Section 212 of the Companies Act, 2013 ("the Act") empowers the Central Government to assign the investigation into the affairs of a company to the Serious Fraud Investigation Office ("SFIO"). The SFIO is a specialised agency, and its investigation is reserved for cases involving serious fraud.
The Triggers
The Central Government may assign an investigation to the SFIO on the receipt of a report from the ROC or an inspector under Section 208, on a request from any department of the Central Government or a State Government, or on the basis of information received from any other source. The SFIO investigation is not available on the application of a private person; the NCLT Ahmedabad has held that Section 212 can be invoked only when the Central Government acts on a report of the ROC and does not allow an outsider to seek an inspection directly.
The Powers
The SFIO has the powers of a civil court and the powers of arrest. The SFIO can arrest a person if it has reason to believe that the person is guilty of an offence under the Act. The arrest is subject to the safeguards in the Code of Criminal Procedure, and the person must be produced before a magistrate within twenty-four hours.
The SFIO submits an interim report and a final report to the Central Government. The Calcutta High Court has held that only the final report, not the interim report, can trigger prosecution under the Act.
The Judicial Scrutiny
The Delhi High Court has quashed SFIO investigation orders where the Central Government did not apply its mind or where the order was based on material that did not disclose a serious fraud. The court's scrutiny is limited to the legality of the order, not to the merits of the investigation.
The SFIO investigation is a serious event for the company and its officers. The company must cooperate, and the officers must obtain legal advice before making statements.
Call to Action
Anuj Desai & Associates advises companies and officers on SFIO investigations—from the challenge to the investigation order and the response to the SFIO's notices to the defence against arrest and prosecution. If you are facing an SFIO investigation, we can help you protect your position.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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