Summary
Permission to reopen accounts and recast financial statements of IL&FS, IFIN and ITNL was upheld. Section 130’s alternative grounds required satisfaction of either fraudulent preparation or mismanagement casting doubt on financial reliability; the material and subsisting related orders supported the Tribunal’s decision. Former directors had appeared and opposed the application, defeating the asserted hearing violation on these facts. The Court left the scope of “other person concerned” open.
Issues
- Whether the statutory grounds for reopening and recasting accounts were satisfied.
- Whether related company-law orders and investigation reports could be considered.
- Whether the hearing process or appellate reasoning required remand.
Held
- The statutory grounds were alternative, not cumulative. The preliminary investigation material and Tribunal findings supported the mismanagement ground, while the ICAI material also addressed fraudulent account preparation. (¶ 9–11)
- Sections 130, 211–212 and 241–242 required conjoint consideration so that relief under one provision furthered rather than defeated related measures. The subsisting, unchallenged board-suspension order and its observations were relevant. (¶¶ 12, 15)
- Counsel for the former directors appeared and opposed the application, providing substantial hearing compliance on these facts. The Court did not decide generally who qualified as an “other person concerned”; suspended directors could not represent the companies. (¶ 13–14)
- Although fuller appellate reasons were desirable, remand was unnecessary because the Supreme Court examined the legality and merits and found no infirmity. (¶ 16)
- The subsequent RBI report could support the decision in the larger public interest, but the existing material independently sustained reopening; the later report was not needed to supply the sole basis. (¶ 18)
Result
Appeal dismissed. Tribunal’s 1 January 2019 order permitting reopening of books and recasting financial statements of IL&FS, IFIN and ITNL for the specified financial-year period 2012–13 to 2017–18, affirmed by NCLAT, upheld. Connected applications disposed of.