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The National Company Law Tribunal NCLT passed an orders on July 24th 2019 and July 26th 2019 respectively ordering the Serious Frauds Investigation Office (SIFO) to initiate enquiry into the legality of business and nature of transactions done by two firms. The Serious Frauds Investigation Office (SIFO) is a statutory authority established by a 2003 resolution by the Government of India. The mandate of Serious Frauds Investigation Office is to primarily investigate the issues of corporate fraud. It got further powers after the Amendment to the Companies Act in 2013.
The Serious Frauds Investigation Office (SIFO) filed an joint appeal against both the orders dated July 24th 2019 and July 26th 2019. It submitted it the The National Company Law Tribunal (NCLT) has no jurisdiction to give orders to Serious Frauds Investigation Office as it is a statutory authority established by an Act of Parliament. Further the Serious Frauds Investigation Office (SIFO) submitted that it can only investigate companies that are in the list of companies. The List of Companies is maintained by the Ministry of Corporate Affairs. This is not the scenario in the present case. The The Serious Frauds Investigation Office (SIFO) submitted that the judgement of National Company Law Tribunal (NCLT) was full of error and was acting ultra vires. It further contented that the National Company Law Tribunal (NCLT) while hearing a case under the Insolvency and Bankruptcy Code 2016 used its powers mandated under the Companies Act 2013, thus bringing a huge contradiction.
The National Company Law Apellate Tribunal ( NCLAT )stayed the orders passed by National Company Law Tribunal (NCLT). A 3 Judge Bench chaired by Chairperson Justice S J Mukhopadhaya noted -
"Until further orders, the operation of the impugned orders dated July 24th and July 26th respectively as impugned in these appeals shall remain stayed in so far as relates to to the direction of SIFO to investigate the matter. The proceedings will continue to proceed according to the law"
The 3 Judge Bench further postponed the date of hearing to October 22nd 2019.
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