An opinion that cannot be seen in the order cannot be saved by an affidavit filed later: the Delhi High Court has set aside the Centre’s 2018 direction for an SFIO inquiry into Educomp, finding no sign that the opinion rested on the material.
New Delhi: On petitions by former directors and others associated with Educomp Solutions Limited, the Delhi High Court quashes SFIO probe that the Central Government ordered on 17 August 2018 under Section 212(1)(c) of the Companies Act, 2013, along with all consequential proceedings. The Government cannot form its opinion whimsically, routinely or mechanically when it invokes the provision, the Court held [Ashish Mittal v. Union of India and Others].
The petitions were allowed by Justice Amit Mahajan. The judgment confines itself to the legality of initiating the investigation and records no finding on the underlying allegations, which remain untested, or on the petitioners’ defence on merits.
What falls with the 2018 order
The defect went to the foundation of the investigation, so the Court quashed the order of 17 August 2018 and everything that followed from it. Once the initial order is found to have been passed outside the powers conferred by Section 212(1)(c), it observed, the consequential proceedings cannot survive. The ruling leaves the Government free to act in accordance with law, and nothing in it decides whether any wrongdoing occurred at the company.
Subjective opinion, objective material
Under Section 212(1)(c), the Court held, the formation of opinion is subjective, but it must rest on an objective consideration of cogent and relevant material, and the power cannot be used as a routine or mechanical measure. On the facts, it found that the order had been passed mechanically without demonstrating proper application of mind to the material, and that the other material relied upon could not independently support the decision:
Mere presence of material is of no consequence unless the same is discernible from the order itself.
Reasons supplied afterwards through affidavits or later material could not cure the defect, the Court said, because the legality of the order has to be judged on the reasons and material that existed when it was passed. The judgment also cautioned against opinions founded on unverified allegations or third-party material that has not been independently examined and authenticated.
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How the petitioners put it
Section 212(1)(c) lets the Central Government assign the investigation of a company’s affairs to the SFIO where it is of the opinion that this is necessary in the public interest. The petitioners said the statutory conditions for forming that opinion were not met.
They pointed out that the Regional Director’s inspection report and the supplementary inspection report had not found siphoning or defalcation of funds, and contended that the minutes of the Oversight Committee and the order that followed showed non-application of mind. These were the petitioners’ contentions before the Court.
Educomp, once one of India’s largest listed education companies, had entered insolvency proceedings in 2017, and the SFIO probe was ordered the following year.
Case Title: Ashish Mittal v. Union of India and Others (writ petitions under Article 226)
Bench: Justice Amit Mahajan, Delhi High Court
Date of Judgment: October 2026 (reported October 17, 2026)