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2021 (12) TMI 1379 - HC - Companies LawMaintainability of petition - irreparable loss - balance of convenience - Constitutional validity of Section 217(5) of the Companies Act - HELD THAT:- The Petitioners have made out a prima facie case for grant of interim relief. Balance of convenience is also in favour of the Petitioners and if the interim relief, as prayed for, is not granted, irreparable loss shall be caused to the Petitioners. There was thus a clear mandate by the Central Government to complete the investigation within three months from the date of the issue of the order i.e. 31.10.2018. However, the investigation was not completed within the stipulated time and as asserted by the Petitioners, the same is still ongoing. Prima facie, there is violation of Section 212(3) and the direction of the Central Government. So far as investigation into the affairs of the six Companies by virtue of impugned order dated 27.10.2020 (Annexure P-2 to the memo of this writ petition) is concerned, which includes Petitioners No.2 and 3 herein, there is violation of provisions of Section 219 of the Companies Act, 2013. There seems to be prima facie merit in the contention of the Petitioners that the Companies sought to be investigated under Section 219 ought to have an affiliation with the Company(s) under investigation, as provided for in the Statute. There is also prima facie merit in the contention of the Petitioners that the impugned orders dated 31.10.2018 and 27.10.2020 do not indicate the reasons or circumstances that compelled the Central Government to form an opinion to order investigation by the SFIO into the affairs of the Petitioners. All that the orders reveal is that the Central Government has the power under Section 212 of the Companies Act to direct investigation into the affairs of a Company and that it has formed an opinion to do so - nothing is discernible from the impugned orders as to what cogent material led to the formation of opinion by the Central Government that the affairs of the Petitioners were required to be investigated. The operation, implementation and execution of the orders dated 31.10.2018 and 27.10.2020 (Annexures P-1 and P-2 to the memo of this writ petition), passed by the Respondents as well as subsequent actions and proceedings initiated pursuant thereto, including coercive proceedings and look-out notices, are stayed, till the next date of hearing. List on 18.01.2022.
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