CENTRE FOR PUBLIC LITIGATION versus UNION OF INDIA & ORS.

Citation: [2016] 9 S.C.R. 673 · Decided: 23-09-2016 · Supreme Court of India · Bench: T.S. THAKUR · Disposal: Disposed off

Judgment (excerpt)

[2016] 9 S.C.R. 673 
CENTRE FOR PUBLIC LITIGATION 
v. 
UNION OF INDIA & ORS. 
(Writ Petition (C) No. 355 of201 l) 
SEPTEMBER 23, 2016 
[T. S. THAKUR, CJI AND DR. D.Y. CHANDRACHUD, J.] 
Public Interest Litigation - Writ petition u/Art. 32 inter alia 
. seeking independent investigation into alleged administrative and 
financial irregularities of Industrial Finance Corporation of India 
(IFCJ) - Held: IFCI has a huge financial commitment to the Union 
Government in terms of loans.· grants and guarantees - There is a 
vital element of public interest in ensuring that a full, fair and 
objective scrutiny is carried out by an independent regulatory -
Object and purpose of such an enquiry is to scrutinize serious 
allegations levelled in regard to the investments made by IFCI -
Directions issued to the Union Ministry of Finance and Union 
Ministry of Corporate Affairs to ensure that a proper scrutiny is 
carried out in respect of the allegations which form subject matter 
of these proceedings - Companies Act, 1956. 
· 
Industrial Finance Corporation of India (IFCI), established as a 
statutory Corporation under the Industrial Finance Corporation oflndia 
Act, 1948 was converted into a Company after the repeal of the said 
Act in 1993. In or about December 2009, there were several complaints 
alleging gross irregularities in certain investments made and generally in 
regard to the accountability ofIFCl to the Government oflndia. Before 
this Court, the writ petitioners sought diverse reliefs, including independent 
investigation, in relation to the conduct of business and affairs ofIFCI. 
Disposing of the writ petition, the Court 
HELD: 1. The material placed before this Court on the 
record inter alia contains a copy of the report of the Registrar of 
Companies, Delhi and Haryana dated 8 January 2013 which notes 
complaints against IFCI. The findings in the reports are as follows: 
(i) acquisition of 5 percent stock in July 2009 by IFCI in MCX-
SX at the rate of Rs. 35 per share at an alleged loss of Rs. 168 . 
crore; (ii) loss of Rs. 225 erorc granted to Blue Coast Hotels 
and Resource Limited and (iii) financial dealings with Satyam 
673 
A 
B 
c 
D 
E 
F 
G 
H 
674 
A 
B 
SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
Group of Companies. Besides these aspects the report deals 
with various other matters including investments in unquoted 
shares worth Rs. 2,500 crore; loss due to investments made 
otherwise than in the normal course of business; bad and doubtful 
debts written off to the extent of Rs. 279.85 crore, 284.66 crore 
and 512.81 crore during 2008-09, 2009-10 and 2010-11. The 
report has adverted to the lack af due diligence in various 
investments made by IFCI. [Paras 7, 8][679-A,B,D; 680-F; 682-
A, G-H; 683-A] 
2.1 The material placed before this Court is such as would, 
necessitate close scrutiny and action by an independent 
C 
regulatory. The position adopted before this Court by the 
Department of Financial Services is that it would be sufficient in 
itself, once IFCI through its newly constituted board had 
examined the report and not found anything untoward or remiss. 
This is not a satisfactory method of resolving the issues which 
D 
have been raised and the serious concerns which emerge from 
the inspection report of the ROC. The object and purpose of 
such an enquiry is to scrutinb:e serious allegations which have 
been levelled in regard to the investments which were made by 
IFCI, a scrutiny of the report by the Board of IFCI would not 
suffice to the affairs and impartial investigation.[Para 11][684-G; 
E 
685-A-C] 
2.2 IFCI has a huge financial commitment to the Union 
Government in terms of loans, grants and guarantees. A dire 
financial position of IFCI led the Union Government to commit 
resources to raise the company from a position of serious financial 
F 
distress. There is a vital element of public interest in ensuring 
that a full, fair and objective scrutiny is carried out by an 
independent regulatory with a view to ensure a degree of 
accountability. If it is found that the conduct of any of the officers 
or employees of IFCI led to the sustain of a loss, such conduct 
must be subjected to scrutiny and action in accordance with law. 
G The whole purpose of an independent regulatory is to ensure 
that an entity in the financial sector whose conduct is in question 
does not have a final or decisive voice in determining whether 
there has been a violation of law and if so what action is necessa

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