Summary
The Supreme Court set aside orders freezing the assets of a former Punjab National Bank managing director in proceedings concerning mismanagement of another company. The powers under Sections 337 and 339, applied in aid of Section 241 proceedings, remained tied to the company whose business was being mismanaged. They could not be used to attach her assets merely by bringing in the head of a different organisation. Criminal and fraud investigations were expressly unaffected.
Issues
- Whether the company-law powers invoked in the mismanagement proceedings authorised freezing the assets of the head of another organisation in these circumstances.
Provisions considered
- Section 241(2), Companies Act, 2013The public-interest mismanagement application concerns the affairs of the company in question. (¶¶ 5, 6)
- Sections 337 and 339, Companies Act, 2013The powers applied in aid of mismanagement jurisdiction remained connected to the officers and fraudulent business of the company concerned. (¶¶ 5, 6, 7, 8)
Held
- Sections 337 and 339 operate, mutatis mutandis, in aid of the Tribunal’s mismanagement powers. Section 337 concerns fraud by an officer of the relevant company; the business and persons referred to in Section 339 are likewise linked to that company’s business, not another company’s business generally. (¶¶ 6, 7)
- These provisions could not be used in the present proceedings to rope in the head of another organisation and attach her assets. The orders against this appellant therefore could not stand. (¶ 8)
- The jurisdictional decision did not affect investigations by the Central Bureau of Investigation or Serious Fraud Investigation Office. (¶ 9)
Result
Appeal allowed; impugned NCLAT and NCLT orders against the appellant set aside. CBI and SFIO investigations expressly left unaffected.