Question

A question regarding the scope of Section 212 of the Companies Act, 2013 was considered in Serious Fraud Investigation Office v. Rahul Modi, [2019 SCC OnLine SC 423]. The court observed that the Central Government is empowered under Section 212(1)(c) of the Companies Act, 2013 to order investigation into the affairs of a company in public interest by the Serious Fraud Investigation Office (SFIO). Section 212(3) of the Companies Act provides that the investigation orders are required to be completed within the specified time. If it not so done, what should be the consequences and whether further proceedings or investigations shall be unlawful. The provision has to be seen in the context in which it occurs in the statute. Therefore, the stipulation of Section 212(3) regarding submission of the report ‘within such period as may be specified in the order’ is not to be taken as mandatory, but as purely directory. On the objective interpretation of the statutory provision, it cannot be said that on the expiry of that period the mandate in favour of SFIO must come to an end. If it was to come to an end, the legislation would have contemplated certain results thereof. In the absence of any clear stipulation, an interpretation that with the expiry of the period, the investigation must come to an end, will cause great violence to the scheme of legislation and with the expiry of mandate SFIO would also be powerless which would lead to an incongruous situation that serious frauds would remain beyond investigation.