HARI SANKARAN versus UNION OF INDIA & OTHERS on 4 June 2019

[2019] 8 S.C.R. 761

HARI SANKARAN

v.

UNION OF INDIA & OTHERS

(Civil Appeal No. 3747 of 2019)

JUNE 4, 2019

[INDU MALHOTRA AND M. R. SHAH, JJ.]

Companies Act, 1956: s.130 – Exercise of power under –Essential conditions – On 1.10.2018, the Central Government fileda petition under ss.241 and 242 before the Tribunal allegingmismanagement by the Board of IL&FS and the affairs of IL&FSwere conducted prejudicial to public interest – In view of the factthat thousands of crores of public money was involved, and in thepublic interest, the Central Government constituted the Serious FraudInvestigation Office (SFIO) and handed over the investigation toSFIO with respect to the affairs of IL&FS and other groupcompanies – SFIO submitted preliminary report to the CentralGovernment placing on record that the affairs in respect of IL&FSgroup companies were mismanaged and that the manner in whichthe affairs of the company were being conducted was against thepublic interest – Meanwhile, Registrar of the Companies alsoconducted an enquiry under s.206 of the Act and prima facieconcluded mismanagement in IL&FS and its group companies – Itwas also observed that IL&FS was presenting rosy picture bycamouflaging its financial statements and concealing andsuppressing severe mismatch between its cash flows and paymentobligations – The ICAI also conducted an enquiry and in itspreliminary report, mentioned that “accounts for the past five yearshave been prepared in a fraudulent and negligent manner by theerstwhile auditors” – In the light of prayers made in petition underss.241, 242, the Tribunal suspended the Board of Directors of IL&FSand appointed newly constituted Board to conduct the business –Thereafter the Central Government filed petition under s.130 of theAct – After issuing notice to all concerned including the CentralGovernment, Income Tax Authorities, SEBI, other StatutoryRegulatory Body and even to the erstwhile Directors of IL&FS andother two companies, the Tribunal permitted/directed the Central

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AGovernment to re-open the books of accounts and to recast thefinancial statements of IL&FS and other two companies of last 5years – Appellant who is suspended Director of IL&FS preferredan appeal before the Appellate Tribunal – Appellate Tribunaldismissed the same – Hence the instant appeal – Held: The orderpassed by the Tribunal under s.130 of the Act showed that theBTribunal had considered the preliminary report submitted by theICAI and SFIO and the observations made in the said reports/preliminary reports – As per s.130 of the Act, the Tribunal may passan order of re-opening of accounts if the Tribunal is of the opinionthat (i) the relevant earlier accounts were prepared in a fraudulentCmanner; or (ii) the affairs of the company were mismanaged duringthe relevant period casting a doubt on the reliability of the financialstatements – The word used is “or” – Therefore, if either of theconditions precedent is satisfied, the Tribunal would be justified inpassing the order under s.130 of the Act – The Tribunal passed theorder on being satisfied with respect to the second part of s.130 ofDthe Act – In the facts and circumstances of the case, and also in thelarger public interest and when thousands of crores of public moneyis involved, the Tribunal is justified in allowing the application unders.130 of the Act.

Companies Act, 1956: s.130 – The submission on behalf ofEthe appellant was that all the three provisions, viz., s.130, ss.211/212 and ss.241/242 operate in different fields and in differentcircumstances and they are in the different Chapters and, therefore,any observation made while passing the orders with respect to aparticular provision may not be considered while passing the orderFunder relevant provisions is concerned – Held: All the threeprovisions are required to be considered conjointly – While passingan order in a particular provision, the endeavour should be to seethat the orders passed under other provisions of the Companies Actare given effect to, and/or in furtherance of the order/orders passedunder other Sections – Therefore, the observations made whileGpassing order under ss.241/242 of the Act can be said to be relevantobservations for passing the order under s.130 of the Act – Evenotherwise in the order passed by the Tribunal under s.130 of theAct, there is a specific observation made by the Tribunal with respectto mismanagement of the affairs of the company, and even with H

respect to the relevant earlier accounts prepared in a fraudulentmanner.

Companies Act, 1956: s.130, proviso – Compliance of –Whether order passed under s.130 was in violation of natural justiceand the proviso of s.130 was not complied with – Held: As perproviso to s.130 of the Act before passing the order under s.130 ofthe Act, the Tribunal is required to issue notice to the CentralGovernment, Income Tax Authorities, SEBI or any other statutoryregulatory body or authorities concerned or any “other personconcerned” and is required to take into consideration therepresentation, if any made – The “other person concerned” is assuch not defined. While passing the order under s.130 of the Act,there shall be reopening of the books of accounts and re-casting ofthe financial statements of the company and therefore the Board ofDirectors of the company may make a grievance – The erstwhiledirectors cannot represent the company as they are suspendedpursuant to the earlier order passed under s.242 of the Act – In theinstant case, the erstwhile directors of the company representedbefore the Tribunal and they opposed the application under s.130of the Act – Therefore, in the facts and circumstances of the case, itcannot be said that the order passed by the Tribunal is per se inviolation of the principle of natural justice as alleged.

Companies Act, 1956: ss.241 and 242 – Submission of theappellant that order dated 01.10.2018 passed under ss.241/242 ofthe Companies Act is an interim order and the same is not a finalorder suspending the directors and the erstwhile board of directorsof the company, and therefore the observations made in order dated01.10.2018 cannot be considered, has no substance – Order dated01.10.2018 suspending the erstwhile directors of the companyincluding the appellant is not challenged by way of an appeal beforean appropriate appellate Tribunal/Court and till date stands andremains in operation.

Companies Act, 1956: s.130 – Reliance placed on subsequentreport of RBI – Held: It is required to be noted, independent to thesubsequent report of the RBI, there is specific finding with respectto the mismanagement and the fraudulent accounts – Therefore,subsequent report of the RBI report can be taken note of while A

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Aupholding the order passed by the Tribunal under s.130 of the Act– Since a larger public interest is involved and reopening of thebooks of accounts and recasting of financial statements of the saidcompanies is required to be carried out in the larger public interest,to find out the real truth, and both the conditions precedent whileinvoking power under s.130 of the Act are satisfied/complied with,Btherefore in the facts and circumstances of the case, the order passedby the Tribunal passed under s.130 of the Companies Act not to beinterfered with.

Dismissing the appeal and disposing of the IAs, the Court

Dismissing the appeal and disposing of the IAs, the Court CHELD : 1. As per Section 130 of the Act, the Tribunal maypass an order of re-opening of accounts if the Tribunal is of theopinion that (i) the relevant earlier accounts were prepared in afraudulent manner; or (ii) the affairs of the company weremismanaged during the relevant period casting a doubt on thereliability of the financial statements. Therefore, the word usedDis “or”. Therefore, if either of the conditions precedent issatisfied, the Tribunal would be justified in passing the order underSection 130 of the Act. The Tribunal passed the order on beingsatisfied with respect to the second part of Section 130 of theCompanies Act. The Tribunal also took note of the preliminaryEreport submitted by the ICAI with respect to the earlier accountswere being prepared in a fraudulent manner. On a fair reading ofSection 130 of the Companies Act, if the Tribunal is satisfied thateither of the conditions precedent is satisfied, the Tribunal wouldbe justified in passing the order under Section 130 of theCompanies Act. In the facts and circumstances of the case, andFalso in the larger public interest and when thousands of crores ofpublic money is involved, the Tribunal is justified in allowing theapplication under Section 130 of the Companies Act, which wassubmitted by the Central Government as provided under Section130 of the Act. [Paras 10, 11] [782-F-H; 783-A, C-D]G2. The submission on behalf of the appellant was that allthe three provisions, viz., Section 130, Sections 211/212 andSections 241/242 operate in different fields and in differentcircumstances and they are in the different Chapters and thereforeany observation made while passing the order/orders with respect H

to a particular provision may not be considered while passing theorder under relevant provisions is concerned. Iit is required tobe noted that all the three provisions are required to beconsidered conjointly. While passing an order in a particularprovision, the endeavour should be to see that the order/orderspassed under other provisions of the Companies Act are giveneffect to, and/or in furtherance of the order/orders passed underother Sections. Therefore, the observations made while passingorder under Section 241/242 of the Companies Act can be said tobe relevant observations for passing the order under Section 130of the Companies Act. Even otherwise in the order passed bythe Tribunal under Section 130 of the Companies Act, there is aspecific observation made by the Tribunal with respect tomismanagement of the affairs of the company, and even withrespect to the relevant earlier accounts prepared in a fraudulentmanner. [Para 12] [783-D-G]

3. As per proviso to Section 130 of the Companies Actbefore passing the order under Section 130 of the Act, the Tribunalis required to issue notice to the Central Government, IncomeTax Authorities, SEBI or any other statutory regulatory body orauthorities concerned or any “other person concerned” and isrequired to take into consideration the representation, if anymade. The “other person concerned” is as such not defined. Whocan be said to be “other person concerned”, that question iskept open. At this stage, it is required to be noted that whilepassing the order under Section 130 of the Act, there shall bereopening of the books of accounts and re-casting of the financialstatements of the company and therefore the Board of Directorsof the company may make a grievance. The erstwhile directorscannot represent the company as they are suspended pursuantto the earlier order passed under Section 242 of the CompaniesAct. The erstwhile directors of the company represented beforethe Tribunal and they opposed the application under Section 130of the Act. Therefore, in the facts and circumstances of the case,it cannot be said that the order passed by the Tribunal is per sein violation of the principle of natural justice as alleged.[Para 13] [784-C-F]

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766SUPREME COURT REPORTS

[2019] 8 S.C.R.

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766SUPREME COURT REPORTS

[2019] 8 S.C.R.

A4. Order dated 01.10.2018 suspending the erstwhiledirectors of the company including the appellant is not challengedby way of an appeal before an appropriate appellate Tribunal/Courtand till date stands and remains in operation. [Para 15] [785-C]

5. As the impugned order passed by the Appellate TribunalBis in the larger public interest, subsequent development/reportwere taken into account. However, at the same time the sameshall be in support of the order under challenge. Even otherwise,it is required to be noted, independent to the subsequent reportof the RBI, there is specific finding with respect to themismanagement and the fraudulent accounts. ThereforeCsubsequent report of the RBI report can be taken note of whileupholding the order passed by the Tribunal under Section 130 ofthe Companies Act. Since a larger public interest has beeninvolved and reopening of the books of accounts and recasting offinancial statements of the aforesaid companies is required to beDcarried out in the larger public interest, to find out the real truth,and both the conditions precedent while invoking power underSection 130 of the Companies Act are satisfied/complied with,therefore in the facts and circumstances of the case, the orderpassed by the Tribunal passed under Section 130 of theCompanies Act, confirmed by the Appellate Tribunal, is notErequired to be interfered with. [Para 18] [786-B-E]

Mannalal Khetan v. Kedar Nath Khetan (1977) 2 SCC424 : [1977] 2 SCR 190 ; Swadeshi Cotton Millsv. Union of India (1981) 1 SCC 664 : [1981] 2 SCR 533 ; Calcutta Discount Company v. Income Tax OfficerFAIR 1961 SC 372 : [1961] SCR 241 ; Mohinder SinghGill v. Chief Election Commissioner, New Delhi (1978)1 SCC 405 : [1978] 2 SCR 272 ; T.P. Senkumar v. Unionof India (2017) 6 SCC 801 : [2017] 6 SCR 881 ;Chairman, All India Railway Recruitment Board v. K.GShyam Kumar (2010) 6 SCC 614 : [2010] 6 SCR 291– held inapplicable.

Case Law Reference

[1977] 2 SCR 190 [1981] 2 SCR 533H

held inapplicablePara 6.4held inapplicablePara 6.4

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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3747of 2019.

From the Judgment and Order dated 31.01.2019 of the NationalCompany Law Appellate Tribunal, New Delhi in Company Appeal (AT)(Company) No. 29 of 2019.

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Dhruv Mehta, Sr. Adv., Samir Malik, Ms. Rimali Batra, RaviPrakash, Aditya Sharma, Chandra Prakash, Advs. for the Appellant.

Maninder Singh, ASG, Ms. Gauri Rasgotra, Vikash Kumar Jha,Aditya Sikka, Siddhant Sharma, Soumya S. Dasgupta, Nishit Agrawal,M/S.Cyril Amarchand Mangaldas, Advs. for the Respondents.

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The Judgment of the Court was delivered by

M. R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned Orderdated 31.01.2019 passed by the National Company Law AppellateTribunal, New Delhi in Company Appeal (AT) No. 29 of 2019 by whichthe learned Appellate Tribunal has dismissed the said appeal preferredby the appellant herein – Ex-Director of respondent No. 2 – InfrastructureLeasing & Financial Services Limited (hereinafter referred to as ‘theIL&FS’) and has confirmed the order passed by the National CompanyLaw Tribunal, Mumbai Bench (hereinafter referred to as ‘the learnedTribunal’) dated 01.01.2019 by which the learned Tribunal allowed thesaid application preferred by the Central Government under Section 130(1)& (2) of the Companies Act, 2013 (hereinafter referred to as the‘Companies Act’) and has permitted re-casting and re-opening of theaccounts of IL&FS, IL&FS Financial Services Limited (hereinafterreferred to as the “IFIN”) and IL&FS Transportation Networks Limited(hereinafter referred as the “ITNL”) for the last five years, the originalappellant has preferred the present appeal.

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2. The facts leading to the present appeal in nutshell are as under:That respondent No. 2 – IL&FS is a company incorporated under H

Athe provisions of the Companies Act, 1956. That the said company IL&FShas 348 group companies, including IFIN and ITNL. That the said IL&FSis a core investment company and systemically important Non-BankingFinance Company duly approved under the Reserve Bank of India Act,1931. The said company was promoted by the Central Bank of India,HDFC Ltd., the Union Trust of India. That the said company is holdingBprominent infrastructure development and finance companies. Overthe years, it had inducted institutional shareholders. That the said IL&FS,during the financial year 2017-18 had 169 companies, out of which, 24companies are direct subsidiaries, 135 companies are indirect subsidiaries,6 companies are joint ventures and 4 companies are associate companies.CThat the appellant herein claims to be the Vice-President/Director ofIL&FS who has been suspended as the Director of IL&FS and its groupcompanies.

2.1 That on 01.10.2018, the Central Government through theMinistry of Corporate Affairs filed a petition before the learned AppellateDTribunal under Sections 241 and 242 of the Companies Act alleging interalia, mismanagement by the Board of IL&FS and that the affairs ofIL&FS were being conducted in a manner prejudicial to public interest.That the Central Government prayed for the following reliefs:

1. That the existing Board of Directors of Respondent No. 1Ecompany, comprising of R2 to R8, be suspended withimmediate effect and 10 (Ten) persons be appointed asdirectors in terms of provisions of Section 242(2)(k) of theAct, to manage the affairs of R1 company and its groupcompanies through their nominees, and such directors anyreport and function under the Hon’ble Tribunal on such mattersFas it may direct:

2. That the Board of Directors appointed by the Hon’ble Tribunalin terms of 242(2)(k) of the Act be authorized to replace suchnumber of directors of subsidiaries, joint ventures andassociate companies as may be required to make the R1 andGits group companies as going concern.

2.2 That it was found that the management of IL&FS and othergroup company/companies were responsible for negligence andincompetence, and had falsely presented a rosy financial statement. Tounearth the irregularities committed by IL&FS and its companies, theH

provisions of Section 212(1)(c) of the Companies Act were invoked forinvestigation into the affairs of the company. The investigation was tobe carried out by the Serious Fraud Investigation Office (hereinafterreferred to as ‘the SFIO’) in exercise of powers under Section 212 ofthe Companies Act. The SFIO submitted an interim report dated30.11.2018 to the Central Government placing on record that the affairsin respect of IL&FS group Companies were mis-managed, and that themanner in which the affairs of the company were being conducted wasagainst the public interest. The said report shall be referred to hereinbelow.

It appears that the Registrar of Companies also conducted anenquiry under Section 206 of the Companies Act, and prima facieconcluded that mis-management and compromise in corporategovernance norms and risk management has been perpetuated on IL&FSand its group companies by indiscriminately raising long term and shortterms loans/borrowings through Public Sector Banks and financialinstitutions. It was also observed that IL&FS company has beenpresenting a rosy picture by camouflaging its financial statements, andconcealing and suppressing severe mismatch between its cash flowsand payment obligations, total lack of liquidity and adverse financial ratios.It was also found that IL&FS company has first defaulted on commercialpaper and then on short term borrowings i.e. inter corporate deposits,negative cash flows in operating activities etc. It was further observedthat the consolidated balance-sheet of IL&FS company indicated theextremely precarious financial position, and was virtually in deep red. Itwas found that intangible assets of approximately Rs.18,540 crores ason 31.03.2017, has increased to approximately Rs.20,004 crores as on31.03.2018, thus creating a serious doubt about the correctness of thefinancial statements. A Report dated 03.12.2018 was submitted by theInstitute of Chartered Accountants of India (“ICAI”) which has beenplaced on the record of the Tribunal.

2.3 In this background, the Union of India approached the learnedTribunal for reliefs under Sections 241 and 242 of the Companies Act.

2.4 Thereafter, by a detailed and reasoned order, the learnedTribunal vide Order dated 01.10.2018 allowed the said prayers andsuspended the Board of Directors of IL&FS, and appointed the newlyconstituted Board to conduct the business as per the Memorandum andArticles of the companies. That the learned Tribunal issued the followingdirections:

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“On the basis of the foregoing discussions and after consideringthe facts of the case, a narrated in the Petition filed by the Unionof India, this Bench is of the considered view that it is judicious toinvoke the jurisdiction prescribed under Section 241(2) of theCompanies Act, 2013 and the Tribunal is of the opinion that as perSection 242(1) of the Companies Act, 2013, the affairs of theIL&FS were being conducted in a manner prejudicial to publicinterest. The Interim prayer of suspending the present Board ofDirectors and reconstitution of the new Board of Directors ishereby allowed. At present, by an additional affidavit only 6 names(supra) of Board members have proposed by the Union of India.

Further directed that the present Board of Directors besuspended with immediate effect. The six Directors as reproducedsupra shall take over the R1 company immediately. Newlyconstituted Board shall hold a meeting on or before 8[th] October,2018 and conduct business as per the Memorandum and Articlesof Association of the company and the provisions of the CompaniesAct, 2013. Liberty is granted to the Board of Directors to select aChairman among themselves. Thereafter, report the roadmap toNCLT, Mumbai Bench at the earliest possible not later than thenext date of hearing. The suspended directors hence forth shallnot represent the R1 company as a Director and shall also notexercise any powers as a director in any manner before anyauthority as well.

As a consequence of “Admission” of the Petition, issue noticeto intimate next date of hearing. The Petition is to serve copy ofthis order along with Petition to all the Respondents. TheRespondents in turn may file their reply by 15[th] October, 2018,only after serving copy to the petitioner. The Petitioner can filerejoinder, if deem fit, by 30[th] October, 2018.”

2.5 That thereafter the Union of India through the Ministry ofCorporate Affairs approached the learned Tribunal under Section 130(1)of the Companies Act seeking permission for re-opening of the books ofaccounts and re-casting thereof, including the financial statements ofIL&FS, IL&FS Financial Services Limited and IL&FS TransportationNetworks Limited for the last five years viz. from Financial Year 2012-2013 to Financial Year 2017-2018. The learned Tribunal issued notices to the Income Tax Authorities, SEBI, and any other statutory regulatorybody or authority, or other persons concerned. The learned Tribunaldirected the Central Government to serve the notices upon the saidparties.

At this stage, it is required to be noted that the aforesaid threecompanies through their new board of directors appeared through theircounsel before the learned Tribunal at the time of hearing of the aforesaidapplication under Section 130 of the Companies Act. That, thereafter,after hearing the counsel appearing on behalf of the respective parties,including the learned counsel appearing on behalf of the erstwhiledirectors, who opposed the application filed under Section 130 of theCompanies Act, the learned Tribunal vide its Order dated 01.01.2019allowed the application filed under Section 130 of the Companies Act,and permitted the said application for re-opening the books of accounts,and re-casting the financial statements of the aforesaid three companiesfor the last five years viz. from Financial Year 2012-2013 to FinancialYear 2017-2018.

2.6 Feeling aggrieved and dissatisfied with the order passed onthe application under Section 130 of the Companies Act by the learnedTribunal dated 01.01.2019, permitting the re-opening and re-casting ofthe financial statements of the aforesaid three companies for the lastfive years viz. from Financial Year 2012-2013 to Financial Year 2017-2018, the appellant herein who is a suspended Director of IL&FS alonepreferred an appeal before the learned Appellate Tribunal. That by theimpugned judgment and order, the learned Appellate Tribunal hasdismissed the said appeal.

3. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the learned Appellate Tribunal dismissing the saidappeal, and confirming the order passed by the learned Tribunal dated01.01.2019 allowing the application under Section 130 of the CompaniesAct, the original appellant i.e. the suspended Director/erstwhile Directorof IL&FS has preferred the present appeal.

4. With the consent of the learned Senior Counsel appearing onbehalf of the respective parties, and in the facts and circumstances ofthe case, we have heard the application for vacating the interim Orderalong with the main Appeal finally.

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A5. Shri Dhruv Mehta, learned senior counsel has appeared onbehalf of the appellant and Shri Maninder Singh, learned Senior Counselhas appeared on behalf of the Union of India as well as the othercontesting respondents.

6. Shri Dhruv Mehta, learned Senior Counsel appearing on behalfBof the appellant has vehemently submitted that the impugned order passedby the learned Appellate Tribunal dismissing the said appeal and confirmingthe order passed by the learned Tribunal allowing the application underSection 130 of the Companies Act is absolutely illegal and bad in law.

6.1 Mr. Dhruv Mehta, learned Senior Counsel appearing on behalfCof the appellant has submitted that the order passed by the learnedTribunal allowing the application under Section 130 of the CompaniesAct is absolutely illegal and as such contrary to the provisions of Section130 of the Companies Act. It is further submitted by Mr. Dhruv Mehtathat as such the pre-conditions before passing the order under Section130 of the Companies Act for re-opening and re-casting the statementsDof account of the company, namely (i) the relevant earlier accounts wereprepared in a fraudulent manner; or (ii) the affairs of the company weremismanaged during the relevant period, casting a doubt on the reliabilityof financial statements, have not been satisfied.

6.2 Mr. Dhruv Mehta, learned Senior Counsel appearing on behalfEof the appellant has submitted that as such there is no specific findinggiven by the learned Tribunal while allowing the application under Section130 of the Companies Act that either the relevant earlier accounts wereprepared in a fraudulent manner, or the affairs of the company weremismanaged, during the relevant period casting a doubt on the reliabilityFof financial statements. It is submitted that in the absence of any specificfinding by the learned Tribunal on the aforesaid, it was not permissiblefor the learned Tribunal to pass the order under Section 130 of theCompanies Act permitting re-opening of the books of accounts and re-casting of financial statements of the company/companies.

G6.3 It is further submitted that, on the contrary, there is a specificfinding/observation by the learned Tribunal in the order under Section130 of the Companies Act itself that the accounts were not prepared ina fraudulent manner. It is submitted that the conditions precedent forinvoking the powers under Section 130 of the Companies Act were notsatisfied, and the learned Tribunal was not justified in passing the impugnedH

order under Section 130 of the Companies Act. It is further submittedthat therefore the learned Appellate Tribunal ought to have quashed andset aside the order passed by the learned Tribunal.

6.4 It is further submitted by Shri Dhruv Mehta learned SeniorCounsel that, even otherwise, the order passed by the learned Tribunalis in breach of natural justice inasmuch as sufficient opportunity was notgiven to the appellant by the learned Tribunal before passing the orderunder Section 130 of the Companies Act. It is submitted that the noticeon the application under Section 130 of the Companies Act was issuedon 27.12.2018 and the impugned order came to be passed on 01.01.2019.It is submitted that even though the appellant sought time to file thereply, the Tribunal without granting any further time to the appellant tofile the reply, passed the impugned order. It is submitted that as per theamended Section 130 of the Companies Act, before passing the orderunder Section 130 of the Companies Act, not only the Income TaxAuthorities and other authorities were required to be heard, even the“other persons concerned”, including the Directors/Ex-Directors of thecompany were required to be heard. It is submitted that the order passedby the learned Tribunal was in violation of the principles of natural justice,therefore the same was required to be quashed and set aside by thelearned Appellate Tribunal.

It is further submitted that though the aforesaid submission wasmade before the learned Appellate Tribunal, and the learned AppellateTribunal accepted that the order passed by the learned Tribunal is inbreach of the principles of natural justice, the learned Appellate Tribunaldismissed the appeal. It is submitted that, therefore, in the facts andcircumstances of the case, the learned Appellate Tribunal ought to haveset aside the order passed by the learned Tribunal and ought to haveremanded the matter to the learned Tribunal for fresh decision aftergiving opportunity of hearing to the appellant. In support of the abovesubmissions and request, Shri Dhruv Mehta, learned senior counselappearing on behalf of the appellant has heavily relied upon the decisionsof this Court in the case of Mannalal Khetan v. Kedar Nath Khetan(1977) 2 SCC 424 and in the case of Swadeshi Cotton Mills v. Unionof India (1981) 1 SCC 664. Relying upon the above decisions of thisCourt, it is submitted that when the Statute provides that things arerequired to be done in a particular manner, it ought to have been done inthe same manner as provided under the Statute. It is submitted that in A

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Athe present case as the Statute specifically provides that before passingthe order under Section 130 of the Companies Act, an opportunity is tobe given to all concerned and that two conditions, as referred tohereinabove, are to be satisfied, the same are required to be followedand complied with.

B6.5 It is further submitted by Shri Dhruv Mehta, learned SeniorCounsel appearing on behalf of the appellant that, even otherwise, thereis no specific finding by the learned Tribunal with respect to themismanagement by the erstwhile Directors. So far as the reliance placedupon the observations made in the earlier order dated 01.10.2018 isconcerned, it is submitted that the order dated 01.10.2018 passed underCSections 241/242 of the Companies Act cannot be said to be the finalorder. It is submitted that it is an interim order/report to which the appellanthas already submitted the objections, which are yet to be considered. Itis submitted that, therefore, condition No. (ii) of Section 130(1) of theCompanies Act is not satisfied.D

6.6 It is submitted that therefore, as the condition precedent whileinvoking the powers under Section 130 of the Companies Act are notbeing met, the learned Tribunal ought not to have and could not haveinvoked and applied Section 130 of the Companies Act. In support of hisabove submission, Shri Dhruv Mehta, learned Senior Counsel appearingEon behalf of the appellant has relied upon the decision of this Court in thecase of Calcutta Discount Company v. Income Tax Officer AIR 1961SC 372.

6.7 It is further submitted by the learned Senior Counsel appearingon behalf of the appellant that all the three different provisions, namelyFSection 130, Sections 211/212 and Sections 241/242 of the CompaniesAct, operate in the different fields and in different situations and as suchthey are in different chapters and therefore the observations made whilepassing the order under one provision cannot be made applicable to whilepassing the order under different provisions.

G6.8 Shri Dhruv Mehta, learned Senior Counsel appearing on behalfof the appellant has further submitted that what is required to be consideredis the relevant material at the time when the learned Tribunal passed theorder under Section 130 of the Companies Act. It is submitted that therespondents cannot support the order passed by the learned Tribunalunder Section 130 of the Companies Act relying upon the subsequentHdevelopments/events. In support of his above submission, he has heavily

relied upon the decisions of this Court in the cases of Mohinder SinghGill v. Chief Election Commissioner, New Delhi (1978) 1 SCC 405and T.P. Senkumar v. Union of India (2017) 6 SCC 801. It is submittedthat the decision of this Court in the case of Chairman, All India RailwayRecruitment Board v. K. Shyam Kumar (2010) 6 SCC 614 reliedupon by the learned Counsel appearing on behalf of the Union of Indiashall not be applicable to the facts of the case on hand. It is submittedthat in the case of K. Shyam Kumar (supra), this Court was consideringthe administrative decision/order and while considering such administrativeorder/decision, this Court observed that the subsequent events/reportscan be considered while considering the legality and validity of the originalaction/order in the public interest.

6.9 Shri Dhruv Mehta, learned Senior Counsel appearing on behalfof the appellant has further submitted that, therefore, neither the conditionprecedent provided in Section 130(1) of the Companies Act has beencomplied with/satisfied, nor even Section 130(2) of the Companies Acthas been complied with, and it is in violation of the provisions of Section130(1) of the Companies Act, and as sufficient opportunity was not givento the appellant, therefore, is in violation of the principles of natural justice.It is prayed that the present appeal be allowed and the order passed bythe learned Tribunal allowing the application under Section 130 of theAct be set aside.

6.10 It is further submitted by Shri Dhruv Mehta, learned SeniorCounsel appearing on behalf of the appellant that so far as the impugnedorder passed by the learned Appellate Tribunal is concerned, it issubmitted that none of the submissions/ground raised on behalf of theappellant have been dealt with and/or considered by the AppellateTribunal. It is submitted that the learned Appellate Tribunal wasconsidering/deciding the statutory appeal and therefore the learnedAppellate Tribunal was supposed to deal with the grounds raised onbehalf of the appellant. It is submitted that though the plea of violationof principles of natural justice was specifically pleaded and even thelearned Appellate Tribunal also observed that there may be violation ofprinciples of natural justice, in that case, the learned Appellate Tribunalought to have remanded the matter to the learned Tribunal. It is submittedthat the learned Appellate Tribunal ought to have appreciated that inview of the violation of principles of natural justice, it has caused greatprejudice to the appellant. It is submitted that as observed and held by A

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Athis Court in the case of Swadeshi Cotton Mills (supra), when theprinciples of natural justice are prescribed by the statutory provision, noprejudice is required to be shown for invoking the ground of violation ofprinciples of natural justice.

6.11 it is further submitted by learned Counsel appearing on behalfBof the appellant that the impugned orders have far reaching consequences.It is submitted that the books of accounts once re-opened and re-castedare deemed to be final under the provisions of Section 130(2) of theCompanies Act.

6.12 Making the above submissions and relying upon the aboveCdecisions, it is prayed to quash and set aside the impugned order passedby the learned Tribunal, confirmed by the learned Appellate Tribunal.7. The present appeal is vehemently opposed by Shri ManinderSingh, learned Senior Counsel appearing on behalf of the Union of India.

7.1 It is vehemently submitted by the learned Senior CounselDappearing on behalf of the Union of India that the impugned order passedby the learned Tribunal, confirmed by the learned Appellate Tribunal donot suffer from any vice of illegality. It is submitted that the order passedby the learned Tribunal under Section 130 of the Companies Act isabsolutely in the larger public interest and absolutely in consonance withEthe provisions of Section 130 of the Companies Act.

7.2 It is further submitted by the learned senior Counsel appearingon behalf of the Union of India that there are very serious allegations ofpreparing the earlier accounts in a fraudulent manner, and also withrespect to the mis-management of the affairs of the company during therelevant period. It is submitted that, in the present case, after havingFsatisfied that there are serious allegations against IL&FS group ofcompanies, the Department of Economic Affairs took a consciousdecision to approach the NCLT under Section 242 of the CompaniesAct to order re-constitution of the Board of Directors. It is submittedthat by a detailed order and considering the material on record, andGhaving been prima facie satisfied with respect to the allegations ofmismanagement and relating to the affairs of IL&FS group of companies,the learned Tribunal passed an order dated 01.10.2018 suspending theearlier Directors/Board of Directors of the companies and appointed anew Board of Directors. It is submitted that even the Ministry ofCorporate Affairs, Government of India in exercise of powers underH

Section 212 of the Companies Act had issued an order directing to conductinvestigation into the affairs of IL&FS group of companies. It is submittedthat SFIO constituted under Section 212 of the Act has alreadycommenced a specialized investigation into the affairs of IL&FS groupof companies. It is submitted that the appellant has been arrested on02.04.2019, and is presently in judicial custody. It is submitted thatthereafter when the Union of India through the Ministry of CorporateAffairs submitted an application before the learned Tribunal to re-openthe books of accounts and to re-cast the financial statements of thethree main companies for the last five years and thereafter consideringthe investigation reports and having been satisfied that the conditionsprecedent for invoking the powers exercised under Section 130 of theCompanies Act are satisfied/complied with, thereafter when the learnedTribunal has passed the order, the same cannot be said to be illegal. It issubmitted that all the requirements under Section 130 of the CompaniesAct have been complied with/satisfied.

7.3 It is further submitted that the order dated 01.10.2018 passedunder Sections 241/242 of the Companies Act has attained finalityinasmuch as the same is not challenged till date. It is submitted thattherefore the same can be considered by passing an order under Section130 of the Companies Act also.

7.4 It is further submitted by the learned Senior Counsel appearingon behalf of the Union of India that all the three provisions, namelySections 211/212, Sections 241/242 and Section 130 of the CompaniesAct are required to be considered and read conjointly. It is submittedthat while considering the one provision and/or while passing the orderunder one provision, it is required to be seen that the effect of the order/orders passed in other provisions do not become nugatory and/orineffective. It is submitted that therefore if all the aforesaid threeprovisions are considered and read conjointly, in that case, it can be saidthat the order passed under Section 130 of the Companies Act would bein the aid of the investigation going on by the SFIO under Section 212 ofthe Companies Act and the same shall be in the larger public interest. Itis submitted that, in the present case, Justice D. K. Jain, a former Judgeof this Court, has been appointed to supervise the resolution process ofIL&FS group of companies. It is submitted that the re-opening of thebooks of accounts and re-casting the financial statements of the aforesaidthree companies is very much required and necessary, since the sameshall be in the larger public interest, to find out the real truth.

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A7.5 It is further submitted by the learned Senior Counsel appearingon behalf of the Union of India that the powers conferred under Section130 of the Companies Act are less stringent than the powers conferredunder Sections 241/242 and/or Sections 211/212 of the Companies Act.It is submitted that while exercising powers under Section 130 of theCompanies Act, there may not be any final conclusion/opinion that theBrelevant earlier accounts are prepared in a fraudulent manner or theaffairs of the company were mismanaged during the relevant period. Itis submitted that if, on the basis of the material on record, the learnedTribunal is satisfied on either of the aforesaid two eventualities, it isalways open to the Tribunal to pass the order to re-open the books ofCaccounts and to re-cast the financial statements of the company.

It is further submitted that, in the present case, before passing theorder under Section 130 of the Companies Act notices were issued underthe first proviso to Section 130 of the Companies Act. It is submittedthat SEBI appeared and submitted that it had no objection to the accountsDand financial statement of respondent Nos. 2 to 4, which are listedcompanies, being re-opened and re-casted.

It is submitted that, as observed by the Tribunal in the impugnedorder, the erstwhile directors had opposed the application under Section130 of the Companies Act, that after hearing all parties, the impugnedEorder has been passed by the learned Tribunal. It is submitted thattherefore the impugned order passed by the learned Tribunal cannot besaid to be in violation of the principles of natural justice as alleged.

7.6 Relying upon the subsequent interim investigation reports bythe RBI, it is submitted that the impugned order passed by the learnedFTribunal under Section 130 of the Companies Act is not required to beinterfered with. It is submitted that mere perusal of the report of theRBI dated 22.3.2019 demonstrates and establishes beyond any doubtabout the complete correctness, validity and legality of the order underSection 130 of the Act. In support of his submission, the learned counselhas relied upon and requested to consider the subsequent event also,Gmore particularly the report of the RIB dated 22.03.2019. The learnedcounsel appearing on behalf of the Union of India has heavily reliedupon the decision of this Court in the case of K. Shyam Kumar (supra)in support of the prayer to consider the subsequent Report of RBI also.

7.7 Making the above submissions, it is prayed to dismiss thepresent appeal, more particularly, considering the larger public interestas, in the present case, thousands of crores of the public money is involved.

8. We have heard the learned counsel for the respective partiesat length and perused the written submissions filed by them.

At the outset, it is required to be noted that by the impugned orderand in exercise of powers under Section 130 of the Companies Act, thelearned Tribunal has allowed the said application preferred by the CentralGovernment and has directed/permitted re-opening of the books ofaccounts and re-casting the financial statements of IL&FS and othertwo companies for the last 5 years, viz., F.Y 2012-2013 to 2017-2018.The order passed by the learned Tribunal has been affirmed by the learnedAppellate Tribunal. Therefore, the short question which is posed forconsideration before this Court, whether in the facts and circumstancesof the case, can it be said that the order passed by the learned Tribunalis illegal and/or contrary to Section 130 of the Companies Act?

8.1 While considering the aforesaid question/issue, few facts andthe relevant provisions of the Companies Act which are relevant fordetermining/considering the legality and validity of the order passed bythe learned Tribunal are required to be referred to and considered, whichare as under:

Section 211 of the Companies Act provides for establishment ofSerious Fraud Investigation Office to investigate frauds relating to acompany. Section 212 of the Companies Act provides for investigationinto affairs of company by SFIO. Section 212 of the Companies Actprovides that if the Central Government is of the opinion that it is necessaryto investigate into the affairs of a company by SFIO....in the publicinterest; or on a request made by any department of the CentralGovernment or a State Government. In the present case, the CentralGovernment has already constituted SFIO and has also orderedinvestigation into the affairs of IL&FS and other group of companiesand the investigation by the SFIO is under progress. It is also requiredto be noted that SFIO had also submitted its preliminary report. In thepreliminary SFIO report, there are specific findings with respect tomismanagement of the affairs of the aforesaid companies, and also withrespect to preparing fraudulent accounts. At this stage, it is also required A

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Ato be noted that ICAI had also conducted an enquiry into the accountsfor the past five years, and in the preliminary report, the ICAI hasmentioned that “accounts for the post five years have been prepared ina fraudulent and negligent manner by the erstwhile auditors”. That theRegistrar of Companies had also conducted an enquiry under Section206 of the Companies Act and prima facie concluded thatBmismanagement and compromise in corporate governance norms andrisk management has been perpetuated on IL&FS and its groupcompanies by indiscriminately raising long term and short term loans/borrowings through public sector banks and financial institutions.Considering the fact that thousands of crores of public money is involved,Cand in the public interest, the Central Government has thought it fit tohandover the investigation with respect to the affairs of IL&FS andother group companies to SFIO.

8.1.1 Sub-section (2) of Section 241 of the Companies Act providesthat if the Central Government is of the opinion that the affairs of theDcompany are being conducted in a manner prejudicial to public interest,it may itself apply to the Tribunal for an appropriate order under ChapterXVI, more particularly the order under Section 242 of the CompaniesAct. In the present case, the Central Government had approached thelearned Tribunal under Section 241 of the Companies Act and for anappropriate order to suspend the existing Board of Directors of theECompanies and to appoint new Directors in terms of the provisions ofSection 242(2)(k) of the Companies Act, to manage the affairs of IL&FSand group companies. That by an order dated 01.10.2018, the learnedTribunal, in exercise of powers under Section 242(2) of the CompaniesAct, has suspended the Board of Directors of IL&FS and has furtherFpassed an order for reconstitution of the new Board of Directors. Sixpersons are appointed as Directors as Board members. While issuingsuch directions, the learned Tribunal has specifically observed that thelearned Tribunal is satisfied that the affairs of the IL&FS were beingconducted in a manner prejudicial to public interest. Thus, pursuant to the said order dated 01.10.2018, the erstwhile Board Members/DirectorsGof the IL&FS are suspended, and new Directors are appointed as BoardMembers and the new Board of Directors are conducting the affairs ofthe IL&FS and group companies. It is further ordered that the suspendedDirectors henceforth shall not represent the IL&FS company asDirectors, and shall also not exercise any power as Directors in anyHmanner before any authority as well. The appellant herein is the Vice President and suspended Director of the company, who alone haschallenged the impugned order passed by the learned Tribunal passedunder Section 130 of the Companies Act.

8.2 In between there is one another development. Pursuant tothe order passed by the NCLAT, a former Judge of this Court – Hon’bleJustice (Retd.) D.K. Jain has been appointed to supervise the operationof the “Resolution Process” of the IL&FS group companies. Consideringthe aforesaid facts and circumstances and in the larger public interestand having found on the basis of the reports/preliminary reports of SFIO,ICAI and ROC and having observed and found that the relevant earlieraccounts of IL&FS and other group companies, named hereinabove,were prepared in a fraudulent manner and the affairs of the companywere mismanaged during the relevant period, casting a doubt on thereliability of the financial statements, the Union of India/CentralGovernment considered it fit to submit an application before the learnedTribunal under Section 130 of the Companies Act. After issuing noticeto all concerned including the Central Government, Income TaxAuthorities, SEBI, other Statutory Regulatory Body and even to theerstwhile Directors of IL&FS and other two companies, by the impugnedorder, the learned Tribunal has permitted/directed the Central Governmentto re-open the books of accounts and to recast the financial statementsof IL&FS and other two companies, named hereinabove, of last 5 years.

8.3 Considering the aforesaid facts and circumstances, the legalityand validity of the impugned order passed by the learned Tribunal passedunder Section 130 of the Act, confirmed by the learned Appellate Tribunalis required to be considered.

9. On going through the order passed by the learned Tribunalpassed under Section 130 of the Act, it appears that the learned Tribunalis conscious of the relevant provisions of the Act, more particularlySection 130 of the Companies Act and more particularly the conditionsprecedent to be complied with/satisfied while directing/permitting re-opening of the books of accounts and re-casting of the financialstatements of the company. From the order passed by the learnedTribunal under Section 130 of the Companies Act, it appears that thelearned Tribunal has considered the preliminary report submitted by theICAI and SFIO and the observations made in the aforesaid reports/preliminary reports. That thereafter having satisfied that the conditionsprecedent for invoking powers under Section 130 of the Companies A

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AAct, stated in Section 130 (i) OR (ii) of the Companies Act are satisfied,thereafter the learned Tribunal has passed an order allowing theapplication under Section 130 of the Companies Act for re-opening thebooks of accounts and re-casting the financial statements of IL&FS andother two companies, viz, for the last 5 years.

B10. While assailing the order passed by the Tribunal under Section130 of the Act, it is vehemently submitted on behalf of the appellant,who as such is a suspended director of the company that there is nospecific finding recorded by the learned Tribunal that (i) the relevantearlier accounts were prepared in a fraudulent manner; and (ii) the affairsof the company were mismanaged during the relevant period casting aCdoubt on the reliability of the financial statements. It is the case onbehalf of the appellant that in the order dated 01.01.2019 passed underSection 130 of the Companies Act, learned Tribunal has specifically givena finding that the alleged accounts of the companies cannot be said tohave been prepared in a fraudulent manner. However, it is required toDbe noted that the aforesaid observations by the Tribunal are required tobe considered in the context for which the observations are made. Itappears that the said observations are made with respect to role of theauditors. It is to be noted that in the same para, the learned Tribunal hasspecifically observed that in the earlier order dated 01.10.2018, it isobserved that the affairs of the company were mismanaged during theErelevant period and that the affairs of the company and subsidiarycompanies were being mismanaged during the relevant period, ascontemplated under Sub-Section (1) and (2). At this stage, it is requiredto be noted that as per Section 130 of the Act, the Tribunal may pass anorder of re-opening of accounts if the Tribunal is of the opinion that (i)Fthe relevant earlier accounts were prepared in a fraudulent manner;OR (ii) the affairs of the company were mismanaged during the relevantperiod casting a doubt on the reliability of the financial statements.Therefore, the word used is “OR”. Therefore, if either of the conditionsprecedent is satisfied, the Tribunal would be justified in passing the orderunder Section 130 of the Act. Considering the order passed by the TribunalGpassed under Section 130 of the Companies Act, it appears that thelearned Tribunal has passed the order on being satisfied with respect tothe second part of Section 130 of the Companies Act. It is also requiredto be noted that the learned Tribunal has also taken note of the preliminaryreport submitted by the ICAI with respect to the earlier accounts wereHbeing prepared in a fraudulent manner. On a fair reading of Section 130

of the Companies Act, if the Tribunal is satisfied that either of theconditions precedent is satisfied, the Tribunal would be justified in passingthe order under Section 130 of the Companies Act.

11. Considering the facts narrated hereinabove and the preliminaryreports of SFIO and ICAI which came to be considered by the learnedTribunal and considering the specific observations made by the learnedTribunal while passing the order under Section 241/242 of the CompaniesAct and considering the fact that the Central Government has entrustedthe investigation of the affairs of the company to SFIO in exercise ofpowers under Section 242 of the Companies Act, it cannot be said thatthe conditions precedent while invoking the powers under Section 130of the Act are not satisfied. We are more than satisfied that in the factsand circumstances of the case, narrated hereinabove, and also in thelarger public interest and when thousands of crores of public money isinvolved, the Tribunal is justified in allowing the application under Section130 of the Companies Act, which was submitted by the CentralGovernment as provided under Section 130 of the Companies Act.

12. Now so far as the submission on behalf of the appellant thatall the three provisions, viz., Section 130, Sections 211/212 and Sections241/242 operate in different fields and in different circumstances andthey are in the different Chapters and therefore any observation madewhile passing the order/orders with respect to a particular provision maynot be considered while passing the order under relevant provisions isconcerned, it is required to be noted that all the three provisions arerequired to be considered conjointly. While passing an order in a particularprovision, the endeavour should be to see that the order/orders passedunder other provisions of the Companies Act are given effect to, and/orin furtherance of the order/orders passed under other Sections.Therefore, the observations made while passing order under Section241/242 of the Companies Act can be said to be relevant observationsfor passing the order under Section 130 of the Companies Act. At thisstage, it is required to be noted that even otherwise in the order passedby the Tribunal under Section 130 of the Companies Act, there is aspecific observation made by the learned Tribunal with respect tomismanagement of the affairs of the company, and even with respect tothe relevant earlier accounts prepared in a fraudulent manner.

13. It is next contended on behalf of the appellant that proviso toSection 130 of the Act has not been complied with and that the order A

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Apassed by the learned Tribunal passed under Section 130 of the Act is inviolation of the principle of natural justice. At the outset, it is required tobe noted that while passing he order under Section 130 of the CompaniesAct, the learned counsel appearing on behalf of the erstwhile directorsappeared and opposed the application under Section 130 of theCompanies Act. Therefore, the learned counsel appearing on behalf ofBthe erstwhile directors was heard before passing he order under Section130 of the Companies Act. Therefore, it can be said that there is acompliance/substantial compliance of the principle of natural justice tobe followed. It is required to be noted that as per proviso to Section 130of the Companies Act before passing the order under Section 130 of theCAct, the Tribunal is required to issue notice to the Central Government,Income Tax Authorities, SEBI or any other statutory regulatory body orauthorities concerned or any “other person concerned” and is requiredto take into consideration the representation, if any made. The “otherperson concerned” is as such not defined. Who can be said to be “other

person concerned”, that question is kept open. At this stage, it is requiredDto be noted that while passing the order under Section 130 of the Act,there shall be reopening of the books of accounts and re-casting of thefinancial statements of the company and therefore the Board of Directorsof the company may make a grievance. The erstwhile directors cannotrepresent the company as they are suspended pursuant to the earlierEorder passed under Section 242 of the Companies Act. Be that as itmay, even otherwise in the present case and as observed hereinabovethe erstwhile directors of the company represented before the Tribunaland they opposed the application under Section 130 of the Act. Therefore,in the facts and circumstances of the case, it cannot be said that theorder passed by the learned Tribunal is per se in violation of the principleFof natural justice as alleged.

14. The submission by learned Counsel appearing on behalf ofthe appellant that in the impugned order passed by the learned AppellateTribunal, the learned Appellate Tribunal has specifically observed thatthere is a violation of principle of natural justice and therefore the learnedGAppellate Tribunal ought to have remanded the matter to the Tribunal isconcerned, on considering/fair reading of the impugned order passed bythe learned Appellate Tribunal, as such, there is no specific finding bythe learned Appellate Tribunal that there is a violation of principle ofnatural justice. What is observed by the learned Appellate Tribunal isHthat “even if it is accepted that the appellant on receipt of notice wanted to file reply” cannot be considered as a specific finding given that theorder passed by the Tribunal was in violation of principle of natural justice.

15. Now insofar as the submission on behalf of the appellant thatthe order dated 01.10.2018 passed under Section 241/242 of theCompanies Act is an interim order and the same is not a final ordersuspending the directors and the erstwhile board of directors of thecompany, and therefore the observations made in the order dated01.10.2018 cannot be considered, has no substance. It is required to benoted that as on today the order dated 01.10.2018 suspending the erstwhiledirectors of the company including the appellant stands and remains inoperation. The same is not challenged by way of an appeal before anappropriate appellate Tribunal/Court.

16. Now so far as the submission on behalf of the appellant thatthe impugned order passed by the learned Appellate Tribunal is a non-speaking and non-reasoned order and the grounds urged before thelearned Appellate Tribunal have not been dealt with by the learnedAppellate Tribunal and therefore the prayer to set aside the order isconcerned, in view of our specific findings recorded hereinabove on thelegality and validity of the order passed by the learned Tribunal underSection 130 of the Companies Act, we do not propose to remand thematter to the learned Appellate Tribunal. It is true that the learnedAppellate Tribunal could have passed a reasoned/speaking order. But inthe facts and circumstances of the case and our findings recordedhereinabove and as observed hereinabove, the order passed by theTribunal under Section 130 of the Companies Act does not suffer fromany illegality and the same is passed in the larger public interest, wehave considered the order passed by the learned Tribunal under Section130 of the Companies Act on merits.

17. In view of the aforesaid findings recorded by us, the decisionsrelied upon by the learned counsel appearing on behalf of the appellantshall not be applicable to the facts of the case on hand. There cannot beany dispute to the proposition of law laid down by this Court in theaforesaid decisions relied upon by the learned counsel appearing on behalfof the appellant. However, in the light of the aforesaid findings recordedby us, none of the decisions relied upon by the learned counsel appearingon behalf of the appellant shall be applicable to the facts of the case onhand.

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A18. Now so far as reliance placed upon the subsequent report ofthe RBI and the objection by the learned counsel appearing on behalf ofthe appellant to rely upon the subsequent report and the reliance placedupon the decision of this Court in the case of Mohinder Singh (supra)is concerned, as the impugned order passed by the learned Tribunal is inthe larger public interest, this Court can take note of the subsequentBdevelopment/report. However, at the same time, the same shall be insupport of the order under challenge. Even otherwise, it is required to benoted and as observed hereinabove, independent to the subsequent reportof the RBI, there is a specific finding with respect to the mismanagementand the fraudulent accounts. Therefore subsequent Report of the RBICReport can be taken note of, while upholding the order passed by thelearned Tribunal under Section 130 of the Companies Act. As observedhereinabove, a larger public interest has been involved and reopening ofthe books of accounts and recasting of financial statements of theaforesaid companies is required to be carried out in the larger public interest, to find out the real truth, and as observed hereinabove both theDconditions precedent while invoking power under Section 130 of theCompanies Act are satisfied/complied with, therefore in the facts andcircumstances of the case, we are of the opinion that the order passedby the learned Tribunal passed under Section 130 of the Companies Act,confirmed by the learned Appellate Tribunal, is not required to beEinterfered with.

19. In view of the above and for the reasons stated above, we seeno reason to interfere with the impugned order dated 01.01.2019 passedby the learned Tribunal under Section 130 of the Companies Act for re-opening of the books of accounts and re-casting the financial statements Fof the Infrastructure Leasing & Financial Services Limited; IL&FSFinancial Services Limited and IL&FS Transportation Networks Limitedfor the last five years, viz. from Financial Year 2012-13 to the FinancialYear 2017-18, which came to be confirmed by the learned AppellateCourt vide impugned judgment and order dated 31.01.2019. Consequently,the present appeal fails and deserves to be dismissed and is accordinglyGdismissed.

All connected IAs are also disposed of.

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Devika Gujral

Appeal dismissed and IAs diposed of.