Corporate Lawyer: reopening and recasting of account of last 5 years under Section 130 of the Companies Act affirmed by the Supreme Court.

Supreme Court of India

Justice M R Shah

The question falling for consideration before the Supreme Court was whether the power was rightly exercised by the competent Authority under section 132 of the Companies Act in ordering reopening and recasting of the accounts?

The SC {Harishankar versus Union of India and others} held in view of preliminary reports of SFIO and ICAI, the conditions required to be fulfilled for invoking Section 130 of the Companies Act are satisfied. Also it was held that in view of thousand of crores of public money being involved, the power was rightly exercised. The orders passed for reopening and recasting of account of last 5 years by the NCLT and NCLAT were affirmed by SC.

Further held that the subsequent facts, that is, report of RBI can also be considered while looking at the validity of order passed under Section 130 by the Court, in view of larger Public Interest. Accordingly, looking at subsequent facts, and for the reasons as aforesaid, the appeal was dismissed by the SC.