New Delhi, Oct 31 (NVI) The Principal Bench of the National Company Law Tribunal (NCLT), New Delhi, has allowed the Serious Fraud Investigation Office (SFIO) to proceed with its petition seeking recovery of around Rs 5,431 crore allegedly diverted from Bhushan Power & Steel Ltd. (BPSL).
A Bench headed by NCLT President Justice Anupinder Singh Grewal and Technical Member Ravindra Chaturvedi on October 30 dismissed eight applications challenging the maintainability of the petition filed by the Union Government through the SFIO against the company’s former promoters and other associated entities.
The Tribunal held that it has the territorial jurisdiction to hear the case and examine the allegations of financial fraud.
The Bench clarified that jurisdiction would be decided on the basis of the location of the registered office of Bhushan Power & Steel Ltd., which is the company under investigation, and not on the basis of the registered offices of the other respondents.
The Tribunal also held that the Central Government had properly formed the required opinion under the Companies Act, 2013, and that the petition had been filed through an officer duly authorised by the SFIO.
The NCLT observed that the legal provision covering fraud that “is being conducted” can also apply to fraud committed in the past if its effects continue. This includes cases where money or assets were allegedly diverted and are still in the possession of the respondents.
The Tribunal further held that the approval of the company’s resolution plan under the Insolvency and Bankruptcy Code (IBC) does not bring an end to proceedings relating to allegedly diverted assets.
It said that Section 32A of the IBC does not protect former directors or outside parties from action for properties that were allegedly wrongfully diverted.
Wrongful gains can be recovered
The Tribunal also held that the recovery of wrongful gains, legally known as disgorgement, is a civil remedy and can be sought under Sections 241 and 242, read with Sections 246 and 339 of the Companies Act.
It further ruled that pending cases before the Delhi High Court, proceedings under the IBC for recovery of assets, objections relating to limitation and Section 212(14A) of the Companies Act do not prevent the SFIO from pursuing the present petition.
However, the Tribunal clarified that no party would be required to pay twice for the same transaction.
SFIO must prove allegations against each respondent
Importantly, the NCLT clarified that its order is limited to deciding whether the SFIO petition can be heard. It has not given any finding that fraud was actually committed.
The SFIO will have to establish the allegations against each respondent and prove their individual role in the alleged diversion of funds.
The Tribunal has given the SFIO four weeks to file a detailed statement explaining the alleged role of every respondent in the transactions.
The interim orders will continue until further directions.
The matter will now be heard on November 26, 2026. (NVI)/SNG
