NCLT orders winding up of 14 Popular Finance-linked entities; asks liquidator to trace money, recover assets

The National Company Law Tribunal (NCLT) at Kochi has ordered the winding up of 14 entities linked to the Popular Finance Group and directed the liquidators to trace money collected from the public and identify assets acquired using such funds.

A Bench of Judicial Member Vinay Goel and Technical Member Ravichandran Ramasamy passed the batch of orders on October 6 on petitions moved by the Union government through the Serious Fraud Investigation Office (SFIO). The 14 entities comprise companies and limited liability partnerships belonging to the Popular Finance Group.

The tribunal issued substantially similar directions in the winding-up proceedings and asked liquidators to examine the SFIO investigation report and determine where money collected from members of the public ultimately went.

“Examine the SFIO Investigation Report and other material available on record and trace the flow and end-use of funds collected from the public,” the tribunal ruled.

The liquidators have also been directed to identify properties and assets acquired from such funds and initiate appropriate proceedings for their recovery, restoration or protection for the benefit of the entities and their stakeholders.

They have further been asked to invite, verify and adjudicate claims from creditors, depositors, investors and other stakeholders, besides seeking information and assistance from the SFIO, Registrar of Companies, banks, financial institutions and other investigating agencies.

The directions assume significance since the SFIO investigation found that the Popular Finance Group had mobilised approximately ₹4,700 crore from members of the public. Of this, around ₹829.31 crore was attributed to the companies and LLPs covered by the investigation.

According to the SFIO, the Group raised funds through fixed, recurring and savings deposits, capital contributions and debentures. It alleged that the money was routed among various group concerns and that funds collected from the public were ultimately used for purposes including the personal use of directors and designated partners.

The investigation also alleged that the Group offered interest rates ranging between 9 percent and 18.18 percent to attract investors and projected its gold-loan operations as the face of its business. It further alleged that when deposits substantially exceeded the gold loans advanced, the Group restructured its operations through Nidhi companies and LLPs, with some depositors being shown as partners or capital contributors.

The NCLT found that the material placed by the SFIO disclosed circumstances warranting winding up. In the case of the LLPs, the tribunal also found that failure to file statements of account and solvency and annual returns for five consecutive financial years constituted an independent ground for winding up.

The tribunal appointed the official liquidator attached to the Kerala High Court to carry out the winding-up exercise and directed periodic reports on the progress of liquidation and recoveries.

The proceedings followed an SFIO investigation report submitted in February 2025. Earlier this year, the Kerala High Court had closed a petition complaining of inaction on the report after the Central government informed the Court that criminal complaints had been filed and winding-up proceedings were being initiated.

The Union government was represented by advocates Renjith R and Athin Roy.

The respondent entities were proceeded against ex parte.