspector under

Section 208, as is found in Section 210; (b) on intimation by the

Company itself as is found in Section 210; (c) in public interest

which is also found in Section 210 and what is in addition is, (d) a

request from any department of the Central Government or a State

Government to assign investigation to the SFIO. What happens

once investigation is handed over to the SFIO is also dealt with
40

under sub-section (2) of Section 212. Any investigation by any

agency preceding such assignment will cease to operate. It is on

the bedrock of the aforesaid statutory frame work, the issue in the

lis needs to be considered.

21. What would unmistakably emerge from what is above

analysed is, once investigation has commenced under Section 210,

the statute does not render the Government of India powerless, to

assign the investigation under Section 212 to the SFIO. It neither

results in duplication of investigation, nor takes away any right of

the petitioner. Sub-section (2) clearly mandates that once the SFIO

is entrusted with investigation under Section 212, any other

investigation already initiated shall not be proceeded further and

further, those agencies who are/were conducting any investigation,

shall transfer all the relevant documents and records in respect of

those offences to the SFIO. The powers of SFIO is statutorily

determined from sub-section (3) to sub-section (17) of Section 212

and for conduct of investigation there is procedure in place which

need not require elaboration at this juncture.
41

22. The submission of the learned senior counsel for the

petitioner is that when the proceedings under Section 210 are

underway, assignment of investigation to the SFIO cannot take

place. The strength on which the said submission is made is that

there should a report under Section 210, as is directed, and only

then the investigation can be handed over to the SFIO. The effect of

such submission is that handing over of investigation to the SFIO,

should precede a final report under Section 210. This submission is

sans countenance as it travels on a slippery slope. Section 210 does

speak of a report, the report can be either interim or final it need

not be the final report only. During an investigation under Section

210, if the Inspectors, out of serendipity come across information

that would prima facie touch upon skullduggery and thereon

necessity emerges to assign the investigation to a multi-disciplinary

body like the SFIO, created under the Act, this Court cannot put

shackles on the hands of the Central Government, for such

assignment. If it had been entrusted to any other agency outside

the Act, it would have been a circumstance altogether different. It

is entrusted to the SFIO which is created under the Act, i.e., in

terms of Section 211 with elaborate functions under Section 212.
42

The protection to any Company from duplication of proceedings is

kept tight under sub-section (2) of Section 212 and above all, and

after all, it is investigation.

23. A bleak attempt is made by the learned senior counsel to

submit that the phrase ‘interim report’ is found only in sub-section

11 of Section 212, and nowhere in Section 210 suffers from want

tenability, as observed hereinabove, the report under Section 210,

can either be interim or final. The said report will not result in any

penalty being imposed straight away against any Company. It is for

the purpose of investigation. Investigation is for the purpose of

unearthing the alleged unethical activities of any Company, in the

case at hand, the petitioner/Company. The Apex Court, in plethora

of cases, has observed that with the advancement of technology,

economic offences have become a real threat to the functioning of

the financial system of the country. Those offences become a great

challenge for Investigating Agencies to detect and comprehend

intricate nature of transactions, as also the role of persons involved

therein. Plethora of minute exercise is expected to be undertaken
43

by any Investigating Agency. It is therefore, to unearth such

intricate or minute details about the transactions it becomes

necessary to hand it over to a multi-disciplinary body, like the SFIO.

As submitted by the learned Additional Solicitor General, the multi-

disciplinary body would bring about multi-departmental

correspondence to arrive at any finding. Therefore, no fault can be

found with the action of the Union of India, in entrusting the

investigation to the SFIO.

24. The second submission is that no reasons are provided to

invoke Section 212 of the Act and, therefore, it suffers from non-

application of mind. This is again unacceptable, as this Court is

projected with a problem of investigation being handed over. At this

stage, application of mind to hand over the investigation, again in

the considered view of the Court, need not form part of the said

order. The statement of objections are, in defence of interim report

necessitating assignment of investigation. If the Union of India has

thought it fit to entrust the investigation to the SFIO, owing to

certain factors which have emerged while conduct of investigation

under Section 210 and in public interest, this Court in exercise of its
44

jurisdiction under Article 226 of the Constitution of India would not

by a stroke of pen, annul such opinion of the Union of India, unless

it is contrary to the statute or the action is demonstrably arbitrary.

Neither of the two is present in the case at hand, as the projection

of the two, by the learned senior counsel for the petitioner is sans

acceptance. Therefore, there is no warrant to interfere at this

stage.

25. Insofar as the judgments relied on by the leaned senior

counsel in support of his submissions in the case of MODERN

DENTAL COLLEGE AND RESEARCH CENTRE v. STATE OF

MADHYA PRADESH – (2016) 7 SCC 353 and in the case of

UTTAM DAS CHELA SUNDER DAS v. SHIROMANI GURDWARA

PRABANDHAK COMMITTEE – (1996) 5 SCC 71 are inapplicable

to the facts situation at this juncture. Reliance is placed on

paragraph 60 of the judgment of the Apex Court in the case of

MODERN DENTAL COLLEGE AND RESEARCH CENTRE which

deals with doctrine of proportionality. It is the submission that the

statute should be used only for the designated proper purpose. In

the considered view of the Court, the statute is used for the
45

designated proper purpose. Proportionality is not what can be

considered at this stage of the proceedings. The stage, as observed

in the course of the order, is conduct of investigation and the Apex

Court is clear that investigation process should not be interdicted or

annihilated unless the grounds projected are in support of such

interdiction. The grounds projected, in support of the petition, are

held to be unacceptable. Therefore, the said judgment would not be

applicable to the issue at this juncture. The other judgment in the

case of UTTAM DAS CHELA SUNDER DAS is for the proposition

that marginal note should be taken note of. The said judgment is

again inapplicable to the facts of the case, as the statute is very

clear. Reliance cannot be made on the marginal note if there is no

ambiguity in the statute. There is no ambiguity as is analysed

hereinabove. Therefore, the judgments relied on would not lend any

support to the submissions of the learned senior counsel for the

petitioner, in any manner. The action impugned does not suffer

from any statutory aberration and therefore, the petition does not

deserve any entertainment.

46

26. For the praefatus reasons, petition stands rejected.

Consequently, I.A.No.1 of 2024 also stands disposed.

Sd/-

JUDGE

bkp
CT:MJ

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