Now, SFIO has powers to arrest

The Serious Fraud Investigation Office now has powers to arrest people for violations of companies law, with the government notifying relevant provisions amid the crackdown on illicit fund flows.

The shot in the arm for the probe agency also comes at a time when the government is cracking the whip on suspected shell companies being used for illegal activities, including money laundering and tax evasion.

While the Companies Act, 2013 provides powers of arrest to the SFIO, which comes under the corporate affairs ministry, the provision has been notified only now.

Most provisions of the Act came into force on April 1, 2014.

The SFIO is a multi—disciplinary organisation having experts for prosecution of white—collar crimes and frauds under the companies law.

The ministry has notified the rules pertaining to arrests in connection with Investigation by the SFIO and they came into effect from August 24.

The director as well as additional or assistant director level officials at the SFIO can arrest a person if they believe he or she is guilty of any offence with regard to the case being probed, the ministry said in a notification.

According to the ministry, the reason for arrest should be recorded in writing.

“In case of an arrest being made by additional director or assistant director, the prior written approval of the director SFIO shall be obtained,” as per the notification.

The SFIO director would be the competent authority for all decisions pertaining to arrest.

The arrest of a person in connection with a government or a foreign company under investigation can be made by the SFIO only “with prior written approval of the central government“.

Besides, such arrest should be intimated to the managing director or the person in—charge of the affairs of the government company.

In case the person arrested is the managing director or person in—charge of a government company, then the secretary of the administrative ministry concerned should be intimated by the arresting officer, the ministry said.

A government source said the decision on whether a case has to be probed by the SFIO is taken by the ministry and once an investigation is launched, then the agency has powers to decide whether a person need to be arrested or not.

On the delay in notifying the particular provision that provides the SFIO with powers to arrest, the source said the modalities were in the works and now the agency is ready with them.

According to the ministry, the SFIO would maintain an arrest register which would have entries about particulars of the arrestee, date and time of arrest as well as other relevant information pertaining to every arrest made by the agency’s officers.

“The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to arrest shall be applied mutatis mutandis to every arrest made under this (Companies) Act,” the ministry said.

The SFIO probed 366 cases in the last three financial years, with 111 of them coming under the scanner in 2016—17, the ministry informed the Rajya Sabha last month.

Among others, the SFIO director has to preserve the copy of arrest order together with supporting materials for a period of five years.

The period would start from the date of judgement or final order of the trial court, in cases where the said judgement has not been impugned in the appellate court.

It could also be from the date of disposal of the matter before the final appellate court, in cases where the said judgement or final order has been impugned, whichever is later.

In a separate notification, the ministry said the “central government hereby appoints the 24th day of August, 2017 as the date on which the provisions of sub—sections (8), (9) and sub—section (10) of section 212 of the said Act shall come into force“.

These sub—sections relate to SFIO’s powers to arrest people.

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