Govt approaches NCLAT, seeks power to attach properties of persons involved in PNB scam

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Published - Apr 20, 2018 3:20 AM

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The government has approached the National Company Law Appellate Tribunal (NCLAT) seeking modification of an NCLT order so that it can attach the properties of those involved in the $2 billion PNB fraud.

In a petition, the corporate affairs ministry has also sought to invoke powers including the removal of the management and recovery of undue gains. The plea seeks modification of the order passed by the Mumbai bench of the National Company Law Tribunal (NCLT) by adding sections such as 241, 242, 246 read with 339 of the Companies Act.

A two member bench of NCLAT headed by Chairman Justice S J Mukhopadhaya has directed the matter to be listed on April 23. The tribunal has also directed the government to come along with an application for condonation of delay as it had approached beyond the permissible period.

"Interim order dated February 23, 2018 passed by the NCLT bench Mumbai be modified to the extent that it be declared to be passed under section 221, 241, 242 read with 339 of the Companies Act, 2013 and not just under section 221 of the act," the government said in the petition filed before NCLAT.

According to the government, addition of the above mentioned sections would "ensure effective implementation" of direction issued by NCLT.

"Section 221 only operates to restrain alienation of assets of the concerned companies and does not apply to the individual properties of the accused directors and other accused," the government said in its petition filed before the appellate tribunal.

The NCLT had restrained more than 60 entities, including Nirav Modi, Mehul Choksi, various individuals, companies and limited liability partnership firms, from selling their assets under section 221 of the Companies Act.

Gitanjali Gems, Gilli India, Nakshatra Brands and Firestar Diamond are among the barred companies, while partnership firms include Solar Exports and Stellar Diamond.

The government further said that execution of the NCLT's order requires "massive coordination" between numerous agencies such as SEBI, IBA, RBI, CSDL, NSDL, CBDT, CBFC and other state government agencies. It contended that section 221 allows it to freeze the assets of company on inquiry and investigation.

Section 241 and 242 of the Companies Act deal with oppression and mismanagement and give wide powers to the tribunal, which include removal of the managing director, manager or any of the directors of the company and recovery of undue gains. It also allows tribunal power to appoint subsequent to an order removing the existing managing director or manager.