NCLAT upholds SFIO power to seek asset disgorgement in IL and FS case

The National Company Law Appellate Tribunal (NCLAT) has dismissed appeals by audit firm BSR and Associates LLP and its former partner N Sampath Ganesh, upholding the authority of the Serious Fraud Investigation Office (SFIO) to seek disgorgement of assets in a case linked to IL and FS Securities Services Ltd. The tribunal rejected arguments that SFIO could not file such applications as it would create a conflict of roles, terming the contention 'completely baseless.'

The appellants had challenged a March 2026 NCLT order, arguing SFIO lacked the power to file for asset attachment under the Companies Act. The NCLAT held that the disgorgement petition was filed in the name of the Union of India, not SFIO, and the decision to proceed was the central government's. SFIO was merely authorised to present the petition, the bench comprising Justice Yogesh Khanna and technical members Barun Mitra and Ajai Das Mehrotra said.

The dispute originates from a 2018 government order for an SFIO probe into IL and FS and its subsidiaries. SFIO submitted its report in July 2023, and the Ministry of Corporate Affairs authorised SFIO's Director to pursue proceedings in September 2023. The NCLAT ruling affirms that civil and criminal liability arising from such investigations remains subject to determination by the appropriate court or tribunal.