Now Reading: NCLAT upholds SFIO power to seek disgorgement in IL&FS case
-
01
NCLAT upholds SFIO power to seek disgorgement in IL&FS case
The National Company Law Appellate Tribunal (NCLAT) has dismissed appeals by audit firm BSR & Associates LLP and its former partner N Sampath Ganesh, upholding the SFIO's authority to seek disgorgement of…
The National Company Law Appellate Tribunal (NCLAT) has dismissed appeals by audit firm BSR & Associates LLP and its former partner N Sampath Ganesh, upholding the SFIO's authority to seek disgorgement of assets in a case linked to IL&FS Securities Services Ltd (ISSL). A three-member bench rejected arguments that the Serious Fraud Investigation Office (SFIO) could not file such a plea before the NCLT, saying the proceedings were filed in the name of the Union of India, not the SFIO.
The appellants had challenged a March 17, 2026 order by the NCLT Mumbai bench, arguing that SFIO lacked the power to seek attachment or disgorgement under the Companies Act without formal delegation via a Gazette notification. The NCLAT termed this argument 'completely baseless', noting the central government had authorised the SFIO to present the petition. The dispute stems from a 2018 government order probing IL&FS and its subsidiaries, with the SFIO submitting its report on ISSL in July 2023.
Indian Opinion Analysis
The NCLAT ruling settles a procedural question that could have slowed other SFIO-linked asset recovery cases: whether the agency must wait for a formal Gazette notification before seeking disgorgement. Under the Allocation of Business Rules, the SFIO Director already holds Joint Secretary rank, which the tribunal accepted as sufficient delegation. The core of the IL&FS crisis involved over Rs 90,000 crore in defaults across group companies, and the government has been pursuing civil and criminal action simultaneously. This judgment clears the path for the NCLT to proceed with attachment proceedings against BSR & Associates and others, with the next hearing on disgorgement likely in the coming months.
Source: legal.economictimes.indiatimes.com
This brief was synthesised by AI from the source linked above.
