Delhi High Court blocks SFIO investigation into Moser Baer

The Delhi High Court has quashed the corporate affairs ministry's order directing the Serious Fraud Investigation Office (SFIO) to probe Moser Baer India Ltd (MBIL) and its subsidiaries for suspected irregularities, saying the directive failed to withstand legal scrutiny.

The court's ruling earlier this week came on a plea filed by Nita Puri, former director of MBIL and sister of former Madhya Pradesh chief minister Kamal Nath. Puri had challenged the SFIO probe on the grounds that two forensic audits commissioned to examine alleged diversion of funds, siphoning of assets and fraudulent transactions had failed to reveal irregularities. Despite this, the ministry of corporate affairs (MCA) relied on those reports to order an investigation.

The bench observed that invoking Section 212(1)(c) of the Companies Act, 2013 - the provision empowering the government to mandate an SFIO probe - was "not a routine administrative measure" but a serious statutory action with grave consequences.


The order, the court said, had been issued "in a casual manner" without due consideration of statutory prerequisites.

"Casual use of power under Section 212(1)(c) undermines the law and its safeguards," the court said, adding that the government's boilerplate language and extrapolated findings showed "disregard for procedural propriety."

The court noted that the MCA's claims of fraudulent transactions conflicted with the forensic audit reports it cited. It added that several allegations, including fund diversion and questionable subsidiary dealings, had already been addressed in a Bank of Baroda show-cause notice, which the court had earlier set aside.