Justice Abhijit Gangopadhyay takes a significant step in addressing the corporate fraud in India by engaging the Enforcement Directorate. This action justify the judiciary’s strong view against corporate misconduct. Monitoring the investigation’s outcomes is important, as it will affect not only the involved parties but also the wider corporate sector in India.
Calcutta High Court’s Landmark Decision on Jute Mill Workers’ Provident Fund
Kolkata: The Calcutta High Court recently conducted a late-night hearing regarding the failure of several jute enterprises, including Delta Mills, to fulfill their obligations regarding provident fund (PF) payments to a group of jute mill laborers. Justice Abhijit Gangopadhyay in a single bench who is presiding over the case, expressed grave concerns over the allegations of an individual falsely representing themselves as a director of a well-known corporation. The petitioners’ lawyer disclosed that each of the ten workers was owed an average of Rs 2.5 lakhs, totaling about Rs 25 lakhs.
Earlier in the day, the single bench had summoned the companies’ directors and they were directed to be appear for questioning by the Serious Fraud Investigation Unit (SFIO). It was disclosed during the SFIO’s representation to the Bench that these directors had fake-identities, who were labourers within the company and had been offered directorial roles in exchange for financial compensation. Later, the Court summoned DSG Dhiraj Trivedi from the Enforcement Directorate (ED) to explain why the ED had not initiated an investigation into the matter.
It was explained that the ED’s jurisdiction extended only to scheduled offenses, and such an investigation could only proceed if the prerequisites in Section 447 of the Companies Act, 2013, were met and if an FIR had been registered.
After considering these arguments and scrutinizing the provisions of S.447 of the Companies Act,
The Court remarked in harsh words:
“The elements of Section 447 of the Companies Act, 2013 are evident in this case. I direct the SFIO to lodge an FIR at the local police station to enable the ED to continue its investigation.”
Although the SFIO’s legal counsel argued that it could not independently file an FIR, the Court said that, Section 212 of the Companies Act, empowering it to direct the SFIO to lodge the FIR for the public interest. The Court noted that the appointment of fictitious directors and abuse of their positions constituted clear instances of fraud.
Furthermore, the Court directed the SFIO to file the FIR before 3 p.m. tomorrow, and to inform the ED of the details of the investigation. Moreover, the Court ordered the release of the five directors under interrogation and the return of their mobile phones.
