Supreme Court held Section 212(3) of Companies Act is directory, restoring SFIO investigation into Sahara Group despite delay.
SC: SFIO Investigation Not Barred by Expiry of Time Limit
The Supreme Court set aside a Delhi High Court order staying an SFIO investigation into the Sahara Group, ruling that the two-year limitation under Section 212(3) of the Companies Act, 2013 is directory, not mandatory. The investigation was held to be validly initiated under Section 219(c), based on continuing public interest and gravity of allegations.
The Court examined the nature of SFIO’s investigative powers and observed that serious financial irregularities affecting public investors justify extension beyond time limits. The bench underscored that procedural timelines cannot override substantive jurisdiction where fraud and economic harm are suspected.
“In matters involving large-scale financial mismanagement, the spirit of investigation prevails over technical delays.”
This decision strengthens regulatory oversight in corporate fraud cases. Legal teams defending or challenging SFIO probes must assess whether the investigation serves public interest, regardless of procedural timelines. The ruling may influence future petitions seeking stay of white-collar crime inquiries.
