COMP.A/269/2025 of Dilliraj Vs The Official Liquidator on 16 October 2026

ORDER

The present Company Application has been filed to vacate the injunction granted in Comp.A.No.276 of 2024 in CP No.255 of 2014 dated 09.08.2024 in so far as Respondent No.13.

2. Heard Mr.R.Murari, learned Senior Counsel appearing for Ms.Hema Srinivasan, learned counsel for the applicant and Mr. V. Chandrasekar, learned counsel appearing on behalf of the Official Liquidator.

3. Mr.R.Murari, learned Senior Counsel appearing on behalf of the applicant would submit that the applicant had joined the services of the Company in liquidation as an employee in the Treasury Department in the year 1997 and had resigned from the services of the Company in liquidation on 22.11.2007 and was relieved on 18.01.2008. He would submit that in the interregnum, he had climbed up the ranks in the Company and was holding the post of a Senior Vice President Treasury on the date of his resignation. He would submit that during his tenure, he had never been vested with any authority which requires statutory compliance, financial decision making or even an authority to sign any return, certificate, balance sheet, prospectus, statement or other statutory documents.

4. He would further submit that the applicant had not derived any financial benefits beyond his compensation for salary and other incentives. He would further submit that the proceedings under PMLA was initiated against the applicant on the basis that there had been a benefit on the proceeds of crime in favour of the applicant. The same was challenged by the applicant in

proceedings of Crl.O.P.No.2488 of 2016, the PMLA proceedings was quashed. As regards to the attachment proceedings under the SAFEMA, the Appellate Tribunal by its order dated 21.11.2023 had set aside the provisional attachment of the applicant’s immoveable properties and the said order had become final. However, an appeal as against the Division Bench order quashing the PMLA proceedings had been challenged by the Department and is pending consideration of the Hon’ble Apex Court.

5. He would further contend that as there was no stay of the orders of quashing. Hence, the finding of fact as rendered by the Division Bench of this Court holding that the applicant was not benefitted of any proceeds of crime as of this date is valid and binding. The SIFO proceedings which had been relied upon by the Official Liquidator is also the subject matter of various proceedings before the Court and the same has also been stayed by this Court. In that regard, he would submit that the present proceedings initiated by the Official Liquidator wholly relying upon the conclusions arrived at by the SFIO in its Report cannot form a basis to sustain the application itself and in that regard, he would submit that the interim relief that had been granted by this Court is liable to be vacated. He would further submit that in view of the decisions made in a collateral criminal proceedings, no prima facie could be said to have met out as against the applicant.

6. He would further submit that a Report of the SFIO is devoid of merits as it is not substantiated by any material evidences. That apart, he would submit that even a perusal of the SFIO Report relates to the transactions beyond the period of the resignation of the applicant. He would further rely upon the judgment of the Hon’ble Apex Court reported in 2021 Vol.228 Comp Cas 185, and would submit that there is an express bar contained under Section 212 (2) of the Companies Act, 2013 which mandates that once a case is assigned to SFIO no parallel investigations or proceedings by any other agency could be continued. He would further submit that when a Division Bench of this Court had found that the applicant was not a beneficiary of the proceeds of crime that arose out of the offences committed in the Company in liquidation, the applicant cannot be again arrayed as a party to the application seeking for various reliefs including the relief against the applicant to deal with the very same property that was the subject matter of the PMLA and SAFEMA proceedings.

7. Drawing attention to the findings in the SFIO Report that the applicant was neither a Director, share holder, key manager Personnel or an officer in default, the proceedings as against the applicant is wholly unnecessary and therefore, prays this Court to vacate the injunction granted which causes serious prejudice to the applicant and also considering that the applicant is a senior citizen.

8. Countering his arguments, Mr. V. Chandrasekar, learned counsel appearing on behalf of the Official Liquidator would submit that the present application seeking for vacating the interim order is wholly without any merits. He would further submit that the applicant even though at the time when he had demitted office was holding the post of a Senior Vice President, Treasury, he was also the Acting Chief Financial Officer of the company in liquidation. He had extended loan facilities to seven satellite companies under the same management. He would submit that the said loans that were extended to the seven satellite companies were for the reason to acquire the shares of the company which had advanced loan to such satellite companies and thereafter, diverted the funds within the same management. The applicant’s role in such fraudulent transactions have been explicitly found in the investigation conducted by the SFIO.

9. He would vehemently content that the applicant was one of the key conspirators had acted in a fraudulent manner in which the companies funds have been siphoned off. He would further submit that he had prepared unsubstantial entries, inflated the income and assets in the books of accounts of the company in liquidation when he was holding the post of the Acting Chief Financial Officer of the Company in liquidation. In that process, there had been various manipulations in the company’s records including its books of accounts.

10. Placing heavy reliance upon the Report filed by the SFIO, he would submit that the applicant had played a crucial role in diverting the funds of the company. He would further submit that the applicant had primarily performed the functions of the Chief Financial Officer of the Company and had also given his residential address as the address of the satellite companies through which the funds of the Company were siphoned off. In that regard, he would submit that there exist a prima facie case as against the applicant for his role in siphoning of the funds of the Company. Hence, he seeks this Court to dismiss the application.

11. I have considered the submissions made by the learned counsels appearing on either side and perused the materials available on record before this Court.

12. The Official Liquidator had taken out an application for the reliefs to take on record the SFIO Report, to declare that the respondents had committed fraudulent activities contravening the Provisions of the Companies Act, to hold the respondents are personally liable without any liability for the debts and dues of the company in liquidation and also to hold that the respondents are jointly and severally liable to contribute Rs.1,200 Crores which is payable to the creditors of the company in liquidation and for disgorgement of the assets of the respondents for realisation of sum of Rs.1,302 Crores or any other further

amount as determined by this Court. Pending the said application, interim reliefs were also sought for realising the monies from the moveable and immoveable assets from various respondents, restrain them from creating any third party interest in the moveable or immoveable properties, freeze their bank accounts, the respondents respectively to disclose the moveable and immoveable assets to freeze their securities owned and held by the respondents and a further directions to the other Statutory authorities. Pending these applications, an interim reliefs were also sought for.

13. The primordial contention of the applicant against whom the interim orders were granted by this Court is that in a collateral criminal proceedings initiated under the PMLA noting that the Applicant was not involved in the allegations as made out therein had quashed the PMLA proceedings. It is to be noted that as against the said proceedings, an Appeal before the Hon’ble Apex Court is pending. However, without any interim orders based upon the same, a provisional attachment order which was pending challenge before the Tribunal under PMLA was also held in favour of the applicant. However, with a caveat that if the orders of the Hon’ble Apex Court have a bearing on the said Appeals that had been disposed of by the Appellate Tribunal, the Department was at liberty to take appropriate remedies including a right to file a Review Petition. In that regard, it can be safely concluded that the PMLA proceedings had not met its logical conclusion.

14. The proceedings by the SFIO and the Report filed by it had not been stayed at the instance of the applicant. The SFIO proceedings that were placed before this Court, dealt with the role of the applicant and he had been described to be a person as a key company personnel of the Company in liquidation. The Report categorically indicates that even though he was holding the post of the Senior Vice President in the year 2004-2005, he had been performing the functions of a Chief Financial Officer as he had been handling banking relationship, issuance of debentures and work relating to direct taxes. The Report also further indicates that he had played a key role in implementation of the fraudulent activities including floating of companies which had been shown to be operating from the residence of the applicant.

15. The Report had also relied upon the documents from the applicant indicating how the profits were escalated. Minutes of the Board Meetings have also been culled out in the said Report wherein the applicant had been authorised to be a Joint Signatory for issuing cheques. He had also issued letters to the consortium banks claiming himself to be a member of the Credit Committee, Asset Liability Management Committee and also of the Task Force Committee. In spite of documented financial ill-health of the Company, in view of the inflated profits and assets as boosted by the applicant which had benefitted the Company from various higher loan disbursal in favour of the

Company in liquidation and was also responsible for siphoning off the monies that had come into the coffers of the company in liquidation through bank loans, leading to a loss of the public money.

16. In that regard, it should be noted that the proceedings initiated under the PMLA had not attained finality. Similarly is the criminal proceedings that is lodged pursuant to the SFIO Report. Hence, the contention of the learned Senior Counsel that there had been a categorical finding absolving the applicant of all the allegations of siphoning of funds holding are yet to be finally adjudicated upon. It is to be noted that even if the assets of the Company has not gone to the coffers of the applicant, under the Provisions of the Companies Act for having held a post and during which tenure there is prima facie finding of fraud committed, they are personally liable to compensate the loss that had occurred for which their properties are liable to be proceeded with as adumbrated under Section 35 of the Companies Act, 2013.

17. If the applicant is allowed to deal with the properties, it would cause severe prejudice in recovering the assets of the company which would affect the interest of the creditors of the Company. In that regard, this Court is of the view that the interim order that had been granted by this Court cannot be wholly vacated, but, however considering that the entire bank accounts of the applicant had been directed to be frozen until further orders. This Court is of the view that

the applicant could be permitted to operate bank operates on condition that the statement of withdrawal and the expenditure that had been incurred on the said withdrawal amount to be filed as a proof every quarterly till the disposal of the Comp.A.No.276 of 2024.

18. Accordingly, the interim order stands modified permitting the applicant to operate his bank account on condition that the statement of withdrawal and the expenditure that had been incurred on the said withdrawal amount to be filed every quarterly till the disposal of the Comp.A.No.276 of 2024 and without any alteration or modification to the interim orders granted by this Court on 09.08.2024. However, there shall be no order as to costs.

16.10.2026 Index: Yes/No Speaking/Non-speaking order Neutral Citation: Yes/No GBA

K.KUMARESH BABU, J. GBA COMP.A No. 269 of 2025 IN CP NO. 255 OF 2014 16.10.2026