SFIO Case Lawyer in Delhi / india

Serious Fraud Investigation Office (SFIO) is a fraud-investigating agency set up to investigate corporate frauds of very serious and complex nature. The authorization of SFIO is limited to investigating frauds related to a company under the Companies Act. The investigation done by SFIO is considered separate from other normal investigation into the affairs of the company.

Initially, it was set up by a resolution adopted by the Government of India on 02.07.2003 and carried out investigations within the existing legal framework under section 235 – 247 of the erstwhile Companies Act, 1956. Later, Section 211 of the Companies Act, 2013, accorded the statutory status to the Serious Fraud Investigation Office (SFIO). It is a multi-disciplinary organization under the Ministry of Corporate Affairs, consisting of experts in the field of accountancy, forensic auditing, banking, law, information technology, investigation, company law, capital market and taxation, etc. for detecting and prosecuting or recommending for prosecution white-collar crimes/frauds.

SFIO falls under the jurisdiction of the Ministry of Corporate Affairs. The SFIO is involved in major fraud probes. It coordinates with the Income Tax Department and the Central Bureau of Investigation (CBI) for fraud investigation. SFIO was set up in the backdrop of stock market scams of 2000-02, phenomena of plantation companies and vanishing companies and failure of non-financial banking companies. The Vajpayee Government decided to set up SFIO on 9 January 2003, based on the recommendation of Naresh Chandra Committee on corporate governance (appointed by the Government of India in 2002) and in the backdrop of stock market scams as also the failure of non-banking companies resulting in a huge financial loss to the public.

As per the Companies Act, 2013, Serious Fraud Investigation Office (SFIO) has been established through the Government of India vide Notification No. S.O.2005(E) dated 21.07.2015. Investigation into the affairs of a company is assigned to SFIO, where Government is of the opinion that it is necessary to investigate into the affairs of a company –

  1. on receipt of a report of the Registrar or inspector under section 208 of the Companies Act, 2013
  2. on intimation of a special resolution passed by a company that its affairs are required to be investigated
  3. In the public interest; or On request from any department of the Central Government or a State Government
As per the resolution of 2nd July 2003, SFIO is to take up only the investigation of frauds characterized by:
  1. Complexity, having inter-departmental and multi-disciplinary repercussions,
  2. Significant involvement of public interest to be judged by size, either in terms of monetary malpractice or in terms of the persons affected,
  3. The potential of investigations leading to, or assisting towards, a clear improvement in systems, laws or procedures.
POWER OF INVESTIGATION: Section 212 of the Companies Act, 2013 empowers Central Government to investigate into the affairs of the company by SFIO. Investigation is made in following circumstances: –
  1. On receipt of a report of the Registrar or inspector under section 208;
  2. On intimation of a special resolution passed by a company that its affairs are required to be investigated;
  3. In the public interest;
  4. On request from any Department of the Central Government or a State Government,
The Central Government may, by order, assign the investigation into the affairs of the said company to the Serious Fraud Investigation Office and its Director, may designate such number of inspectors, as he may consider necessary for the purpose of such investigation. The investigation into the affairs of a company shall be conducted in the manner and by following the procedure specified in Chapter XIV of Companies Act, 2013. The SFIO shall submit its report to the Central Government within the period specified in the order.

The Director SFIO shall cause the affairs of the company to be investigated by an investigating officer, who shall have the powers of the Inspector under section 217 of the Companies Act, 2013.

It shall be the responsibility of the company, its officers and employees, who are or have been in the employment of the company to provide all information, explanation, documents and assistance to the investigating officer as he may require for conduct of business. It is important to note that the offence covered under Section 447 of the Companies Act, 2013 is a cognizable offence, wherein the inspector has the power to arrest any person without a warrant, notwithstanding anything contained in the Code of Criminal Procedure, 1973.

POWER TO ARREST: If any officer, not below the rank of Additional Director, of SFIO has a reason to believe that any person is guilty of any offence punishable under Section 447 of the Companies Act, 2013 on basis of material in his possession, the office can arrest that person and will inform him the grounds of such arrest. A copy of arrest order along with the material in his possession which basis such arrest is forwarded by the concerned officer to SFIO in a sealed envelope. Every person arrested by the SFIO officer shall within twenty-four hours be taken to Special Court or Judicial Court or Metropolitan Magistrate, as the case may be, having appropriate jurisdiction over such matter. The period of twenty-four hours excludes the time required for journey from place of arrest to appropriate court.