The High Court of Karnataka has rejected the petition filed by Exalogic Solutions Private Limited, a company owned by T. Veena who is the daughter of Kerala Chief Minister Pinarayi Vijayan, questioning the action of the Ministry of Corporate Affairs (MCA) ordering a probe by the Serious Fraud Investigation Office (SFIO) into the affairs of the company.
Justice M. Nagaprasanna, who pronounced the verdict on the petition on February 16 (Friday), told the advocates representing the petitioner-company and the Central Government that a copy of the order would be released on February 17.
With this order, the court has rejected the contention of the petitioner-company that there exists a bar on the Central Government ordering an investigation through SFIO under Section 212 of the Companies Act in larger public interest when the probe, ordered earlier through the Inspectors of the Registrar of Companies (RoC) under Section 210 of the Act, has not reached its logical conclusion.
What MCA said
The MCA had told the court that Illegal payments made to the extent of ₹135 crore by Cochin Minerals and Rutile Limited (CMRL) to various political functionaries of Kerala and certain other entities, including Exalogic, had necessitated the probe. Exalogic had not cooperated in earlier proceedings on the issue.
Apart from Exalogic and CMRL, a probe was ordered against Kerala State Industrial Development Corporation (KSIDC), which too had business links with CMRL.
Contending that inspectors had given an interim report recommending probe by SFIO, as it is a multidisciplinary agency having right in law to access the documents in the possession of Income Tax authorities, the MCA had said that the inspectors of RoC have no power to access such documents under Section 210.
The MCA had informed the court that once investigation is entrusted to SFIO, all other probes on the affairs of the company would cease.
The MCA had also stated that probe by SFIO would not impact functioning of Exalogic, as the company has obtained dormant status in December 2022.
Also, the MCA had claimed before the court that Exalogic had secured dormant status in a fraudulent manner by not disclosing to the authorities about pendency of proceedings against the company, as pendency of proceedings would not entitle a company to apply for dormant status.
Exalogic’s claim
Exalogic had claimed to have received ₹1.7 crore from CMRL for providing software services, but the MCA is disputing this claim on the ground that Exalogic has failed to submit the relevant documents.
The MCA’s actions were based on the input received from the Income Tax authorities, who had searched the premises of CMRL and had detected huge payments made to political functionaries and others.
