Delhi HC Quashes SFIO Probe against Moser Baer's Ex-director Nita Puri, Slams ‘Casual’ MCA Order

Moneylife Digital Team 12 September 2025

Economy & Nation

The Delhi High Court (HC) has quashed an order issued by the Union ministry of corporate affairs (MCA) directing the serious fraud investigation office (SFIO) to probe Moser Baer India Ltd (MBIL) and its former director Nita Puri, holding that the decision was issued in a 'casual and perfunctory' manner without fulfilling the statutory requirements under section 212 of the Companies Act, 2013.

Last month, justice Subramonium Prasad, while delivering the judgment, observed that the MCA had failed to demonstrate the existence of circumstances necessary to justify a probe by the SFIO, particularly when prior forensic audit reports did not suggest any fraud or dubious transactions. "Exercise of power under section 212(1)(c) in a casual or perfunctory manner, seriously undermines the statutory provision itself and the safeguards implicit thereunder. The use of boilerplate language and/or extrapolations from third-party documents, without consideration of all the 'relevant circumstances', reflects a disregard for procedural propriety. It can hardly be emphasised enough that the power under section 212(1)(c) must be exercised with circumspection and deliberation. In the present case, the impugned order under section 212(1)(c) appears to have been issued in a rather casual manner, unmindful of the statutory prerequisites therefor."

The HC stressed that an SFIO investigation is a serious matter with far-reaching consequences and cannot be ordered mechanically. “The order passed by the MCA reveals complete non-application of mind and does not disclose the existence of circumstances specified in section 212(1),” the bench noted.

The judgment highlighted that earlier forensic audits conducted on Moser Baer’s accounts had not indicated any preferential, undervalued, fraudulent, or extortionate (PUFE) transactions, and therefore, there was no basis for the government to assume otherwise. The MCA’s reliance on such reports, without substantiating its decision with reasons, was found to be legally unsustainable.

The HC further observed that the impugned order did not record any satisfaction or reasoning that could justify invoking the extraordinary powers under section 212. As such, the direction for an SFIO probe was quashed as being arbitrary and contrary to law.

The case marks a significant judicial check on the misuse of investigative powers under corporate law. By emphasising the need for 'demonstrable circumstances' before ordering an SFIO investigation, the HC reinforced that regulatory actions must be grounded in law and evidence, not assumptions.

For Ms Puri, the wife of Deepak Puri, former managing director (MD) of Moser Baer India, the ruling provides substantial relief after years of facing allegations linked to the company’s financial troubles.

Comments