New Delhi: The National Company Law Appellate Tribunal (NCLAT) has dismissed appeals filed by audit firm BSR & Associates LLP and its former partner N Sampath Ganesh, upholding the authority of the Serious Fraud Investigation Office (SFIO) to pursue attachment and disgorgement of assets in a case linked to IL&FS Securities Services Ltd (ISSL).
A three-member NCLAT bench upheld the March 17, 2026 order of the Mumbai Bench of the National Company Law Tribunal (NCLT), which had rejected the appellants’ plea that SFIO had no locus to seek attachment or disgorgement of assets before the tribunal.
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The appeals challenged SFIO’s authority to initiate proceedings under Section 212(14A) of the Companies Act, 2013. BSR & Associates and Ganesh argued that the power to seek such relief rests with the central government and can be delegated only through a formal notification under Section 458 of the Act.
They also contended that SFIO could not simultaneously act as the investigator and seek civil relief arising from the same investigation report while also prosecuting criminal proceedings. According to the appellants, this created a conflict of roles and could prejudice them by allowing SFIO to pursue both civil and criminal liability.
NCLAT rejected the argument, describing it as “completely baseless”. The tribunal said the proceedings had been instituted by the central government, and not by SFIO in its own capacity. SFIO, it said, had only been authorised to present and pursue the proceedings before the NCLT on behalf of the government.
“The institution of either CA 396/2021 and/or CA 234/2025 is not by the SFIO,” the bench said. It added that the contention that SFIO could impose both civil and criminal liability was without foundation because such liability is ultimately determined by a tribunal or court constituted under the Companies Act.
The bench comprised Officiating Chairperson Justice Yogesh Khanna and technical members Barun Mitra and Ajai Das Mehrotra.
The dispute stems from a September 30, 2018 order by the central government directing SFIO to investigate the affairs of Infrastructure Leasing & Financial Services (IL&FS) and its subsidiaries, including ISSL.
SFIO submitted its investigation report on ISSL to the central government on July 14, 2023. Subsequently, on September 26, 2023, the Ministry of Corporate Affairs issued a letter authorising the SFIO Director to place the report before the NCLT and pursue proceedings for attachment and disgorgement of assets under Section 447 of the Companies Act.
BSR & Associates, which was ISSL’s former statutory auditor, and Ganesh challenged the authority granted through the letter. They argued that it was merely an executive order and could not substitute for the formal delegation contemplated under Section 458 of the Companies Act.
The NCLAT, however, found that the decision to initiate the proceedings was taken by the central government after considering the material before it. SFIO’s role was limited to filing and pursuing the petition before the NCLT pursuant to that authorisation.
The tribunal noted that the petition had been filed with the “Union of India” as the applicant, rather than SFIO. The SFIO Director was authorised only to present and execute the petition on behalf of the central government.
“On consideration of the matter, the NCLT in the impugned order has arrived at the same finding. Thus, the appellant’s contention the proceeding has not been filed by the central government is incorrect,” NCLAT said.
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The appellate tribunal also referred to the Allocation of Business Rules and Transaction of Business Rules, 1961, noting that SFIO functions under the Ministry of Corporate Affairs and that its Director holds a rank equivalent to Joint Secretary. It further noted that the September 2023 authorisation had the approval of the competent authority.
NCLAT also rejected the argument that SFIO’s involvement as the investigating agency and its role in pursuing the civil proceedings could cause prejudice to the appellants. The tribunal said neither civil nor criminal liability is imposed by SFIO itself, as both are ultimately subject to determination by the appropriate court or tribunal.
Disgorgement proceedings allow a tribunal to direct individuals or entities to surrender assets, property or money alleged to have been wrongfully obtained through fraudulent conduct identified during an investigation.
With the dismissal of the appeals, NCLAT has affirmed the NCLT’s view that SFIO was duly authorised to pursue the asset attachment and disgorgement proceedings on behalf of the central government in the ISSL matter.
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