Bombay High Court dismisses plea by daughter of Binani companies promoter challenging SFIO summons

The Bombay High Court on Monday dismissed a petition filed by Shradha Binani, daughter of the promoter of the erstwhile Binani Cement Limited (BCL), challenging the summons issued by the Serious Fraud Investigation Office (SFIO) against her in relation to an investigation into the company's affairs [Shradha Binani v. Ministry of Corporate Affairs & Ors.].A bench of Justices SV Gangpurwala and RN Laddha noted that the Ministry of Corporate Affairs had initiated investigation into the affairs of the company, relying on a forensic report as well as a report by the Resolution Professional of BCL. The Bench thus decided to not sit in review of facts as an appellate body nor substitute the opinion of the government..The High Court further noted that investigation into the affairs of the company would permit examination of flow of company’s funds into personal accounts of Binani.“The details and documents are sought from the Petitioner would be relevant and related while investigating into the affairs of the Company,” the Court observed..Further, the Court highlighted that Binani has only been served with summons by the SFIO, and the final investigation report is yet to be submitted to the Central government. “The Courts would not generally interfere at the initial stage of the investigation. The investigation is carried out to unearth the alleged irregularities into the affairs of the company. The investigation is carried out by SFIO consisting of experts. In such scenario, we do not find it a fit case to invoke the writ jurisdiction under Article 226 of the Constitution of India," the Court held..Binani had approached the Court through Dhru & Co. challenging the summons issued by SFIO to Binani who claimed that she was not involved in the daily affairs of the company being its non-executive director. “Under the summons under challenge, a roving inquiry is sought to be made in respect of petitioner’s (Binani’s) personal information/documents, which is clearly beyond the powers under Section 217 of the 2013 Act,” Senior Advocate Mukul Rohatgi argued for Binani..On the other hand, Additional Solicitor General Anil Singh, appearing for the agency, informed the Court that Binani had evaded the summons issued to her despite acknowledging the receipt. Such a litigant is not entitled to any relief, he argued. "Mere issuance of summons under Companies Act was part and parcel of powers of SFIO and could not be considered as violation of fundamental rights," Singh submitted..The Court after hearig the parties said that it is not inclined to grant any relief to Binani. However, it clarified that Binani could challenge any report which the SFIO may file with the Central government, in the event she is aggrieved by the same..A corporate insolvency resolution process (CIRP) had been initiated against Binani Companies Ltd., the directors, promoters as per provisions of the Insolvency and Bankruptcy Code. The National Company Law Tribunal, Kolkata, approved the Final Resolution Plan submitted by Ultratech Cements Limited, which was upheld by the National Company Law Appellate Tribunal, as well as the Supreme Court.BCL was renamed to Ultratech Nathdwara Cement Limited in 2018. By 2019, after the procedure for acquiring Binani was completed by Ultratech, all creditors of BCL received more than their debt amounts, one of the rare cases in which that has happened..Rohatgi appeared for Binani along with Senior Advocates Janak Dwarkadas and Dr. Birendra Saraf briefed by Dhru & Co., for Binani. Singh was assisted by advocates Aditya Thakkar, YS Bhate, DP Singh, Smita Thakur, Pranav Thaikur, Mayank Joshi and Pradeep Yadav.[Read order]