The Hindu Business Line : HC restrains Serious Fraud Office from probing Ispat Ind

THE Calcutta High Court has restrained the Serious Fraud Investigation Office (SFIO) from initiating investigations against Ispat Industries for alleged misappropriation of funds.

Official sources said, "The court has stayed the Ministry of Company Affairs order asking the SFIO to carry investigations against the company."

The company had challenged in the Calcutta High Court the Centre's decision to order a probe against it for alleged exposure of Rs 8,500 crore of public funds, erosion of net worth and high-accumulated losses.

The Government had ordered an investigation under Section 235 of the Companies Act, which permits investigation into a company's affairs.

Ispat Industries filed a writ challenging the order and sought a stay on the investigation.

According to sources, while putting a stop to the investigation by the SFIO, the High Court has directed that the Registrar of Companies (RoC), Kolkata, can examine the matter under Section 234 of the Act, which gives power to the registrar to call for information or explanation.

When contacted, counsel for the company told Business Line, "The Calcutta High Court has set aside (quashed) the Government order for probe against the company."

The dispute arose when the RoC, after a scrutiny of the company's balance sheets for the years 2000-01 and 2001-02, concluded that the documents on record and the company's clarifications did not establish the true and fair state of affairs of the company and recommended further investigation under Section 235 of the Act.

The RoC had pointed out in its report that the books submitted by the company did not reflect the correct position with respect to issues such as provisions for shortfall on investments, reconciliation of accounts of certain financial transactions, revaluation of assets, restructuring of capital post-corporate debt restructuring and provisioning for interest dues.

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