Supreme Court dismisses ED plea against Satyam’s successor firm Tech Mahindra

The Supreme Court has dismissed an appeal filed by Enforcement Directorate against a 2014 Hyderabad High Court judgement quashing money laundering charges against Satyam’s successor company Tech Mahindra.

Enforcement Directorate (ED) had challenged the High Court judgement of December 22, 2014, in Tech Mahindra’s favour, arguing that the new company — which took over Satyam Computer Services Ltd in 2009 under the intervention of Company Law Board (CLB) — could not escape responsibility for the acts of omission and commission of the erstwhile company.

A three-judge bench led by Chief Justice of India Dipak Misra dismissed the plea without examining the legal issue of whether a successor company can be fastened with criminal liability of an earlier corporate entity.


Satyam had floundered after its chairman B Ramalinga Raju confessed publically to cooking up its books to make the company look more attractive.

CLB then came up with a proposal to infuse fresh funds into the ailing company and a new board of directors had taken over the company, which was then christened Tech Mahindra. The amalgamation was vetted by the High Court.

CBI had later taken over the case and filed cases of criminal conspiracy, forgery, cheating and impersonation etc. Money laundering charges were added later under sections 70 (3) and (4) of the Prevention of Money Laundering Act, 2009.

ED treated Rs8 22 crore infused into Satyam by its previous board of directors as proceeds of crime.

Tech Mahindra challenged it in the High Court and sought quashing of the charges on the ground that the charges pre-dated 2009 when a new board of directors took over.

Any such charges, against the successor company, were just unnecessary harassment, it argued.

If anything, the successor company was a victim of crime, Tech Mahindra claimed. Moreover, the new board had no knowledge of the previous dealings of the earlier board of directors, a necessary requisite of the crime of money laundering.

ED on the other hand claimed that the law would treat all those directly or indirectly involved in the company as part to the crime.

The company cannot claim lack of knowledge, it said. Tech Mahindra as the successor company cannot escape its predecessor company’s liabilities, it said. Huge unaccounted for money was brought in into the former company, ED had alleged.

ED was represented by senior advocate AK Panda while Tech Mahindra was represented by senior advocates Harish Salve and KK Vishwanathan. They were assisted by lawyer Mahesh Agrawal. The SC bench included Justices AM Khanwilkar and DY Chandrachud besides the CJI.