Delhi HC stays Centre’s orders for investigation into 9 companies relating to Sahara Group
A bench of Chief Justice D N Patel and Justice Jyoti Singh said it was of the view that petitioners Sahara Housing Investment Corporation Ltd and others have made out a prima facie case for grant of interim relief and the balance of convenience is also in their favour and if the interim relief is not granted, irreparable loss shall be caused to them.
The high court also issued notice to the Centre and asked it to file response to the petition.
The court stayed the Centre’s October 31, 2018 and October 27, 2020 orders till the next date of hearing, that is, January 18.
“… We hereby stay the operation, implementation and execution of the orders dated October 31, 2018 and October 27, 2020, passed by the respondents as well as subsequent actions and proceedings initiated pursuant thereto, including coercive proceedings and look-out notices, qua the petitioners herein, till the next date of hearing,” the bench said.
It further said, “There was thus a clear mandate by the Central Government to complete the investigation within three months from the date of the issue of the order, that is, October 31, 2018. However, the investigation was not completed within the stipulated time and as asserted by the petitioners, the same is still ongoing. Prima facie, there is violation of Section 212(3) of the Companies Act and the direction of the Central Government.”
The petitioners submitted that the first order was passed by the Centre on October 31, 2018 for investigation into the affairs of three companies — Sahara Q Shop Unique Products Range Ltd, Sahara Q Gold Mart Ltd and Sahara Housing Investment Corporation Ltd.
The order had mentioned that the investigation report shall be submitted by the inspectors to the government within three months from October 31, 2018. However, no such report was rendered within three months and in fact even today, despite passage of more than three years, the investigation is still ongoing, the petitioners said.
Senior Advocate S B Upadhyay, appearing for the petitioners, said that without completing the investigation in a time-bound schedule as mandated under the Companies Act, another order was passed by the Centre on October 27, 2020 handing over the investigation of six more companies to the Serious Fraud Investigation Office (SFIO).
The plea said perusal of the October 27, 2020 revealed that no reason has been assigned as to why it was considered necessary that an investigation be made against the six companies — Aamby Valley Ltd, Qing Amby City Developers Corporation Ltd, Sahara India Commercial Corporation Ltd, Sahara Prime City Ltd, Sahara India Financial Corporation Ltd and Sahara India Real Estate Corporation Ltd.
The petitioners submitted in the petition that the six companies have never been, at any relevant time, the subsidiary or holding companies of the three other companies already under investigation.
The counsel submitted that only Securities and Exchange Board of India (SEBI) has the power to investigate these matters but, in this instance, SFIO has been tasked with a probe which again violated the Companies Act.
Additional Solicitor General Chetan Sharma, representing the Centre, raised preliminary objection to the maintainability of the petition on the ground that a petition seeking similar reliefs is also pending before the Lucknow bench of the Allahabad High Court and another plea laying a challenged to the look-out circulars is also pending before a single judge of the Delhi High Court.
However, the court did not agree with the submission that the plea deserves to be dismissed on account of pendency of other writ petitions.
Regarding the other companies, the court said it was of a prima facie view that there was no justification in initiating investigation against them through the October 27, 2020 order.
“There is also prima facie merit in the contention of the petitioners that the impugned orders dated October 31, 2018 and October 27, 2020 do not indicate the reasons or circumstances that compelled the Central Government to form an opinion to order investigation by the SFIO into the affairs of the petitioners,” the bench said.
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