HC dismisses Binani plea against SFIO, Legal News, ET LegalWorld – Legal Firms

Mumbai: The Bombay high court on Monday dismissed a petition filed by Shradha Binani, daughter of Binani Group’s chairperson Brij Binani and former non-executive director in Binani Cements (BCL), who challenged summons issued to her last year by the Serious Fraud Investigation Office (SFIO).

SFIO said its probe has revealed movement of huge funds since 2010 to the personal bank accounts of Binani from the related companies of BCL and from certain other entities to which funds of BCL were transferred directly or indirectly. A bench of Justices S V Gangapurwala and R N Laddha said the investigation is carried out by SFIO, which has experts, and this is not a fit case to invoke its extraordinary jurisdiction that empowers HC to do full justice in a matter.

The agency carrying out investigations was to unearth alleged irregularities in the affairs of the company, observed the HC. It added such a probe — right now at a nascent stage — may not be a narrow compass and details sought from Binani “would be relevant and related while investigating into the affairs of the company”. The bench also said that “courts would not generally interfere at the initial stage of the investigation”.

The HC said, however, if the SFIO submits its report to the central government and Binani claims it is in violation of the provisions of the Companies Act, she would have liberty to assail it appropriately.

Senior counsel Mukul Rohatgi appeared for Binani and argued that she was “merely a non-executive director” of BCL in 2012-2014 and the SFIO was planning to conduct a “roving inquiry” under the summons and seek her “personal information”.

Additional solicitor general (ASG) Anil Singh countered her plea, saying it was not maintainable and that her “conduct would disentitle” her from any discretionary and equitable relief from the HC. Singh said she had sought time on grounds of the pandemic last August to appear for the summons without disclosing that she was planning on going to London.

Rohatgi submitted that the SFIO had harped upon her conduct and said it was the second wave of Covid and she had “genuinely desired to travel to London to meet her parents” and never intended to exit the country as suggested.

The HC said she was a director and hence would be in the realm of “officer” under the law. It said its order was not on merits and hence it was not going into arguments on her “conduct” or maintainability of the petition.

The ASG argued, “A person cannot be said to be aggrieved by mere issuance of summons under the Companies Act ” which is part of the process of the probe and said none of her fundamental rights were violated to warrant court’s intervention at this stage. The HC, too, said the May 2020 order is to investigate the company’s affairs and “not against an individual” and she “is only issued with the summons” and a report of the SFIO is not submitted yet.

Rohatgi had argued that she “never received any remunerations except the sitting fees” and was “not a signatory to BCL’s account” nor on any committee. She was not entrusted with any activity. She was not involved in the day-to-day affairs of the company and the Act requires investigations to be into affairs of the company with an exception to rope in certain individuals like a “managing director, the manager or the employee of the company and that too with special permission of the central government”, he argued saying she was neither, nor was any special nod taken.

The HC order said, “It is also revealed that, as on date, the petitioner was actively involved in the day-to-day operations of BCL, not even during her tenure as a non-executive director but after the said period also”.

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