WA/327/2020 of Karvy Stock Broking Limited Vs The Union of India on 31 December 2021

1. The Union of lndia, Represented by its Secretary, Nlinistry of Corporate [Affairs,]having office at A Wing, Shastri Bhawan, Rajendra Prasad [Road, ][New ][Delhi,]Delhi 1'10001having office at A Wing, Shastri Bhawan, Rajendra Prasad [Road, ][New ][Delhi,]Delhi 1'10001

2. Office of Director General, tr/inistry of Corporate Affairs, Kota [House ][Annexe, ][1]Shahjahan Road, New Delhi [- ][1 ][10 ]011.Shahjahan Road, New Delhi [- ][1 ][10 ]011.

3. Serious Fraud lnvestrgation Office,2nd floor, Pt. Deendayal [Antyodaya ][Bhawan,]CGO Complex. Lodhi Road, New Delhi-1 10003.CGO Complex. Lodhi Road, New Delhi-1 10003.

4. Regional Director, South East Region, having office at 3rd [Floor, ][Corporate]Bhavan, Bandlaguda, Nagole, Tattiannaram Village, Ranga Reddy District,Hyderabad - 500 068, TelanganaBhavan, Bandlaguda, Nagole, Tattiannaram Village, Ranga Reddy District,Hyderabad - 500 068, Telangana

5. The Registrar of Companies, Having office at 2nd [Floor, ]Corporate [Bhavan, ][GSI]Post, Thatti Annaram, Nagole, Bandlaguda, Hyderabad [- ]500 068Post, Thatti Annaram, Nagole, Bandlaguda, Hyderabad [- ]500 068

6. Assistant Registrar of Companies, Office of the [Registrar of Companies, ][2nd]Floor, Corpoiate Bhavan, GSI Post, Thattiannaram, Bandlaguda, [Hyderabad ][-]500 068.Floor, Corpoiate Bhavan, GSI Post, Thattiannaram, Bandlaguda, [Hyderabad ][-]500 068.

...RESPONDENTS/RESPONDENTS

lA NO: 1 OF 2020

Petition under Section 151 CPC [praying ]that in the circumstances stated [in]the affidavit filed in support of the petition, the High Court may be [pleased ]to suspendthe operation of the notices dated 16.06.2020 and 19.06.2020 issued by RespondentNo.2 by suspending the Common Order dated 26.08.2020 in WP No. 8997 of 2020passed by the Learned Single Judge.

lA NO: 2 OF 2020

Petition under Section 151 CPC praying that in the circumstances stated inthe affidavil filed in support of the petition, the High Court may be pleased to vacatethe affidavil filed in support of the petition, the High Court may be pleased to vacatethe order dated 1410912020 in lA No 1 of 2020 in WA No 327 ol 2020.

IA NO: 3 OF 2020

Petition [under ][S lction ][151 ][CPC ][praying ][that ][in ][the ][circumstances ][stated ][in]the affidavit [f ][iled ][in ][sup ][rcrt'ot't"ne ][i"titi"i ][ifi" ][ilign ][Court may ][b€: ][pleased ][to ][extend]the tnterim [order ][datet ][14 ][;9 ][;b;6-i; ][iA ][ruo ][1-ol ][2o2o ][in WR ][t'to ][327 ][or ][2020 ][titt]in" Ji"potrr [of ][the ][pres ][rnt ][Writ Appeal']

Counsel [for the Appell rnt:SRl' ][AVINASH ][DESAI]

Counsel [for the ][Respo ][ldents: ][SRI' NAMAVARAPU RAJESHWAR ][RAO']

ASST. SOLICITOR [GENERAL]

WA NOi[328][ oF ][2020]

Writ Appeal [undt ][r clause ]['1 ][5 of ][the ][Letters-Patent ][Appeal ][Preferred Against ][the]Order dated.26 [tovlz[2c ][p"t"l ][i" ][WpL'f ][o'soz+ ][ot ][2020 ][on ][the file ][':f ][the ][High ][Court']

Between:

Karvv Stock [Brc ][<ing ][Limited' Karvy ][Millennium' ][Plot ][No'31/P ][Nanakramguda]n a - 500 [0 ][32]'iini inJL' i.i,i- iji.t,ic, Reptesent [rd ]d [by ]acn [its ]io#i!; [r.*"#f [Vi ](1lr:fi ifi :,41. " ff :X11a ...A''ELLANTMRIr [pETlrtoNER]l r he [u ][nion ][of ][r ][nd ][a,. ][Repre'.?1l",.t ][tt*" ]::fi:::ffi iyJ!'i?.ts,"J:R ff #If, [i ]:having office [at ][I ][-Wing' ][I]Delhi [1 ][10001]Atrairs' [Kota ][Ho:se Annexe' ][I]' Sfl:i.illl"'fi8:". [R"ff'3:,Hi'il33lf"*'rate ]' #3 [€JJii"Xl ][I ][txl'.Pfi ][::! ][o#trD'# ][jl?Bli Pr ][Deend ][ava ][I ][Antvo ][d ][ava ][B ][hawan']4.ReoionalDirectc',southEastRegion,having.ofiiceat3rdFloor'corporateBhivan. Bandla [uda, ][*'il'il ][i;ili;;;t;;n.,Viltase' ][Ranga Reddv District']ftyOeraUaO [- ][50( ][068, ][Telangana]5. The [Registrar of Companies' ][Having. ][office ][at2ndfloor' ][Cor3orate Bhavan' ][GSI]post. Thatti Arrn rram, ai"dt;guda, [Hyderabad ][- ][50() ][068]^ilb",r"r". 6. Assistant [Regist ][ar ][of Companies' Office ][of ][the Registrar of ][rlonrpanies' ][2nd]Froor, corporat. [enuu"Xl'35i'i;;;iiffiC;;iraml ][Bandtasuda' Hvderabad ][-]500 068,

AND

...RESPONDENITS/RESPONDENTS

IANO:1OF[2020]

Petition [under ][iection ][151 ][CPC ][praying.that in the ][circumstances ][stated ][in]the affidavit [fited ][in ][sr ][ppoi ][ot'in"i'"i,tio;,liu'if'gf,Court ][may ][be ][pleased ][to ][direct]coercive [steps ][agarnst ][the ][Appellant ][includtng]the Respondents [nol ][to ][t'f" ''"i ]of ihe companies [Act' ][2013']il;".i[ffi;;nder [S< ]'tion212

IA NO:2[o][F ][2020]

petition under lection [151 ][cpc ][praying ][that ][in ][the ][circrumstances ][stated ][in]the affidavit [filed ][in ][st ]'po't'o'f [i# ][p""ilt'"t' ][tn" ][{:1 ][9o"t ][may be pltrased ][to ][suspend]the operation [of ][tn ][, ][ord"er ][" ]['i.iJi'l)'diizoz"o ][i..u"o ][by ][Respondent ][No ][2bv]suspendins [the ][comr ][on ][dti'"ti?t"J ][xitiuzozo ][in ][wP ][No ][5024 ][01 ][2020']the affidavit [filed ][in ][st ]'po't'o'f [i# ][p""ilt'"t' ][tn" ][{:1 ][9o"t ][may be pltrased ][to ][suspend]the operation [of ][tn ][, ][ord"er ][" ]['i.iJi'l)'diizoz"o ][i..u"o ][by ][Respondent ][No ][2bv]suspendins [the ][comr ][on ][dti'"ti?t"J ][xitiuzozo ][in ][wP ][No ][5024 ][01 ][2020']

lA NO: 3 [OF ][2020]

Between:

1The Union of lndia, [Represented by ][its ][Secretary' ][Mrnistrv ][of Coroorate Affairs']office [at ][A-wins, ][snr"iii"dnl'i'"', ][R;j;;6i' ][Prasad Road' New Delhi']office [at ][A-wins, ][snr"iii"dnl'i'"', ][R;j;;6i' ][Prasad Road' New Delhi']having Delhi 1 10001Delhi 1 10001

Office of Director [General, Ministry of Corporate Affairs, Kota ][House ][Annexe' ][I]Shahjahan Road, [New ][Delhi ][- ]['l ][10 ][01 ][1 ][']Shahjahan Road, [New ][Delhi ][- ]['l ][10 ][01 ][1 ][']

2

3Serious Fraud [lnvestigation Office, ][2nd ][t!gqt,.l^t ][Deendayal Antvodaya Bhawan']COO Comptex. [Lodhi Road, New ][Delhi-1 ][10003']COO Comptex. [Lodhi Road, New ][Delhi-1 ][10003']

4Reoional Director, [South East Region, having office q! 3rd Floor' ][Co-rporate]ij;;;;,'#;;'i;;rd"nrs"l;' raitiannaram [Village' ][Ranga Reddv District']Hyderabad [- ]500 068, [Telangana]ij;;;;,'#;;'i;;rd"nrs"l;' raitiannaram [Village' ][Ranga Reddv District']Hyderabad [- ]500 068, [Telangana]

5TheReoistrarofCompanies,Havingofficeat2ndFloor'C-o.rpo.rateBhavan,GSlp,iit. ir{r]ii Atraiim, ttasote' Bandlaguda, Hvderabad [- ][500 068]p,iit. ir{r]ii Atraiim, ttasote' Bandlaguda, Hvderabad [- ][500 068]

6AssistantReqistrarofCompanies,officeoftheRegistrarofCompanies,2nd-'ii'";;, ilrp"irG anauin, dSt poit, Thattiannaram, Bandlaguda' Hvderabad 'ii'";;, ilrp"irG anauin, dSt poit, Thattiannaram, Bandlaguda' Hvderabad 500 068.

,..PETiTIONERS/RESPONDENTS

AND

Karvv Stock Brokinq [Limited, ][Karvy ][lVlillennium, ][Plot ][No.31/P, ][Nanakramg-uda]ii;u;.;i-Diti;ici, dacr,ioowti, [Hvoerabad ][Rangareddi, ][Telangana ][- ][500032']inJL, nep*t"nted by [its ][Vice-Prelident ][(Legal) ][lVr. ][Ch ][Viswanath]

...RESPONDENT/WRIT [PETITIONERYPETITIONER]

Petition under section [151 ][CPC ][praying ][that ][in the ][circumstances ][stated ][in]the affidavit filed in support [of ][the ][petition, ][the ][High ][court ][may be ][pleased ][to ][vacate]the order dated 14109/2020 [in ][lA ][No 2 ][of ][2020 ][in ][WA ][No 328 ][ol ][2020']

IANO: 4 OF 2020

Petition under section [151 ]CPC [praying ][that in the ][circumstances stated ][in]the affidavit filed in [support ][of the ][petition, ][the ][High ][court ][may ][be ][pleased ][to ][extend]the tnterim order dated [14109t2020 ][in ][lA. ][No. 2 ][0f ][2020 ][in ][wA ][No. 328 ][of ][2020 ][till ][the]disposal of the [present ][Writ ][Appeal.]

Counsel for the Appellant:SRl. [AVINASH ][DESAI]

Counsel for the Respondents: [SRl. NAMAVARAPU RAJESHWAR ][RAO, ][ASST']SOLICITOR GENERAL

The Court delivered the following:

HANDRA SHARMATHE HON'BLE THE [CHIEF JUSTI][CE ][SATISH ][C]ANDTHI HON'BLE SRI[JUSTICE ][N. ][T][UNARAMJI]WI IT APPEAL [Nos.327][ AND][ 32A OF ][202][0]

coMMON JUDi[IMENT: ][\'t [tlLe ][]lott bi" ][Ihe ]'lL1sttt1 ['s ][rilsl ][( ][/r'1rr''rrr ][s/r'r'l;r(r/]'-ltLel Both th' [.'Iirit ][appeals ][are arising ][out ][of ][a ][common]orderandaStheissueinvolvedinboththeu,ritappealsisone and the [strme, ][thel- are ][being ][disposed ][of ][b)' ][this]common orde ['.]

2. The [present ][writ ][appeals are ][arising ][out ][of ][a ][common]order dated [2't.O8.2O2O, passed ][in ][W'P Nos'5O24 ][and ][8997]of 2O2O by tlre [learned ][Singie ][Judge ][dismissing ][the ][u:rit]petitions.

3. The [facr ]s [of ][the ][case reveal ][that ]['Lhe ][appellant/]is [r. ][companY registered ][under rhe ][Compantes]petitioner Act with the [Registrar ][of ][Companles'][ Hvderatrad ][and ][its]maln cbject [i; ][tc][ carry ][out ][the ][business ][as ][ti ][registered]stock broker [i.nd ][a ][depository ][participant ]['lhe ][undisputed]reslror-Ident/f acts of [th ][e ][cerse ][reverrl ][that ][the ][second]Director [Gene'a1, ][Ministry ][of ][Corporate ][Aflairs' ][t1-rrough ][its]conlerre<1 [under]ioint Directc [: irr ][exercise ][r-rf ][powers]Section [212( ]\{al [and ][(c) ][of ][the ][Conrrrarries ][Act' ][2013]orclered [inve: ][tigation ][into the ][affairs ][of ][thc ][appellant]cclnpany, [rrid' ][Or:der ][dated ]['27 ]['t)2'2O2O ][and ][in ][pursi'rance]of the Order [rl,atr:'l ][27'A2'2O2O' ][the ][investigatior ][officer]

Issues

issued notice dated 16.06.2020 under Section 2i7 of thecompanies Act calling for certain information and videcommunication dated 19.06.2O2O intimated the appellantcompany to strictly comply with notice under section 217of the Companies Act with default clause. The appellantof the Companies Act with default clause. The appellantcompany preferred a writ petition i.e., W.p.No.5O2 4 of 2O2Ochallenging the Order, d,ated, 2Z.02.2020 passed by the2Z.02.2020 passed by thesecond respondent under Section 212(l) (a) and (c) of theCompanies Act, and filed another writ petition i.e.,W.P.No.8997 of 2O2O challenging the notices dated16.06.2020 and 19.06.2020, issued under Section 2lT ofthe Companies Act.W.P.No.8997 of 2O2O challenging the notices dated16.06.2020 and 19.06.2020, issued under Section 2lT ofthe Companies Act.

4. The facts of the case further reveal that on22.11.2019, the National Stock Exchange (NSE) hasreported to the Securities and Exchange Board of India(SEBI), the findings of an inspection and forensic auditconducted by the NSE in respect of the activities of theappellant company andthe same revealedmanymisconducts on the partof the appellant companyincluding the unauthorisedpledging of client securitiesand transfer of funds raised from the above to the relatedparties, stock lending scheme carried out by the companyand deletion of fiies and emails from the systems of Mr.c.Parthasarthy, cha,rman and Managing Director of the appellant co npany as [well ]as [certain other ][elnploYees,]anti-fc [-ensic ]tools. [The ][SEBI ][vide ][its ][er ][parte ][ad]using interim order dated 22.11.2019 [issued ][various ][clirections]relating to th [: ]appellant [company. ][The ][SEBI ][prohibited ][tile]col appellant tpany from [taking new clients ][lor ][broking]activities, di'ected the depositories, [namety ][National]Securities t epository Limited [(NSDL) ][and ][Central]Depository Sr rvices Limited [(CDSL) ][not ][to ][act ][lrpon on ][the]instructions rf the appellant [company ][in ][prtrsuance ][of]Power of Atto ney and also restricted [transfer of ][securities]from one DP e ccount of the appellant [company]

5. The fact ; further reveal that [there ][were ][cotnplaints]from the inve',tors and continuous [reporting ][in ][press ][and]visual media about the [fraudulent activities ][of ][the]cor and [in ][those ][circumstances, ][the]appellalt lpany Inquiry was o'dered under [Section ][206 ][of the ][Corrtpanies]Act by the Reg strar [of ][ComPanies.]

6. The statr [tory ][provisions, namely ][Sections ][206' ][2O8']210 and 212 [( ]| [of ][the ][Companies ][Act, ][which ][are ][nocessary]for adjudicatio [r ][of ][the present ][writ ][appeals, are ][reproduced]as under:- "2O6. Powt,r to [call for information, ][inspect ][books ][and]conduct in luiries. - [(1) ][Where ][on ][a ][strLttinv ][of ][anv]clocument [I ]led [by a ][compan] ][or on ilnv ][inlbrrna ][titln]received bv nitn, [the ][Registrar ][is ol ][thc ][ollinton ][t ][r?rt ][:llr\]

further information or explanation or any furtherdocuments relating to the company is necessary, he mayby a written notice require the company- (a) to furnish in writing such information or explanation; or (b) to produce such documents, 'a'ithin [such ][reasonable ][time, as ]may be specificd in thenotice.

(2) On the receipt of a notice under sub-section (1), itshall be rhe dury of the company and of its officersconcerned to furnish such information or explanation tothe best of their knowledge and power and to produce thedocuments to the Registrar vuithin the time specified orextended by the Registrar:

Provided that where such information or explanationrelates to any past period, the officers who had been in therelates to any past period, the officers who had been in theemployment of the company for such period, if so calledupon by the Registrar through a notice served on them inwriting, shall also furnish such information or explanationto the best of their knowledge.upon by the Registrar through a notice served on them inwriting, shall also furnish such information or explanationto the best of their knowledge.

(3) If no information or explanation is furnished to theRegistrar ivithin the time specified under sub_section (1) orif the Registrar on an examination of the documentsif the Registrar on an examination of the documentsfurnished is of the opinion that the inlormation orexplanation lurnished is inadequate or if the Registrar issatisfied on a scrutiny of the documents furnished that anunsatisfactory state of affairs exists in the company andsatisfied on a scrutiny of the documents furnished that anunsatisfactory state of affairs exists in the company anddoes not disclose a full and fair statement of theinformation required, he may, by another written notice,call on the company to produce for his inspection suchlurther books of account, books, papers and explanationsas he may require at such place and at such time as hemay specify in the notice:information required, he may, by another written notice,call on the company to produce for his inspection suchlurther books of account, books, papers and explanationsas he may require at such place and at such time as hemay specify in the notice:

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

(4) II the Registrar is satisfied on the basis of iniormationavailable with or furnished to him or on a representation made to lim by anv person that the business of a companvis being < arried on lor a fraudulent or unla*,ful purpose ornot in co npliance rvith the provisir:ns ol'this Act or il thegrievance i of investors are not being addrr.ssed, thcRegistrar may, after informing the company of theallegation i made against it by a written order, call on thecompany to furnish in u'riting any infornration orexplanatic n on matters specified in the order within suchtime as hr may specify therein and carry out su(--h inquiryas he dee ns fit after providing the companl,a reasonableopportunit y of being heard:

Provided that the Central Government ma1 is, if it satisfied t rat the circumstances so [.tvarrant, ]Cirect theRegistrar c: an inspector appointed by it for rhe purpose tocarrv out t' re inquiry under this sub-section:

Provided urther that where business of a coml;an-y hasbeen or is being carried on lor a fraudulcn r or u niau'fulpurpose, e'ery officer of the company who is irr dclerr-rltshall be pu-rishable for fraud in the manner as provided insection 447shall be pu-rishable for fraud in the manner as provided insection 447

(5) Withor t prejudice to the foregoing provisions ol thissection, the Central Government may, il it is satisfied thatthe circum: tances so \ [/arrant, ]direct inspection of booksand papers of a company by an inspector appointed by itfor the purp rse.the circum: tances so \ [/arrant, ]direct inspection of booksand papers of a company by an inspector appointed by itfor the purp rse.

(6) The Ce ntral Government may, having regard to thecircumstanc:s by general or special order, authorise [an,v]statutory aL lhority to carry out the inspection [of ][books of]account of a company or class of companies.

(7\ lf a c{ mpany fails to furnish any informarion [c.,r]explanation rr produce any document [required under ][thts]section, the [, ]ompany and every officer [of the comp:rrlr,, ]'r'ircris in default shatl be punishable with a [llne ][rvhit'h ][rritv]extend to on: lnkh rupees and in [the ][case ][ol ][a contintting]failure, with an additional fine [which ][mav extend ][to ][i'ivc]hundred rup res for everv da-v after [the ][first ][during ][u'hich]the failure co rtinues. "

2O8. Report on inspection made:- The Registrar orinspector shall, after the inspection of the books of accountor an inquiry under section 206 and other books andpapers of the company under section 207, submit a reportin writing to the Central Government along with suchdocuments, if any, and such report may, if necessary,include a recommendation that further investigation intothe alfairs of the company is necessary giving his reasonsin support.

21O. Investigation into affairs of company:- (1) Wherethe Central [(iovernment ]is of the opinion, that it isthe Central [(iovernment ]is of the opinion, that it isnecessary to investigate into the affairs of a company,- (a) on the receipt ol a report of the Registrar orinspector under section 208;inspector under section 208; (b) on intimation of a special resolution passed by acompany that the affairs of the company ought tobe investigated; orcompany that the affairs of the company ought tobe investigated; or(c) in public interest, it may order an investigation into the affairs of thecompany.

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

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

212. Investigation iato affairs of Company by SeriousFraud Investigation Office:- ( 1) Withour prejudice to rheprovisions of scction 2l O, u'here the Central Governmcnt isof the opinion, thar it is necessary to investigate into thealfairs of a company by the Serious Fraud InvcsrigationOffice-Fraud Investigation Office:- ( 1) Withour prejudice to rheprovisions of scction 2l O, u'here the Central Governmcnt isof the opinion, thar it is necessary to investigate into thealfairs of a company by the Serious Fraud InvcsrigationOffice- on ['eceipt ][of ][a ][report of ][the ][Registrar ][of ][inspector](a) un< er Section [2O8;]un< er Section [2O8;]

(b) on ntimation [of ][a ][special ][resolution ][passed ][b-u" ][a]con pany [that its ][affairs ][are ][require<l ][to ][be]invr stigated;con pany [that its ][affairs ][are ][require<l ][to ][be]invr stigated;(c)in t re Public [interest; ][or](d)on request [from any ][Department ][ol ][the ][Cr:nt ][ral]Go\ ?rnment [or a State Government'](d)on request [from any ][Department ][ol ][the ][Cr:nt ][ral]Go\ ?rnment [or a State Government']

the Centr [rl ][Government ][may' b]' ][order' ][assigr ][thc]investigatit [n ][into ][the ][affairs ][of ][the ][said ][comparrv ][to ][the]Serious [Fr ][rud ][lnvestigation Office ][and ][its ][Dircctor' ][tnav]designare [: ][uch numbcr ][of inspectors' as he mav ][cotlsidcr]necessary [')r ][the ][purpose of ][such ][investigzrtion ]["]investigatit [n ][into ][the ][affairs ][of ][the ][said ][comparrv ][to ][the]Serious [Fr ][rud ][lnvestigation Office ][and ][its ][Dircctor' ][tnav]designare [: ][uch numbcr ][of inspectors' as he mav ][cotlsidcr]necessary [')r ][the ][purpose of ][such ][investigzrtion ]["]

7 . In the [li ]tht [of ][the ][aforesaid statutoryr ][provisions' ][the]respondent [Ir ][c.6/Assistant ][Registrar ][of ][Compani<:s ][issued]a letter dated [03. ][l2'2['g ][calling for certain ][inlbrmation ][of]the appellant [company ][with ][regard ][to ][the ][currellt ][status]and investiga [ion ][of ][SEBI ][and the action taken ][against the]and inappeliant [co ][npany ][and ][its ][group ][companres][o1 ][the ][same, ][the ][aPPellant ][comPanv][ submitted]pursuanceits replY [on]3.12.2O1g. [The ][facts ][further ][reveal ][that ][the]respondent [N ][c.6/Assistant ][Registrar ][of ][Compztnies issued]14.O7.2O2O [under ][Section ][206(1) ][ol ][the]a notlce [on]Companies [1 ][ct ][calling ][upon ][the ][appellant ][rlonlpanv ][to]furnish [som{' ][more ][information ][and ][documents within]seven [daYS][,,f ][receipt ][of ][such ][notice ][and ][the ][appeliant]company [so ][-rght ][four ][weeks ][time vide ][lett(lr ][dated]to thre [aPPellant]22.O1.2O2O [rut ][time ][was ][not ][granted]/n/

and another [notice ][dated 27.01.2020 ][under]company Section 206(3) of [the ][Companies ][Act ][was ][issued ][to ][the]appellant company to furnish [original documents/registers]maintained by the appellant company. [It ][has ][been ][stated]that the officers of the appellant company [were physically]present on 27.O1.2O2O and submitted a preliminary replyand sought time to submit some more documents and alsoprayed lor grant of opportunity of personal hearing. Theappellant company at that point of time.preferred again arvrit petition, i.e., W.P.No.3143 of 2020 before this Courtstating that they li,ere not given time to respond to theletter dated 14.O1.2O2O and therefore, the action of therespondents is bad in lau,. In the aforesaid case, thelearned Assistant Soiicitor General appeared in the matterand categorically stated that the respondents wili take intoaccount the explanation submitted by the appellantcompany and shall proceed with the enquiry in accordancewith law. The writ petition was disposed of in view of thestatement made by the learned Assistant Solicitor General,vide order dated 14.O2.2A2O.

8. The appeilant company thereafter requested therespondents vide letter dated 20.02.2020 stating that anopportunity of hearing be granted to the appeliantcompany and as allegedly no response was received, the

co another [writ ][petition,]appellant npany [preferred ]i.e., W.P.No.4'.42 of 2O2O and [in ][the ][aforesaid ][r:ase, ][it ][was]to th: notice of this [Court ][that ][based ][upon ][the]brought Inquiry Repc:t dated [24.O2.2O2O ][submitted ][b-v- ][the]Registrar of C rmpanies, [the ][Office ][of ][the ][Director ][General]has passed an Order [dated ][27.O2.2O2O ][clirecting]investigation nto the [affairs ][of ][the ][appellan: ][company]under Section [212 ][(1)(a) ][and ][(c) ][of ][the ][Companies Act']

g. Aggrieved by the aforesaid order. the appellantcompany prefe'red another [writ ][petition, ][i.e., ][W ][P ][No'5O24]of 2O2O. The r:spondents [have also issued notices under]Section 217 ol the [Companies ][Act dated ][16'06 ]['2O2O ][and]19.06.2020 a rd [against ][the ][aforesaid ][nor-ices, ][the]appellant com )any [preferred ][another ][writ ][petition, ][i'e"]W.P.No.8997 o12O2O.

10. Learned [c ][runsei ][for ][the ][appellant/petitioner ][company]has vehementll [argued before ][this ][Court ][that ][the ][appellant]company has [n ][lt ][been ][granted ][an ][opportunity ][as ][provided]under Section [206(a) ][of ][the ][Companies ][Act and ][a ][Report]was submitted [by ][the ][Registrar ][of ][Companies rvithout]an [oI ][portunity ][to ][the ][appellant ][company ][and]granting the [order ][daled' ][27'O2'2O2O ][deserr'es ][to ][be]therefore, Another [ground ][raised ][by the appellant ][compf,ny]quashed. J

is that the Central Government [has ][not ][formed any opinion]based upon [t1-re ][Report submitted ][by ][the ][Registrar ][of]ASunder Section 2lO of [the]Companiesrequired Companies Act and therefore, the [order ][passed ][by ][the]Central Government is bad in law. The appellant/petitionercompany has prayed for the following reliefs in [the ][writ]petitions:- "W.P.No.5O24 of 2O2Ot- Petition under Article 226 of the Constitution of lndiapraying that in the circumstances stated in the affidavitfiled therer.r'ith, rhe High Court may be pleased to

(i) Issue u,rit of mandamus or any other appropriatewrit, order or direction declaring that the action ofrespondcnt No.2 in issuing order dated 27.02.2O2Ois in contravention of the provisions of theCompanies Act, 201 3 and is illegal, arbitrary andunconsti tutional.writ, order or direction declaring that the action ofrespondcnt No.2 in issuing order dated 27.02.2O2Ois in contravention of the provisions of theCompanies Act, 201 3 and is illegal, arbitrary andunconsti tutional.

(ii) lssue u,rit of mandamus or any other appropriatewrit, order or direction restraining the Respondentsand their agents/officers from taking any coercivesteps including investigation under Section 212 ofthe Companies Act, 20 1 3, without following theprocedures under Sections 206 to 208 of theCompanies Act, 20 13, without awaiting the finaldecision of SEBI.writ, order or direction restraining the Respondentsand their agents/officers from taking any coercivesteps including investigation under Section 212 ofthe Companies Act, 20 1 3, without following theprocedures under Sections 206 to 208 of theCompanies Act, 20 13, without awaiting the finaldecision of SEBI.

W.P.No.8997 of 2O2O:-

Petition under Article 226 of the Constitution of Indiapraving that in the circumstances stated in the affidavitflled therewith, the High Court may be pleased to

(i) Issue r.r,ri t of mandamus or anv other appropriateu,rit, order or direction declaring that the action ofrespondent No.3 in issuing NoliceNo.SFIO/ INV/ UNIT-II/ t 12t4-223lK;BLl2o2o I t /u,rit, order or direction declaring that the action ofrespondent No.3 in issuing NoliceNo.SFIO/ INV/ UNIT-II/ t 12t4-223lK;BLl2o2o I t /

19:\89 /2O2O, dated 1610612020, Notice No.SFIO/rN\ /uNrT-I/ 1214-1223 IKSBLI 2O2O I [1 ]I re93o I20- O, dated 19/06/2o2a, is in contravention [o1' ][the]prc uisions of the Companies Act, 20 13 and isille and unconstitutionai [zrnd]1al, arbitrary cor aside the \oticesequenlly set No. IFIO / INV/ UNIT-ll / | [1 ]2 [1 ]4-223 I [KSBL ]I [20 ][20 ]I [I ]Il9t'59 l2O2O, dated 1610612020, [Notice ][\o.SFIO/]rN! /uNIT,r/ t214-t223 I KSBL I [2o2O ]I [1 ]I [ltte3o ]I'202),

(ii) Issr e n'rit of mandamus or [any other ][appropriate]writ order or direction [restraining the ][ResllonCents]and their agents/officers [from takirtg ][allr ][cot'r<'ivc]steps against the [petitioner, pending ][W,P ][No.5O24]of 2 )2O before this [Hon'lcle ][Court."]writ order or direction [restraining the ][ResllonCents]and their agents/officers [from takirtg ][allr ][cot'r<'ivc]steps against the [petitioner, pending ][W,P ][No.5O24]of 2 )2O before this [Hon'lcle ][Court."]

i 1. The lear ned Single [Judge ][has ][dismissed ][the ][writ]petitions by a Common Order [dated 26.08'2020 ][and]relevant porti( n is [reproduced ][as ][under:-]

"81. tn the light of these [allegations, ][the ][q'trr]respondent initiated inquiry [under ][Section ][206 ][of ][the ][Act]and issued lotices [and the ][petitioner also ][liled ][a ][detailccl]repl-"- dated )3.O2.2O2O [and ][at during ][that ][stage, ][thc ][2r'rr]respondent vide [order ][dated ][10.01.2020 ][directed ][thc ][Strl]respondent to conduct [full-fledged ][inquirv under ][Set'tion]2O614) of th : Act [and submit ][report ][And ][lhis ][r:o ][rrt ][vitie]crrder clatet [14.O2.2O2O ][directed ][the ][re ][spon(l(rnts ][t(')]conclude th I inquiry [under ][Section ][206( ][1) ][ot ][the Act ][bl']duly taking [into ][consideration ][the ][reply submitted ][tr-v ][the]petitioner or 03.O2.2020. [Accordingly, ][the ][Stl' ][responcient']by consideri rg [the reply ][of ][the petitioner dated ][03'O2'2O2O']concluded tl e [inquiry ][under ][Section ][20614l ][of the Act ][and]submitted r( [port ][dated ][24 ][.O2.2O2O, ][and ][this ][court ]' [u ][hiie]he [first ][issue, ][held ][that initiation ][of ][incluiry ][by]considering Central Go /ernment and [report ][submitted ][b1' ][5'h]respondent are in [conformity ][with ][sub-sectior-r ][(4) ][of]

Section 2O6 of the Act. The said report lormed the basis forpassing the impugned order dated 27.O2.2O2O, orderinginvestigation by SPIO into the aflairs of the company, andthe investigation is also ordered in public interest.

82. As the report dated 24.02.2020 is relied upon bythe 2nd respondent to pass the impugned order, it isnecessary to examine the said report, to see u,,hether the2,,,r respondent is justified in forming an opinion to orderfor investigation by SFIO. The said report is filed alongr,l,ith the material papers to the counter affidavit, and therelevan t conclusions are as under:

(14) CONCLUSTON:

(l a.1) The company hasfiled its latestfinancialstatements for the financialyear 20IB-19only on23.12.2019 and Annual Returnon 31.12.2019.Furtherbased on t he media reportsand directionsfrom theDirectorate and thc Ministry letters have been issued to theDirectorate and thc Ministry letters have been issued to thecompanv inclucle the latest one issued uncler Section206(1) dated 14.01.2O2O for their comments u,ithin 7 days.The companv has furnished its reply vide letter dated206(1) dated 14.01.2O2O for their comments u,ithin 7 days.The companv has furnished its reply vide letter dated03.O'2.2020, which has been examinecl in detarl in theT:rbular Statement attached as Annexure-IV. It may bescen that the company has not provided full details onspecific details called for, as may be seen from the attachedreport.(14.2) Inview of thenature of allegations, thenumber of groupcompaniesinvolved r.,",hich are underjurisdictions of various ROCs, the prima facie findings thatthe company has raised their loan capital by pledgingT:rbular Statement attached as Annexure-IV. It may bescen that the company has not provided full details onspecific details called for, as may be seen from the attachedreport.(14.2) Inview of thenature of allegations, thenumber of groupcompaniesinvolved r.,",hich are underjurisdictions of various ROCs, the prima facie findings thatthe company has raised their loan capital by pledgingshares of their clients and diverted the money to groupcompanies using a power of attorney taken from theclients, rvhich is meant to be used only at the time of theclients, rvhich is meant to be used only at the time of theclient's direction to sell the securities, with acriminalintent u,ithout the knowledge or consent ofclien ts,discrepancies in charge documents in this office \.l,ith thardiscrepancies in charge documents in this office \.l,ith thar of the clai;:ls of bank [revealed ][in ][SEBI ordcrs, ][signrng ][of]stanclalone balance [sheet ][by ][the ][continuing ][auditor ][and]consolidat€ 1 balance [sheet ][by ][a ][different ][auditor ][appointed]just before AGM i.e., 3O-O9.20i9, the [media ][reports ][irbout]investor gr evances [and ][to ][protect ][investrtrs ][mollc]' ][this]office sugt ,ests that [the ][Ministry ][ma-\' ][consicle;- ][al1]investigatio r into [affairs ][of ][this ][compan-v, ][Karvl gro;p ][of]companies and 9 [companies ][having ][domain ]['rante ][of]karly.com :nd [having common ][addresses ][in ][UGC records']as mentior ed in [SEBI ][order ][dated ][22-Nov-20 ][19 ][by ][an]appropriate [authority ][in ][a ][speedy ][and efficient manncr ][for]better prote :tion [of ][public ][interest ]["]

83. The above [conclusions ][recorded ][by ][the ][5'l']respondent needs no [reiteration, ][and ][they ][i:lre ][self]and [one ][of the ][ailegations ][against ][the]explanatory petitioner I nd its [group ][of ][companies ][is ][thar ]' [those]companies ['aised Ioans ][from ][the ][Bank, ][u'hich ][is ][p ][-rblic]in L fraudulent [manner ][detailecl ][above ][Hence']money, there is sufl cient [amount of ][public interest ][involverl ][rn ][this]case. ln th, [light ][of ][these ][conclusions, ][the ][511'resPOn(le11t]recommend, d [lbr further ][investigation ][vide ][his ][report ][datcd]24.O2.2020.

a4. . Jor-rg with [the ][counter ][affidavit' ][resp':)ndents]filed the mii utes [of the ][Oversight Committec meeting ][he ][id]on 25.O2.'2tt2O. [The ][said ][minutes disclose tilat]t1-rcthcCommittee considering [the ][allegations ][agaiust]petitioner, d rection [of this ][court ][in ][W ][P No ][3143 ]['rf ][2020]dated \4.O'. [.2O2O ][and ][the ][report ][of ][the ][RoC ][clatcd]24 .O2.2O2O, [conveyed ][its ][decision ][to the ][Central]Government [recommending investigation ][into ][the aflairs ][of]the [petition( ][r ]- [company ][The ][decision ][of ][the ][O"ersight]Committee is extracted [as ][under for ][ready ][referencc:]"8. De, ision [of Oversight Committee:]

8.1 ln view [of ][the ][presentation made ][bv ][RD ][(SER)]and the in 1uiry [report, ][the ][oversight ][6ommi11sg ][(oC)]observed:

a) Interest of investors (more than 80,000) , [includirlg]retail investors, u,hich [are ]at [stake ][as ][KSBL ][had ][prima]facie abused its position as a Depository [Participant.]

b) KSBL had prima-facie borrorT,ed fund from [Banks]& BFIs by citing false information.

c) There is a likelihood of diversion of [public ][funds]thrr:ugh relate d parties.

d) Specialized/Technical/ Complex nature of thealleged fraud.

8.2 Taking into consideration all these factors, therecommendedOversight Committee unanimously investigation into the affairs of KSBL and their 9 companiesmentioned in para 44 above, by SFIO under Section212(l)(a\ and (c) of Companies Act, 2013 by SFIO, in publicrnterest,

85. Considering the report submitted by the sthrespondent dated 24.O2.2O20 and also the decision of theOversight Committee dated 25.02.2O2O, I arr of theconsidered view, that there are pima facie circumstancesjustifying the action taken by the 2"d respondent in formingopinion with regard to necessity for ordering investigationinto the affairs of by the company by SFIO, as large publicinterest is. involved.

86. In t-hc judgments relied on by the learned SeniorCounsel appearing for the petitioner in Medak Diocese ofChurch of South India Trust Association vs. Union of India(20 18 (l) ALD 7341, the facts disclose thar rhe impugnedorder therein does not disclose formation of opinion withregard to necessigr for ordering investigation by SFIO.Therefore, the learned single Judge has remitted the matterback for passing fresh orders in exercise of jurisdictionunder Section 2 12 of the Act.

87 . Similarly in the order of the Division Be nch ofthe High [,)ourt ]of Bombav in Parameshu'ar Das Agarr,r'al v.Additiona Director (2016 SCC Online Bom !t27(>), thclearned ju lges after exposition ol the Ia$, [()n ]Section 212 ofthe Act, o: L facts found that there is no material [q ]hit:h canbe termcd as enough to \.\.'arrant the exercise of [potrer ][b1']the Centri I Government by resorting to Section [2 ][12{ ][1) ][of]the Act of 2013. The facts in the [judgment of the ][Division]Bench, arr different from the facts of the [present ][case, ][and]hence exc, pt for the law laid down therein, it [cannot ][be]made appl' :able.

88. [.or ]the foregoing reasons, the issue [No.2 ][is ][aistr]ansu,ered i r the affirmative.

89. [' ]he other contentior-r of behalf of [the ][pctitiorler ][is]that as th ) matter is sub [judice ]by SEBI, the [present]investigatio r has to await the result ol inquiry [b1' ][SEBI.]

90. l-r the counter affidavit it is categorical:r' [sLittud]that the au -horities that deal with the inqlriry, [inspection]or investiga ion under the Ministry of Corporate [Aflairs ][arc]altogether [,lifferent ]and the scope of [inquiry ][and ][the]procedure t rat rvould be adopted by another [regllliltor ][i.e.,]SEBI, is difl :rent, therefore, [the ][case ][of ][the ][responCents ][is]that the ci ntention of the [petitioner ][is ][incorrect ][and]absolute fals e.

91. Sub-section [(2) ][of ][Section ][212 ][of ][thc ][Act']mandates tl at where [any ][case ][bas ][been assigned ][bv ][the]Central Gov rrnment to [SFIO ][for ][investigatiot't ][utlclcr ][this]Act, no othe [- ]investigating [agenclr ][of ][central ][(lovernnlelll]or the State iovernment [shali ][proceed ][r'l'ith investigirtir>n ][in]such case ir [rerspect ][of ][:inv ][rlflcncc ][undcr ][t!.tis ][At ][t ][arlri ][irr]case anv sr-t h [invcstigation has ][aireird',' ][bct'n ][inil ][l'rit'rl ][lt]shzrll n0t lte' [,rOce ][ccl ][i-tlrthcr ][$ ][ith ][ancl ][thc cot'l''ilrnt ][li ][itllt ][ti<'r']shall trar-rsi, r the [re ][lcvant ][documcrts ancl ][rt'cr ][rcis ][it-t]rospect of st r:h [oflenct ][s ][under ][this ][Aci ][to ][SFI(). ][IrL ][titr':]

of sub-section [(2) ][of Section ][212, ][the ][contention ][of the]light petitioner in this regard is rejected.

92. Before [parting ][with ][the ][case ][it ][is to ][be ][noticed]that this court is [not ][sitting ][in ][appeal over ][the ][decision of]the Ccntral Government in [ordering ][investigation ][into ][the]affairs of the company [under ][Section ][212(l\(a) ][and ][(c) ][of]the Act, and scope of this [court ][under ][Article 226 ][of ][the]Constitution of India, with [regard ][to ][judicial ][review, ][is]limited to the examination of decision [making ][process, and]not the decision. In the preceding [paragraphs, ]this [court,]on examining the said process, found that [ROC ][has]follou'ed the procedure envisaged [under ][Section ][206$l ][of]the Act and submitted the report; and the s.aid [report ][and]the ordcr of this court, and also the other material availableon record, w'as examined by the Oversight Committee, andvide its minutes dated 25.02.2020 recommended for, investigation. Eventually, the 2"d respondent, consideringthe report dated 24 .O2.2O2O, and in exercise of hisjurisdiction under Section 2l2(1)(al and (c) of the Act, andforming an opinion with regard to necessity for orderinginvestigation into the affairs of the company by SFIO,ordered investigation vide the impugned, as large publicinterest is invoived. In these circumstances, no cxceptioncan be taken to the impugned order.

93. For the foregoing reasons, I do not find anyinfirmity in the impugned order warranting interlerence ofthis court under Article 226 of the Constitution of India forcxcrcise ol pou.er ol judicial review, and in vieu. of thesame, W.P.No.5024 of 2O2O is liable to be dismissed.

94 . I t is made clear that the prese nt writ petitionsare confined to the jurisdiction of the 2nd respondent inordering investigation into the affairs of the company bySFIO under Section 212 of thre Act, and this court has notexpressed any opinion on merits, and the truth orotherwise of the allegations are subject to the result of the r and [the ][further ][proceedings ][as per ][law']investigatic Hence, thr investigation [and ][the ][proceedings ][lher(laftcr]shall be st ictly [in ][accordance ][with ][law ][and ][uninflucnced]by observat [ons ][or findings, ][if ][any, made ][in ][this ][orcler']

95..or the foregoing reasons, the [impugncd :rclcr]lndated 27.O [).2020 ][is ][confirmed ][and the \\:rit ][petrtlc)n]W.P.No.502 [1 ][is ][dismissed, ][and ][consequently' ][W ][P ][No ][8997]of 2O2O, [v ]hich [has ][been ][filed ][challenging ][the]noticesis alsoissued in [pursuance ][of ][the ][impugned ][order']dismissed.

96. \4iscellaneous [petitions ][pending'' ][if ][an1 ]' [shirll]stand close( [No ][order as to costs ]["]

12. The [aptr ]ellant [company ][belore ][this ][Court ][\'"'hile]challenging [the ][order ][passed ][by ][the ][learned ][Single ][Judge]has raisecl twt [grounds:- ][(i) ][that ][no ][opportunitr' ][of ][hearing]as required [ur ][der ][Section ][20614l ][of ][the ][Companies ][Act ][u'as]granted to th r [appellant ][company; ][and ][(ii) ][the ][Central]Government [has ][not ][formed ][any opinion ][keeping ][in ][view]Section 2lO [of the ][Companies ][Act for ][clirecting]investigation [ir ][Ito ][the ][affairs ][of ][the ][appellant ][compan;u']

13. In [respett ][ol ][the ][first ][ground ][of ][not ][conducting ][an]inquiry [and ][n( ][t ][providing ][an opportunity ][of ][hearing to ][the]appellant [coml)any ][as ][required ][under ][Section 206(4) ][of ][the]Companies [At ][t ][is ][concerned' ][the ][stand ][of ][th('- ][Llnion ][of]India is [that under ][Section ][208 ][of ][the ][Companies ][Act' ][the]Registrar [or ][in ][spector ][after ][inspection ][of books ][of ][ztccount']

submits a report in writing to the Central Government andsuch report may, if necessary) include a recommendationfor further investigation into the affairs of the company.The aloresaid statutory provision makes it very clear thatthe Registrar of Companies can forward matter afterinspection of books of accounts to the Central Governmentor he can forward the matter after conducting an inquiryas required under Section 206(41 of the Companies Act. Inthe present case, keeping in view the complete material onrecord, the Registrar of Companies has foru,arded thematter to the Central Government in public interest.Keeping in view the larger public interest, the Inquiry wasnot conducted by the Registrar of Companies underSection 206(4) of the Companies Act. proviso to sub-section (4) of Section 206 of the Companies Act dispenseswith other requirements of sub-section (4) of Section 206 ofthe Companies Act. The Inquiry under Section 206 of theCompanies Act by the Registrar of Companies and theinvestigation under Section 212 of the Companies Act bythe Serious Fraud Investigation Office (SFIO) operate indifferent fieids and the information gathered by theRegistrar of Companies under Section 206 of theCompanies Act can be used as a tool for furtherrnvestigation and an investigation under Section 212 of the Companies \ct is in public interest and there.lore, the firstground argrLed by the learned counsel for the appellantcompanv is rf no help to the appellant comparry.

14. In the :onsidered opinion of this Court, f<_:: orderingan investiga .ion and further action bv the SFIC) underSection 272 ol the Companies Act, the recluirement ol'obtaining a I eport of the Registrar of Companies is not atall warranteci

15. The inv:stigation can be ordered on th(-. basis of -(a) on receipt tf a report of the Registrar or insp,ector underSection 208; (b) on intimation of a special resolutionpassed by a :ompany that its affairs are required to beinvestigated; ( :) in the public interest.

16. In the considered opinion of this (lourt, theinvestigation l as been ordered by the Central Cor,<:rnmentin public inter est and therefore, this Court dot,rs not findany reason tr interfere with the Order passed by thelearned Single ludge.

17. Much ha: been argued by the learnecl coursel for [the]appellant com )arv that no opinion rnas lormed bv theCentral Goverrment as required under Section [')1C) ]of theCompanies Act In this context. it is relevant to reproduce the Order d.ated. 27.02.2020 [passed ]by [the ][respondent]No.2/Office of the Director General, Ministry [of]Corporation Affairs, is reproduced as under:- ,,";il:ffi::,':i;?",."Office of Director GeneralNo.o7 / 341 I 2o1s-CL.ll (SER)

Kota House Annexe,1, Shahjahan Road,New Delhi - 110 01 1Dated: 27.O2.2O20

ORDER

Whereas the Central Governmeni is empoweredunder Section 2l-2 of the Companies Act, 20 13 to orderinvestigation into the affairs of any company in publicInterest and to appoint one or more competent persons asinspectors to investigate the affairs of the company.

2. AND where as ROC, Hyderabaci through RD (SER)has submitted Inquiry Report dated 24.O2.2O2O to theCentral Government under Section 208 of the CompaniesAct, 20 13 and recommended investigation into the affairshas submitted Inquiry Report dated 24.O2.2O2O to theCentral Government under Section 208 of the CompaniesAct, 20 13 and recommended investigation into the affairsof the Karvy Stock Broking Limited (KSBL), its Group ofCompanies and 9 other companies namely (i) KarvyConsultants Limited, (ii) Wizard Insurance Services privateLimited, (iii) Zenith Insurance Services private Limited, (ir,)Buoyant Insurance Services private Limited, (v) NovaWealth Management Services private Limited, (vi) VitalinkWealth Advisory Services private Limited, (vii) ClassicWealth Management Services private Limited, (viii)Champion Insurance Services private Limited, (ix) pelicanWealth Advisory Services private Limited.Consultants Limited, (ii) Wizard Insurance Services privateLimited, (iii) Zenith Insurance Services private Limited, (ir,)Buoyant Insurance Services private Limited, (v) NovaWealth Management Services private Limited, (vi) VitalinkWealth Advisory Services private Limited, (vii) ClassicWealth Management Services private Limited, (viii)Champion Insurance Services private Limited, (ix) pelicanWealth Advisory Services private Limited.

3. Noir., thcrefore, in exercise of powers conferredunder Secrion 2t2(tl (a) & (c) of the Companies Acr, 2013,thc Central Government has formed an opinion that theunder Secrion 2t2(tl (a) & (c) of the Companies Acr, 2013,thc Central Government has formed an opinion that thea ffairs of theabove referredcompanies needto beinvestigated toexamine theserious nature offraud

committe( as large public interest is involved and therebyorders inr -'stigalion into the affairs of Karvy Stock BrokingLimited ( iSBL), its Group of Companies ancl 9 othercompanies namely (i) Karvy Consultants Limited, [(ii) ][Wizarcl]Insurance Services Private Limited, (iii) Zenith [Insurancc]Services I rivate Limited, [(iv) ]Buoyant Insurance' [St'rvices]Private Li nited, (v) Nova Wealth Management [Service's]Private Li nited, (vi) Vitalink Wealth [Aclvisorv ][Services]Private Lir rited, (vii) Classic Wealth [Management ][Services]Private Lin ited, [(viii) ]Champion [lnsurance ][Servict:s ][Privarte]Limited, (x) Pelican Wealth Advisory [Scrvice:r ][Private]Limited to be carried out [by ][officers ][of the ][Serious ][liraud]lnvestigati< n Office as may [be ][designated ][bl ][Director,]SFIO.

4. T: .e inspectors appointed by [Director, SFiO ][to]investigate into the affairs of thc [abo','e ][nlclrtiotlecl]hall exercise all the [por.T'ers ][available ][to ][them]company, [s ]under the Companies Act, 2013. [The ][inspectors ][shall]complete tl eir investigation [and submit ][the ][repor-t ][t(r ][the]Central Gor :rnment.

5. Th is order is issued [for ][and ][on ][behall ][o1' ][the]Central Gov :rnment.

(A.M.ManaPatra)Joint Director"

18. The afor:said [Order ][makes ][it ][very ][clear ][that ][the]Central Gover lment [has ][formed ][an ][opinion ][based ][upon]the serious [nr ][ture of ][fraud ][committed ][in ][the ][matter ][as]larger public [interest ][is ][involved ][in ][the ][affairs ][of ][the]appellant [com ])any [and ][the ][opinion was ][formeci ][based]the mate [ial ][forwarded by ][the ][Registrar ][of Companies]upon to the Central [t ][iovernment.]

19. The learned counsel for the hasappellant company placed reliance upon the Judgment delivered by thelearned Single Judge of this Court in the Medak Diocese ofChurch of South India Trust Association v. the Union of Indiar.The Order impugned in the aforesaid case is reproduced asunder:- "Whereas the Central Government is empowered undersection 212 of the Companies Act, 2013 to orderinvestigation into the affairs of any company and to appointone or more competent persons as Inspectors to invest.igatethe affairs of the company.

2. And whereas RoC (Chennai)/RD, Southern Region,vide their report dated 2ud.)une , 2016 submitted to theCentral Government Under section 20g ol the CompaniesAct, 20 13 has also recommended investigation into thealfairs o1' the company i.e., M/s. Church of South IndiaTrust Association.

3. Nou,, therefore, in exercise of powers conferred undersection 212 (1)(a) of the Companies Act, 2013 the CentralGovernment hereby orders investigation into the alfairs ofM / s. Church of South India Trust Association, to becarried out by the Serious Fraud Investigation office.

4. The Inspectors appointed by Director, SFIO toinvestigate. into the affairs of the above mentionedcompany, shall exercise all the powers available to themunder the Companies Act, 2013. The Inspectors shallcomplete their investigation and submit the report to theCentral Government within a period of six (6) months fromthe date of issue of this order.

5. Further, if any information is required cluring thecourse of investigation, you are requestecl to depute someolficer to coordinate with the Ministry for obtaining thedesired documen ts/informat ion.

6. This r rder [is ][issued ][for and on behall ][ol ][the ][Central]Governmen [,]

sd/-

(Himanshu Shekhar)DePutY Director"

20. Keeping [n ][view ][the ][aforesaid ][order' ][it ][can ][be ][safely]that n [the ][aforesaid ][case, ][there ][was ][no lormation]gathered of the opinior [by ][the ][Central ][Government ][and ][in ][those]circumstances [the ][learned ][Single ][Judge has ][delivered the]Judgment [hol< ][ing that][ no ][case ][was formed ][bY ][the ][Central]Government [vhereas]the requirement [of ][folmation ][of]has [reen ][fulfilled ][in ][the ][present ][case' ][and]opinion therefore, the luestion [of ][interference ][on ][this ][g:ound ][also]does not [artse.]

2L.Thelearn':dcounselhasalsoplacedrelianceupontheJudgment [deli ][rered ][in ][the ][case ][of ][Mohinder ][singh ][Gill ][v']Chief Election [C ][rmmissioner2 ][']

22. This [Court ][has ][gone ][through ][the ][aforesaid ]['Judgment]and the [presel ][tt ][case ][is ][a ][case ][where ][the ][documunts ][on]record establis'Ies [that ][the ][action was ][not only ][initiated ][by]theresponden.sbaseduponthelnquiryReportunderSection [2O8 ][o' ][the ][Companies ][Act ][by the ][Registrar ][of]Companies [bur ][aiso ][based ][on the ][other ][material ][involving]interes' public , [as ][stated ][clearly ][in ][the ][order ][dated]I ( tglS) t scc qo:

-l+

27. O2.2O2O and therefore, the Judgment relied upon, doesnot help the appeilant company in any manner. Not onlythis, the conduct of the appellant company reveals that atnot help the appeilant company in any manner. Not onlythis, the conduct of the appellant company reveals that atevery stage, all possible hindrances are being created bythe appellant company in order to stop investigation bySFIO right from day one on some pretext or the other, writpetitions have been filed, interim orders were granted andthe matter is not proceedings forward at all, meaningthereby not permitting the investigating agency i.e.,Serious Fraud Investigation Oflice to investigate into theaffairs of the appellant company.the appellant company in order to stop investigation bySFIO right from day one on some pretext or the other, writpetitions have been filed, interim orders were granted andthe matter is not proceedings forward at all, meaningthereby not permitting the investigating agency i.e.,Serious Fraud Investigation Oflice to investigate into theaffairs of the appellant company.

23. The matter is only at the stage of investigation andotherwise also the appeliant company has not been able topoint out the prejudice caused to the appellant company inthe matter. The respondents have adopted a transparentprocess. They have given an opportunity of hearing to theappellant company right from initial stages and therespondents are under obligation to follow the procedureprescribed under Section 2L2 of the Companies Act andthe Companies Act is a complete code in itself.

24. In the light of the aforesaid, this Court does not findany reason to interfere with the Order passed by the learned [Singl'' Judge and the ][writ ][appeals ][are ][ac<;ordinglv]dismissed.

Misceliareouspetitions,ifanypencling,slrr-rllstanddismissed. [T ][rere ][shall ][be ][no order ][as ][to ][costs']

'r,.9,ry*$=[t?HIA

//TRUE [COPY']

SECTION [OFFICER]

' [o', ]

' r Shastri h e s e [c ][Bhawar ][reta ]ry, ^' [Rai']["'.fl?:i",i,T,,:ifl'{#: ]ffi :,.", H ;hl;- l [} ]lift "1,lift "1,2. Office [of ][Direct< r ][Ge]

:Bltfl t{ril1""+:Fi'ld::"#i:J:"#*mDeendavaAn'1vodavaBhawant{ril1""+:Fi'ld::"#i:J:"#*mDeendavaAn'1vodavaBhawan. A'i''o."::'ui:i [ii$;a'iR;s ][o" ]':'lt;[iE [i:lii"i:ffi"JtTll:]':'lt;[iE [i:lii"i:ffi"JtTll:]Erh.\/2n Bandl [quoa' Nagole ][Tattiannaram ][vttt]: lffi Floor, [Corpora ]rus"xt#rqr,":m:r*-ii*.?ffi;*[e ][Bt]

, ?t333i; [[s6 ][r ][vinash ]][[r ][vinash ]][[vinash ]][Desai' ][Ra'ieshwar ][Advocat:l?t^Y"i*, ][xao' ][[t]][solicitor ][General ][toPucl]

, ?t333i; [[s6 ][r ][vinash ]][[r ][vinash ]][[vinash ]]l o.';a; [to ][sri ][Namavarapu ][[xao' ]][[t]]l o.';a; [to ][sri ][Namavarapu ][[xao' ]][[t]]

9. Two [CD ][CoPie ][s']

,rfo.one [Spave ][COPY']

SW t\$.

DATED:3111212021

COMMON JUDGMEI IT ORDERWA.Nos.327 & 328 c'2020

Dismissing th r WAsWithout costs

\\ [)-a)-]rO\k\l-

6ffi/r tr\l l,'-., a_;r-./