PNB Scam: NCLT restrains Nirav Modi and over 60 entities from selling assets

PNB Scam: NCLT restrains Nirav Modi and over 60 entities from selling assets

Varun Marwah

A Mumbai Bench of the NCLT has passed an ex-parte order restraining Nirav Modi, Mehul Choksi and over 60 other related entities from disposing off their assets. This order has been passed while the Central Bureau of Investigation and Enforcement Directorate are investigating Rs. 11,400 crore PNB scam.

The Company Petition has been filed by Union through the Ministry of Corporate Affairs under various sections of the Companies Act, 2013. The ministry moved the petition under Section 241 and 242, which deal with oppression and mismanagement and under section 221, which pertains to freezing of assets of company on inquiry and investigation.

The ex-parte order has been passed under Section 221 of the Companies Act, 2013 and Section 43 of the LLP Act, 2008.

The NCLT has restrained over 60 entities from disposing off their assets during the pendency of investigations.

At the same time, the Bench has also passed orders restraining trusts and individuals. The aforesaid provisions of Companies Act and LLP Act don’t deal  with assets of individuals or trusts, however, since it has been alleged that the fraudulent transfers were made using these individuals and trusts, the NCLT has restrained disposal of their assets as well.

…the whole exercise of investigation and passing of orders by this Bench will become futile unless restraint order is passed against these trusts and individuals thereof ”, recorded the Bench in its order.

The Ministry has also prayed for orders under Section 222 of the Companies Act, which imposes similar restrictions on dealing of securities of a company.  At this point, however, this prayer was not granted.

The matter has now been listed for further hearing on 26 March 2017.

(Read the order)

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