The Serious Fraud Investigation Office (SFIO) is looking into various cases of the companies’ liquidation, to ascertain whether any financial irregularity has taken place at the entities being wound up.

SFIO, a multi-disciplinary organisation under the Ministry of Corporate Affairs with mandate to probe serious financial frauds, is looking into the company liquidation cases at the request of official liquidators and high courts hearing the winding-up petitions, a senior official said.

The SFIO mainly assists the high courts in these cases to ascertain whether any violation had taken place the companies that have been put under the process of liquidation.

In such cases, the investigation agency’s focus is mainly on possible violations of Companies Act at the company being liquidated, while it also investigates the possibility of officials siphoning off money or misusing the assets.

The services of SFIO have been sought so far in about 20 cases by the high courts of Delhi and Kolkata, where winding up petition have been moved by the creditors, the official said.

SFIO expects its involvement in many more such cases in the future, he added.

The SFIO’s expertise is generally sought by the court once an official liquidator is appointed to oversee the winding up of a company to further strengthen the system to protect the interest of creditors and other stakeholders.

Official liquidators are appointed by the central government under the Companies Act and are attached to various high courts.

The courts require the investigations to be completed in a time-bound manner. Depending on cases, the deadlines vary and it can be 8-12 weeks or more.

The official said that SFIO also provides additional information, regarding other violations, to the court, which can then be pursued by other competent authorities.

Under the Companies Act, the court can order for investigation of affairs of a company by an entity appointed by the central government.

Most of the requests so far have come from the Delhi High Court and SFIO’s reports have been appreciated in many cases that have been completed, he noted.

SFIO was well-appreciated for its probe into the Satyam Computer scandal and is currently investigating many high profile cases including alleged financial irregularities at Reebok and multi-layered marketing company Speak Asia.

The new Companies Bill, which is awaiting Parliament approval, has proposed statutory status for the SFIO. With that status, the agency’s investigation report submitted to the court would be treated at par with a report filed by a police officer.

Related Topics