In a huge relief for Karvy Stock Broking Limited, the Telangana High Court, on Monday, stayed the ongoing probe by Serious Fraud investigation Office (SFIO) into the alleged financial irregularities at Karvy. Prima facie, the authorities concerned have not followed the required procedure before ordering a probe into the affairs of Karvy, the court observed, and issued notices to the Ministry of Corporate Affairs (MCA) and the Registrar of Companies (ROC) for filing counter affidavit by next date of hearing.
The bench comprising passed this interim order in appeals filed by Karvy challenging the order of a single judge who had dismissed its two petitions challenging the decision of Ministry of Corporate Affairs (MCA) in ordering Serious Fraud Investigation Office (SFIO) probe into alleged financial irregularities at Karvy and issuance of notices to the company on June 16 and 19, this year.
Senior counsel S Niranjan Reddy, appearing for Karvy, contended that the authorities concerned have not followed any proceedings envisaged under the Companies Act while ordering a probe against the appellant company. Meanwhile, Assistant Solicitor General N Rajeshwar Rao submitted that there is no requirement of issuance of any notice or providing an opportunity of being heard since the Central government, in exercise of its power conferred on it under Section 206(4) of the Act, ordered for full-fledged inquiry.
The bench sought clarification from the Centre as to whether it had issued notice or not to the appellant company before ordering a probe by SFIO. The bench posted the matter to September 29 for further hearing.