Centre’s reply sought on plea for action against defaulting firms

The government can also take action against directors and managerial personnel of the defaulter companies and declare them unfit to hold the post.

MADURAI: The Madurai Bench of the Madras High Court sought response from Centre on a public interest litigation seeking direction to the Central government to take action against private companies in cases of loan defaults.

The litigant K Nandhagopal, an advocate from Virudhunagar, submitted that the Central government under section 237 of the Companies Act 2013, has the power to amalgamate two or more companies in public interest.

“This could be a best way to recover public money as the liability of the sister companies or parent companies will become the liability of the main defaulter, especially when the directors and shareholders are common”, he stated. The government can also take action against directors and managerial personnel of the defaulter companies and declare them unfit to hold the post.  

He explained that it also has the power to appoint Serious Fraud Investigation Office to investigate the frauds committed by private companies.