TMI Blog2021 (9) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation into any matter concerning the affairs of the company? - HELD THAT:- It clearly transpires that the jurisdiction of SFIO is vast, in that, in addition to the assignment of investigation under the Companies Act by the Central Government, the SFIO could investigate the issue relating to any other law; however, the other investigating agencies are barred from investigating any matter which is already seized of by SFIO under the Companies Act; rather, the other investigating agencies could only investigate matters which are not within the realm of the Companies Act. To that extent the powers of the SFIO is multifold to that of the other investigating agencies - there exists a complete bar for other investigating agencies to investigate into the matter under the Companies Act once it is assigned to SFIO by the Central Government. Whether the default committed by ITNL on account of non-payment of interest in view of the moratorium granted by NCLAT could be held against ITNL and the petitioners, thereby making them liable for penal prosecution under the TNPID Act? - HELD THAT:- Though the default has occurred, it can safely be concluded, at the present point of time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er powers of investigation to deal with infraction under any law in addition to its exclusive jurisdiction under the Companies Act, it is well open to the intervenors to approach SFIO and submit appropriate representation for the relief aforesaid in accordance with law. Petition allowed. - CRL. O.P. NOS. 3730, 4227, 4095 & 11206 OF 2021 CRL. M.P. NOS. 6647, 6649, 2218, 2601, 2679, 3388, 6708 & 6709 OF 2021 W.P. NO. 1397 OF 2021 AND W.M.P. NO. 5917 OF 2021 - - - Dated:- 31-8-2021 - HONOURABLE MR. JUSTICE M. DHANDAPANI For Petitioners: Mr. B. Kumar, SC, for Mr. Rahul Unnikrishnan in Crl. OP 3730/21 Mr. Manishankar, SC, for Mr. A. Ashwini Kumar, in Crl. OP 4227/21 Mr. M.K. Kabir, SC, for Mr. Sunder Mohan in Crl. OP 4095/21 Mr. Nithyesh Natraj in WP 1397/21 For Respondent : Mr. C.E. Pratap, GA (Crl. Side) For Intervenors : Mr. P.S. Raman, SC, for Mr.Nithyesh Natraj Mr. Sarath Chander for Mr. B.Vijay Mr. Anand Sashidharan Mr. Nithyesh Natraj Mr. Abdukumar Rajarathnam COMMON ORDER Initially, Crl. O.P. No.11206/21 was listed before this Court on 6.7.2021 and during the hearing of the said petition for bail, it was fairly conceded by the learned senior counsel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Central Government, in view of the enormity of the economic offence involved and also the fact that monies of various entities are at stake in the ill-fated IL FS group companies, with a view to have a comprehensive investigation, ordered investigation under the Companies Act by Serious Fraud Investigation Office (for short 'SFIO') u/s 212 of the Companies Act and by virtue of the said orders, the investigation of the case stood assigned to SFIO. 5. In the meanwhile, due to the moratorium granted by NCLAT, the intervenors, being subsequent purchasers of the debentures from various other entities, having not received the interest as undertaken by the company while issuing the said debentures, lodged complaint by invoking the provisions of the Tamil Nadu Protection of Investment of Depositors (in Financial Establishments) Act (for short 'TNPID Act') against IL FS and its group companies and more particularly against ITNL, which had issued the debentures and also against the petitioners, who were Directors in the said group for the default in payment of interest, which led to the registration of the above crime against ITNL, IL FS and also various other Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission of the learned senior counsel that the registration of the complaint on 21.1.2019 at the instance of the intervenor is wholly unsustainable. 9. It is the further submission of the learned senior counsel for A-7 that non Executive Director would not fall within the definition of 'Key Managerial Personnel', as provided under sub-section (51) of Section 2 of the Companies Act and such being the case, invocation of a case against A-7 on the basis of the complaint by the intervenor, when A-7 is no longer in the company on the date of the complaint, is wholly unsustainable. 10. Learned senior counsel appearing for A-7 further submitted that Section 149 (12) of the Companies Act prescribes the circumstances under which an action is permitted against a non-executive director of a company. It is the submission of the learned senior counsel that the non-payment of interest, pursuant to the moratorium, having happened after the date on which A-7 had demitted office as non-executive director, he cannot be mulcted with any responsibility for the lapse committed by the company. It is the submission of the learned senior counsel that in view of non-fulfilment of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded payment of any other dues by the IL FS and its 348 group companies, which had literally put the spokes on ITNL from paying the dues towards interest. It is therefore the submission of the learned senior counsel that the order of the NCLAT having stayed the payment, invocation of the provisions of the TNPID Act against the petitioners and the companies cannot be maintained. 15. It is the further submission of the learned senior counsel for A-7 that ITNL had taken up issuance of shares on private placement basis, as is provided u/s 42 of the Companies Act. It is the further submission of the learned senior counsel that the said private placement has been made only to select group of persons and that neither any public advertisements were given nor any media, marketing or distribution channels were utilised for informing the public about the issue. Such being the case, the issuance of debentures would not attract the provisions of the TNPID Act, as the issue was not meant for public and that no advertisement was made about the issue and no money was collected from the public. 16. It is the further submission of the learned senior counsel for A-7 that Entry 46 of the Union L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entures and the intervenor, being a subsequent purchaser cannot have any right to claim that he was misled into purchasing the debentures and has suffered a loss. In fact, the complainant cannot claim that he was lured into the transaction to deposit the amount and seek aid of the provisions of the TNPID Act when the complainant was not one among the select few, who were informed about the floating of the debentures. 20. It is the further submission of the learned senior counsel for A-6 that the non-convertible debentures were purchased by the 2nd respondent from Trust Capital, which has its office at Mumbai and through the Mumbai Stock Exchange and, therefore, the 2nd respondent has to only invoke the jurisdiction at Mumbai and not at Chennai. It is the submission of the learned senior counsel that only in view of the fact that the Maharashtra Protection of Interest of Depositors Act disallows invocation of the provisions of the said Act in relation to debentures, the 2nd respondent has invoked the jurisdiction at Chennai. In view of the fact that all the transactions having taken place within the jurisdiction of Mumbai and also the entities involved in the transactions are hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when in categoric terms, the information memorandum has spoken about the risk factors associated with the debentures and also the illiquid state of the secondary market for the said debentures and the potential investors having been called upon to hold the debentures until redemption to realize any value thereof, the 2nd respondent, who was not an investor with ITNL, but is a subsequent purchaser from Trust Capital, the original investor, was bound by the risk factors enumerated in Section 4 of the information memorandum and it is not open to the 2nd respondent to turn back and claim that the amount invested in the debentures having not paid, the said default is liable to be proceeded with under the TNPID Act. 24. It is the further submission of the learned senior counsel for A-6 that the complaint was registered by the respondent EOW only due to the 2nd respondent invoking the jurisdiction of this Court, wherein as well, this Court had directed the 2nd respondent to register the complaint in accordance with law. It is submitted by the learned senior counsel that the 2nd respondent herein had filed two sets of petitions for registration of the case, which was ordered by this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned senior counsel appearing for A-3 that in view of the investigation being carried out by SFIO u/s 212 of the Companies Act, the jurisdiction of the other law enforcing agencies to conduct parallel investigations is barred and further all the cause of action having arisen within the juridical limits of Mumbai, the complaint filed before the respondent invoking TNPID Act is wholly without jurisdiction. 28. Similarly, it is the submission of the learned senior counsel for A-3 that the 2nd respondent, viz., 63 Moons Technologies having already gone before the NCLAT by filing necessary application for repayment of the amount towards the debentures, without divulging the filing of the above petition before NCLAT, filing the present complaint is a clear suppression and, the 2nd respondent having come before this Court with unclean hands, necessarily, his case does not require any benevolent consideration. 29. It is the further submission of the learned senior counsel for A-3 that the intervenors, viz., 63 Moons Technologies, at whose instance the complaint has been registered, has no locus to prosecute the case, as the 2nd respondent is a purchaser of the non-convertible debentu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 33. Learned senior counsel drew the attention of this Court to sub-section(10) of Section 71 of the Companies Act and submitted that the failure to pay interest is not on account of any default committed by ITNL, but it is only on the basis of the moratorium granted by NCLAT and further ITNL has not failed to redeem the debentures on the date of its maturity, as the debentures held by the 2nd respondent are due for maturity only in the year 2024. Such being the case, the 2nd respondent having already filed petition before NCLAT for payment of its money as a creditor, giving the complaint as if the deposit amount was not paid by ITNL, more so, when the maturity is only in the year 2024, is wholly preposterous and does not merit consideration. 34. It is the further submission of the learned senior counsel for A-3 that the issue made by ITNL is private placement of debentures and no advertisement or marketing through print or digital media, was resorted to and, therefore, the provisions of TNPID Act would not be applicable to the money collected by ITNL, as the said collection could in no way be termed to be 'deposits' as defined u/s 2 (2) of the TNPID Act. It is the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Vs SEBI (2017 SCC OnLine SAT 88) ii) Chintalapati Raju Vs SEBI (2018 (7) SCC 443) iii) N.Magesh Vs State of Tamil Nadu (2019 SCC OnLine Mad 38922) iv) Sunil Bharti Mittal Vs CBI (2015 (4) SCC 609) v) G.Swaminathan Vs G.Antonie Radjou (Crl. OP No.5135/2011 Dated 3.1.20) vi) SFIO Vs Rahul Madi (2019 (5) SCC 266) vii) Doraisamy Vs State (2019 SCC OnLine Mad 1354) viii) Viswapriya (India) Ltd. - Govt. of T.N. (W.P. No.14229/15 Dated 6.8.15) ix) Helios Matheson Information Technology Ltd. - Vs State (2015 SCC OnLine Mad 7398) x) S.Bagavathy Vs State of T.N. (2007 (2) CTC 207 (FB)) xi) Union of India Vs IL FS (Comp. Appeal No.346/18 Dated 15.10.2018) 39. Per contra, Mr.P.S.Raman, learned senior counsel, leading the arguments for the intervenors, submitted that the parent company, viz., IL FS, the pivot in the group around which the other 348 companies revolve, including ITNL, had come to the adverse notice of the Union Government leading to the filing of a petition before the National Company Law Tribunal, Mumbai. Learned senior counsel drew the particular at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible debentures under the private placement scheme, but the debentures are open ended debentures, which could be transferred in the trading market, with the clear intention of making it a deposit scheme, but clothing it as a private placement issue. To further their nest, the petitioners even went to the extent of manipulating the rating given by the credit companies, with the connivance of the credit rating companies, which aspect is also under the scanner of the SFIO and other investigating agencies. It is therefore the submission of the learned senior counsel that merely because the petitioners have resigned from the Board prior to the initiation of the complaint and the registration of the case would not absolve them of the offence, as the offence is a continuous one, which dates back to 2014, when the petitioners were in the controlling positions in the group companies. Such being the case, the stand of the petitioners that they have resigned prior to the initiation of the complaint cannot be a ground to release them from the rigours of criminal prosecution. 44. It is the further submission of the learned senior counsel that in view of the non obstante clause found in Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation is a mere figment of imagination, as the same stands axed on account f sub-section 17 (b) of Section 212 of the Companies Act. Drawing the attention of this Court to the said provision under the Companies Act, learned senior counsel submitted that while sub-section 17 (a) provides the other investigating agencies to provide any material which would be of relevance in the matter investigated by SFIO, subsection 17 (b) imposes upon SFIO to share any information or documents available with it with any investigating agency, State Government, police authority or income tax authorities, which may be of any relevance in such investigation undertaken by the said authority in respect of any offence under investigation by the said authority. Therefore, it is submitted that the contention of the petitioners that once SFIO takes up investigation, investigation by any other agency is barred, is wholly misconceived. 48. It is the further submission of the learned senior counsel that moratorium granted by NCLT will not put a freeze on any parallel proceeding, as SFIO investigation being conducted, any other investigation, in line with the SFIO investigation, for any other offence, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 242 of the Companies Act by the Union of India. Not only the Government had initiated the said step, but the same was initiated not only at the behest of the Registrar of Companies, Mumbai, but on the basis of the very letter written by A-7 which was written even before the Registrar and the Reserve Bank of India had also stepped in with its report, which shows that not only there was mismanagement, but the activities of the group companies was tainted with fraud. 52. It is the further submission of the learned counsel that the forensic auditor, M/s.Grant Thornton, who was appointed to submit report, had, in its interim report submitted that IL FS was following the practise of evergreening of loans, which was done purely with a fraudulent intention for the purpose of screening certain accounts from becoming NPA. 53. It is the further submission of the learned counsel that SFIO had also filed a complaint, on its being appointed by the Central Government to investigate into the affairs of IL FS and the SFIO had implicated the petitioners for many wrongful acts in the running of the company and its affairs, including decision making. 54. It is the further submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervenors, further submitted that the term deposit , as defined under the TNPID Act would take within its fold the debentures floated by ITNL under private placement basis, relied on the decisions in i) 2019 (1) LW (Crl.) 197. 59. Respective learned counsel appearing for the intervenors placed reliance on the following decisions to drive home the point that the registration of the case is wholly maintainable and that the investigation could very well be carried out under the TNPID Act, simultaneous to the investigation carried out by SFIO and that the registration of the case within the jurisdiction of this Court is wholly permissible :- i) Deputy Commissioner Vs Jaspal Singh Gill (1984 (3) SCC 555) ii) Directorate of Enforcement Vs Ashok Kumar Jain (1998 (2) SCC 105) iii) Vedi Ram Vs State of UP (2003 (Crl. LJ 1084) iv) Bibhuti Nath Jha Vs State of Bihar (2005 (12) SCC 286) v) State of Gujarat Vs Mohanlal Jitamalji Porwal (1987 (2) SCC 364) vi) Puran Vs Rambilas (2001 (6) SCC 338) vii) Y.S.Jagan Mohan Reddy Vs CBI (2013 (7) SCC 439) viii) Nimmagadda Prasad Vs CBI (2013 (7) SCC 466) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act, investigation by other agencies stood barred. On the contrary, it is the contention of the 2nd respondent/complainant that sub-section 17 (a) and (b) clothes the other investigative agencies with powers to proceed with parallel investigation and the only requirement is that the materials collected in such investigation should be shared with SFIO by the said investigating agency and vice versa. Very many decisions have been referred on this aspect by the learned counsel on either side. 63. Before adverting to the same, this Court for the purpose of brevity, would extract hereunder the relevant provision of law, viz., sub-sections (2) and 17 (a) and (b) of Section 212 of the Companies Act for better appreciation of the issue. 64. Sub-section (2) of Section 212 of the Companies Act deals with the power of the Central Government to assign a case to SFIO, which provision, is quoted hereunder :- 212. Investigation into affairs of Company by Serious Fraud Investigation Office * * * * * * * * (2) Where any case has been assigned by the Central Government to the Serious Fraud Investigation Office for investigation under this Act, no other investigating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o transfer the documents and records in respect of such offence under 2013 Act to SFIO. * * * * * * * * 33. The very expression assign in Section 212 (3) of 2013 Act contemplates transfer of investigation for all purposes whereafter the original Investigating Agencies of the Central Government or any State Government are completely denuded of any power to conduct and complete the investigation in respect of the offences contemplated therein. The idea Under Sub-section (2) is complete transfer of investigation. The transfer Under Sub-section (2) of Section 213 would not stand revoked or recalled in any contingency. If a time limit is construed and contemplated within which the investigation must be completed then logically, the provisions would have dealt with as to what must happen if the time limit is not adhered to. The Statute must also have contemplated a situation that a valid investigation undertaken by any Investigating Agency of Central Government or State Government which was transferred to SFIO, must then be re-transferred to said Investigating Agencies. But the Statute does not contemplate that. The transfer is irrevocable and cannot be recalled in any manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 (b) mandates SFIO to share any information or documents available with it to the other investigation agency for the purpose of investigation of the offence under any other law. 70. There is no quarrel with regard to the provision encapsulated u/s 17 (b) of Section 212 of the Companies Act. However, what is patently apparent from sub-section (2) of Section 212 of the Companies Act is that once the case stands assigned by the Central Government to the SFIO to proceed against the company under the Companies Act, an explicit bar is imposed on any agency of the Central Government or the State Government to proceed with any type of investigation under the Companies Act and, if at all, any other investigation is mooted out by the Central or the State Governments under the Companies Act, the said investigation stands merged with the investigation conducted by the SFIO. 71. In the case on hand, relating to the irregularities in the functioning of the group companies under the umbrella of IL FS, the Central Government, invoking the provisions of the Companies Act had filed necessary petitions before the NCLT, Mumbai for suspension of certain Directors and for appointment of new no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) enunciates the said ratio succinctly and, there is no ambiguity and this Court is in respectful agreement with the proposition of law laid down therein. 74. From the above, it clearly transpires that the jurisdiction of SFIO is vast, in that, in addition to the assignment of investigation under the Companies Act by the Central Government, the SFIO could investigate the issue relating to any other law; however, the other investigating agencies are barred from investigating any matter which is already seized of by SFIO under the Companies Act; rather, the other investigating agencies could only investigate matters which are not within the realm of the Companies Act. To that extent the powers of the SFIO is multifold to that of the other investigating agencies. 75. Therefore, for all purposes, only when an investigation is mooted out by the Central Government under the Companies Act and the investigation is assigned to SFIO, the bar operates for the other investigating agencies to proceed with investigation under the Companies Act and not insofar as it relates to any other offences under any other law for which investigation is being carried out by any other agency under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation to SFIO. That being the factual position, though the default has occurred, it can safely be concluded, at the present point of time, as being due to the moratorium granted by NCLAT and the culpability of the petitioners in the complex web of the economic offence, which is the subject matter of investigation by SFIO, will entangle itself only after full fledged investigation by SFIO. Therefore, this Court, at this point of time is not inclined to give a finding one way or the other as to the culpability of the petitioners in the default committed in payment of interest. Issue No.2 is answered accordingly. ISSUE NO.3 4 Whether the amounts received by ITNL could be held to be deposits within the meaning of Section 2 (2) and whether ITNL could be held to be a financial establishment as defined u/s 2 (3) of the TNPID Act. Whether the provisions of the TNPID Act could be enforced against ITNL for the debentures issued by it on the private placement basis u/s 42 of the Companies Act. 78. As issues 3 and 4 go hand in hand, they are taken up together for the purpose of convenience and being answered. 79. The criminal law has been set in motion b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Division Bench of this Court in M/s.Helios Matheson Information Technology Ltd. - Vs The State (2015 SCC OnLine Mad 7398) has been placed before this Court by the 2nd respondent to contend that any deposits received by ITNL would give ITNL the character of a financial establishment as defined u/s 2 (3) of the TNPID Act. 83. The Division Bench of this Court in Helios Matheson's case (supra) had formulated the following as one of the point for consideration :- Whether the company which is not in the business of receiving deposits, but which received deposits in terms of the provisions of the Companies Act, 1956, can be prosecuted for an offence under Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997, hereinafter referred to as the TNPID Act, especially when there is a specific provision under Section 74 (2) of the Companies Act, 2013, enabling the company to approach the Company Law Board for extension of time to repay the deposits? 84. In the said case, the company, which was the appellant, had, on its own, admitted that they were accepting deposits from the public as well as the shareholders for over 10 yeas in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact into which this Court exercising jurisdiction under Article 226 cannot go, especially when the relief sought is to quash a First Information Report. It is needless at this distance of time to cite any authority for the proposition that a First Information Report cannot be quashed by a Court under Article 226, on the basis of any evidence or material other than what is reflected in the First Information Report itself. 61. The question as to whether the appellant is carrying on the business of receiving deposits under any Scheme or Arrangement or in any other manner is a question of fact, which needs to be proved with evidence. It may not even be proper, merely to look into the Memorandum and Articles of Association of a company and come to a conclusion on the basis of the objects clause contained therein. Whether a company is carrying on the business as per the objects clause contained in the Memorandum and Articles of Association would itself be a question of fact to be decided on the basis of evidence. 62. To satisfy his conscience as to whether or not there was prima facie material to show that the appellant is carrying on the business of receiving deposits, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ID Act. 89. The definition of the terms deposit and financial establishments as defined in Sections 2 (2) and (3) are self-explanatory and in a catena of judgments, the literal interpretation to be given to the aforesaid words have been portrayed and this Court needs no necessity to amplify on its interpretation any further. 90. In the present case, it is the case of the petitioners that ITNL had floated a private placement scheme as provided u/s 42 of the Companies Act, rather than floating a scheme for accepting deposits under Section 76 of the Companies Act from the public. Further, it is the case of the petitioners that under the private placement scheme, as per the mandate of Section 42, no advertisement was made, but only select group of persons, identified by the Board, were called upon to show their intent in participating in the said private placement process for issue of debentures. Further, by way of private placement, the company had issued debentures to the select group, who had shown interest in investing in the said debentures. It is therefore the stand of the petitioners that mere acceptance of money from the select group of persons, and from whom the 2nd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich led the 2nd respondent to purchase the debentures. However, it is to be borne in mind that for the said complicity, necessary investigation has been taken by SFIO and the matter is also sub judice before the NCLAT. Further, action has also been taken against the credit rating companies by the appropriate authority. In the above backdrop, it is clear that those are the issues, which are under investigation of SFIO under the Companies Act, which does not require any deliberation at the present point of time, as the same is not an issue before this Court. 94. Coming to the substratum of the case as to whether the debentures purchased by the 2nd respondent would partake the character of deposit, it is but necessary to understand the meaning of the word debenture . The word debenture has been derived from a Latin word debere which means to borrow. Debenture is a written instrument acknowledging a debt to the Company. It contains a contract for repayment of principal after a specified period or at intervals or at the option of the company and for payment of interest at a fixed rate payable usually either half-yearly or yearly on fixed dates. 95. Debenture includes debentur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness proposition, have taken the step to invest in the said debentures. 98. It is the ancillary contention of the respondents that though ITNL has floated the private placement scheme, however, the monies earned through the said scheme are distributed among all the entities within the IL FS group tree and, therefore, it cannot be said that the money collected by ITNL was not deposit . The decision in Helios Matheson case (supra) is taken in aid of to emphasise that the money collected by ITNL should be deemed to be deposit within the meaning of Section 2 (2) of TNPID Act. 99. Though such a contention is placed before this Court by the respondent, this Court, even at the very outset could safely hold that the said contention is too far fetched to accept. The decision in Helios Matheson case (supra) could in no way be taken in aid to support the case of the respondent in the present case for the simple reason that in the said case, it is the admitted case, as already stated above, that the company was accepting deposits from the public. Though ancillary contention was raised that the company is not into banking and financial service and was involved only in information t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the intervenors that they were lured by the petitioners and ITNL to deposit in the debentures floated by ITNL; on the contrary, the 2nd respondent, based on the credit ratings given for the said debentures, had purchased the same from open market. Though the credit rating system is alleged to have been rigged by the petitioners and ITNL in their favour for which action has been taken by the appropriate authority against the credit rating agencies, that cannot be a ground to hold that the debentures issued under private placement scheme should be deemed to be in the nature of deposits by covering it with a thin veil for protection so as to categorize the said deposits as debentures. 102. Once this Court has come to the conclusion that the debentures floated by the company are not deposits within the meaning of Section 2 (2) of the TNPID Act, the associated issue that requires to be addressed is whether ITNL could be held to be a financial establishment as defined u/s 2 (3) of the TNPID Act. 103. A perusal of the Information Memorandum, which has been circulated by ITNL pursuant to the floating of private placement scheme outlines the activities of ITNL, which shows that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITNL would squarely fall within the definition of financial establishment . 106. Though such a contention is advanced, it is to be pointed out that the said argument is preposterous and is nothing but putting the cart before the horse. By means of private placement, debentures have been issued by ITNL. Debenture is a term which is codified under the Companies Act and the manner in which it can be floated and the legal necessities to be complied with it are spelt out under Section 71 of the Companies Act. Once any infraction is noticed with regard to any act performed under the Companies Act and the same brought to the knowledge of the Central Government, the Central Government could step in to set right the same and even entrust the such investigation to SFIO and once such entrustment of investigation is made to SFIO under the Companies Act, investigation by any other agency stood barred, even if the establishment is a financial establishment , which is evident from Section 212 (2) of the Companies Act as also the decision of the Hon'ble Apex Court in Rahul Modi's case (supra). 107. It is further to be pointed out that the words under any scheme or arrangement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loated aimed only towards the corporates, who were well aware of all the nuances of such business transactions and the risks associated therewith. From the above, it is pointedly clear that what is floated could never be classified as deposit as defined u/s 2 (2) nor the company floating the private placement scheme could be termed to be a financial establishment as defined u/s 2 (3) of the TNPID Act. If any such construction is given, the meaning of debentures would stand wiped out and every money received by any company could only be termed to be a deposit and in such a situation, many of the provisions of the Companies Act would get diluted. Therefore, giving any other interpretation to the above definitions would be nothing but importing something into the words which the Legislature had no intention to add. Further, giving an enlarged interpretation would defeat the very purpose of the Act, more so, when the act of ITNL is not what has been codified under the Act for it to be labelled as a financial establishment or the investment received by it to be termed a deposit with the meaning of Section 2 (2) and 2 (3) of the TNPID Act. 110. Once this Court has come to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady assigned investigation with SFIO, which investigating agency, as stated above, is vested with jurisdiction and wider powers of investigation to deal with infraction under any law in addition to its exclusive jurisdiction under the Companies Act, it is well open to the intervenors to approach SFIO and submit appropriate representation for the relief aforesaid in accordance with law. 113. In the result i) Crl. O.P. Nos.3370, 4095 and 4227 of 2021 are allowed and the case in Crime No.13 of 2021 on the file of the 1st respondent/Deputy Superintendent of Police, EOW-II, Chennai, is quashed insofar as the petitioners in the above petitions and ITNL are concerned; ii) In view of the order of quashment passed above, no further orders are required to be passed in Crl. O.P. No.11206 of 2021 and, accordingly, the said petition is closed; iii) W.P. No.1397 of 2021 is disposed of granting liberty to the intervenors as aforesaid; iv) All the connected miscellaneous petitions for permitting the intervenors to intervene are allowed; and v) All other connected miscellaneous petitions are closed. 114. Before parting with the case, it is to be impressed upon that the economi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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