USHA ANANTHASUBRAMANIAN versus UNION OF INDIA

Citation: [2020] 3 S.C.R. 882 · Decided: 12-02-2020 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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USHA ANANTHASUBRAMANIAN
v.
UNION OF INDIA
(Civil Appeal No. 7604 of 2019)
FEBRUARY 12, 2020
[R. F. NARIMAN, S. RAVINDRA BHAT AND
V. RAMASUBRAMANIAN, JJ.]
Companies Act, 1956: ss. 241, 337, 339 – Application to
tribunal for relief in cases of oppression, etc. – Charge sheet filed
by CBI against several persons occupying positions in the Punjab
National Bank as well as the Directors of a company – Criminal
case against the appellant-MD and CEO of the Bank that she omitted
to take precautions or preventive steps to prevent the fraud
perpetrated by Nirav Modi and thereby committed mis-conduct and
conspiracy with the other accused persons – Orders passed by NCLT
and NCLAT in exercise of its jurisdiction u/s. 241 freezing the assets
of the appellant – On appeal, held: Powers u/ss. 241, 337 and 339
cannot possibly be utilized in order that a person who may be the
head of some other organization be roped in, and his or her assets
be attached – Thus, the order passed by the NCLAT and well as the
NCLT set aside.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7604
of 2019.
From the Judgment and Order dated 04.07.2019 of the National
Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)
No. 79 of 2019.
C.S. Vaidyanathan, Ms. Meenakshi Arora, Sr. Advs., Parthiv
K. Goswami, Anirudh Sharma, Rajiv Dalal, Abhaid Parikh, Vikrant Singh
Negi, Advs. for the Appellant.
Sanjay Jain, ASG, Kanu Agrawal, Zoheb Hussain, Padmesh
Mishra, Arkaj Kumar, Arvind Kumar Sharma, Advs. for the Respondent.
[2020] 3 S.C.R. 882
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 The Judgment of the Court was delivered by
R. F. NARIMAN, J.
1) The present appeal is by Usha Anandhasubramanian - former
MD & CEO of the Punjab National Bank. She was MD & CEO of the
said Bank from 14.08.2015 to 05.05.2017.
2) A charge sheet has been filed by the CBI against several
persons occupying positions in the Punjab National Bank as well as the
Directors of Gitanjali Gems Ltd.
3) Mr. C.S. Vaidyanathan, learned Senior Advocate appearing on
behalf of the appellant, points out that the charge sheet by the CBI itself
makes it clear that at the highest even the criminal case against the
appellant is only that she omitted to take precautions or preventive steps
to prevent the fraud perpetrated by Nirav Modi and thereby committed
mis-conduct and conspiracy with the other accused persons. After pointing
out the aforesaid charge sheet, Mr. Vaidyanathan then pointed out orders
that were passed by the NCLT in exercise of its jurisdiction under Section
241 of the Companies Act by which certain named individuals were
injuncted from disposing movable and immovable properties/assets which
belong to them and whose assets were frozen, making it clear that post-
freeze only a sum of Rs.1,00,000/- per month will be allowed to each of
such persons for personal expenses. He further argued that in exercising
powers under Section 241, powers may be exercised under various
provisions of the Companies Act including Section 337 and 339 only
insofar as the mis-management of that very Company is concerned,
which is obviously not relatable to any other corporate body, including
the Punjab National Bank, of which the appellant is the CEO & MD.
According to him, therefore, any order that freezes assets of the appellant
in the exercise of jurisdiction under Section 241 of the Companies Act
would be without jurisdiction. He read to us the relevant sections of the
Companies Act and pointed out that however widely they are construed
they can only be qua the Company in which acts of mis-management
are alleged and not qua any other person.
4) Mr. Sanjay Jain, learned Additional Solicitor General appearing
for the respondent, on the other hand, supported the orders passed by
the NCLT and the NCLAT  in the appellant’s case by reading to us, in
particular, Sections 337 and 339 of the Companies Act. According to
him, where a person is liable for fraudulent conduct or business the
USHA ANANTHASUBRAMANIAN v. UNION OF INDIA
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[2020] 3 S.C.R.
jurisdiction under Section 339 if very wide and would include freezing
the assets of any person who was knowingly a party to the carrying
on of the fraudulent conduct of business.
5) Having heard learned counsel for both sides, we may first set
out Section 241(2) and Sections 337 and 339 of the Companies Act,
which read as follows:-
“241. Application to Tribunal for relief in cases of oppression,
et
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