In Brief
Hari Sankaran, a suspended director of Infrastructure Leasing & Financial Services Limited (IL&FS), challenged a National Company Law Tribunal order permitting reopening and recasting of IL&FS group companies' accounts for five years under Section 130 of the Companies Act, 2013. The appellant argued that the statutory conditions precedent were not met and natural justice was violated. The Supreme Court upheld the order, holding that Section 130 requires satisfaction of either of two alternative conditions: fraudulent account preparation OR mismanagement casting doubt on reliability. The Tribunal had relied on evidence of mismanagement and fraud in SFIO and ICAI reports. The Court held that the prior board suspension order remained operative and that substantial natural justice compliance existed. Given the public interest involved and thousands of crores at stake, the Court dismissed the appeal.
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