Lok Sabha Question No. 233 (STARRED), answered on 2025-03-17
Subject: Fraud Cases Referred to SFIO
Ministry: CORPORATE AFFAIRS
Asked by: Shri K Sudhakaran

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA STARRED QUESTION NO. *233 ANSWERED ON MONDAY, THE MARCH 17, 2025 [PHALGUNA 26, 1946 (SAKA)]

## FRAUD CASES REFERRED TO SFIO

## QUESTION

- *233  Shri K Sudhakaran:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a) whether  the  Government  has  identified  companies  under investigation  for  financial  irregularities  exceeding  Rs.  1,000  crore during the last two years and if so, the details thereof;
- (b) whether  the  Government  is  considering  amendments  to  the Insolvency and Bankruptcy Code (IBC) to prevent misuse by wilful defaulters and the expected timeline for such reforms;
- (c) the  number  of  corporate  fraud  cases  referred  to  the  Serious Fraud Investigation Office (SFIO) during the last five years and the conviction rate achieved;
- (d) whether  the  Government  has  assessed  the  effectiveness  of Corporate  Social  Responsibility  (CSR)  mandates  particularly  in ensuring companies  comply with funding obligations and the penalties imposed for non-compliance; and
- (e) whether the Government has proposed stricter ESG (Environmental, Social and Governance) reporting norms for publicly traded  companies  and  the  enforcement  mechanism  for  ensuring compliance?

## ANSWER

THE MINISTER OF FINANCE AND CORPORATE AFFAIRS (SHRIMATI NIRMALA SITHARAMAN)

(a)to(e) : A statement is laid on the Table of the House.

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- STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (e) OF LOK SABHA STARRED QUESTION No. 233 FOR 17 th MARCH, 2025 REGARDING 'FRAUD CASES REFERRED TO SFIO'. (a) The Ministry of Corporate Affairs takes action against frauds as defined under the Companies Act, 2013. Investigation in matter of  serious  frauds  are  assigned  to  the  Serious  Fraud  Investigation Office (SFIO) under Section 212 of the Companies Act, 2013 on the basis  of  report  of  the  Registrar  or  Inspector  or  on  receiving intimation  of  a  special  resolution  passed  by  the  company  or  in public interest or on the request of any Department of the Central Government or State Government. These cases may include companies under investigation for financial irregularities exceeding Rs.  1,000  crore  as  the  exact  quantum  of  financial  irregularities  is not definite at the time of order of investigation. (b)  Section 29A of IBC already provides that a person shall not be eligible  to  submit  a  resolution  plan,  if  such  person,  or  any  other person  acting  jointly  or  in  concert  with  such  person  is  a  wilful defaulter in accordance with the guidelines of the Reserve Bank of India  issued  under  the  Banking  Regulation  Act,  1949.  Further,  at present there is no proposal before the Government to amend IBC in this regard. (c) Since the Financial Year 2019-2020 to 2023-2024, 72 number of cases were referred to Serious Fraud Investigation Office (SFIO) for investigation.  Further  69  number  of  complaints  were  filed  out  of which 43 complaints included complaint u/s 447 of the Companies Act, 2013. In this period, fine was imposed in 114 cases , 20 cases were compounded and in 9 cases fine and imprisonment were (till rising of courts) ordered. (d) Under  Section  135  of  the  Companies  Act  2013,  every  CSR mandated  company  has  to  constitute  a  CSR  Committee.  The Committee shall formulate and recommend the CSR policy and the Board  of  the  company  plans,  decides,  executes  and  monitors  the CSR activities. The Board is required to disclose the CSR Policy in its  Board  report  and  it  as  to  satisfy  itself  that  the  funds  so disbursed have been utilised for the purposes and in the manner as approved  by  it,  and  the  Chief  Financial  Officer  or  the  person responsible  for financial  management  shall  certify  to  the  effect.

The details of CSR activities, Impact Assessment etc. are required to  be  reported  by  the  companies  in  the  'Annual  Report  on  CSR' including  an  annual  action  plan  on  CSR.  Further,  those  companies who have their websites are required to make disclosures such as composition  of  CSR  Committee,  CSR  Policy  and  CSR  projects approved by Board on their website. The  CSR  framework  is  disclosure  based  and  expenditure  on CSR activities is required to be audited by the statutory auditors of the  company.  The  Ministry  has  notified  the  Companies  (Auditor's Report)  Order,  2020,  ('CARO,  2020')  applicable  from  FY  2021 -22 which requires auditors to state details of any unspent CSR amount. The Government does not issue any direction on which activity or area Company shall spend. The companies are required to disclose the  contents  of  its  CSR  Policy  in  its  report  and  place  it  on  the company's  website.  Thus,  the  corporate  governance  framework along with the existing legal provisions such as mandatory disclosures,  accountability  of  the  CSR  Committee  and  the  Board, provisions  for  statutory  audit  of  accounts  of  the  company  etc. provide adequate safeguards for CSR activities implemented by the companies. Whenever violation of CSR provisions is reported, action against such non-compliant Companies is initiated as per provisions of  the  Act  after  due  examination  of  records  and  following  due process of law. (e) In  March 2019, new principles called the National Guidelines on  Responsible  Business  Conduct  (NGRBCs)  were  released  by  the Ministry of Corporate Affairs (MCA). Subsequently, MCA constituted a Committee on Business Responsibility Reporting ('Committee'), of which  SEBI  was  a  member,  for  finalising  sustainability  reporting formats, based on the framework of the NGRBCs. Based on the recommendations of the Committee, extensive stakeholder  consultation  and  global  benchmarking,  in  2021,  SEBI mandated the top 1000 listed companies (by market capitalization) to  make  ESG  disclosures  as  per  the  Business  Responsibility  and Sustainability Report (BRSR) from FY 2021-22 on a voluntary basis and mandatorily from FY 2022-23.

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