Dilliraj vs The Official Liquidator

COMP.A No. 269 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON
PRONOUNCED ON
17.07.2026
16.10.2026
CORAM
THE HON'BLE MR.JUSTICE K.KUMARESH BABU
COMP.A No. 269 of 2025
IN
CP NO. 255 OF 2014
Dilliraj
S/o.Kuppaswamy Somasundaram,
Flat No.501 Reliance Avans Legacy,
Srinagar Colony, Hyderabad - 500 073
..Applicant(s)
Vs
1. The Official Liquidator,
High Court, Madras as the Provisional
Liquidator of
M/s.First Leasing Company of India Limited,
(In provisional Liquidation)
2. Farouk M.Irani
S/o.Merwan Rustom Irani,
(Managing Director of FLCIL),
DIN. 00174018,
Address La Reve, 10,
River View Road, Kotturpuram,
Chennai - 600 085.
3. Maharaj Jai Singh
S/o.Maharaja Sawai Manisingh,
(Director of FLCIL) DIN. 00041513,
Bungalow No.12,
Civil Lines, Jaipur - 06.
4. A.C.Muthiah
S/o.Muthaiah Chidambraram Annamali,
(Chairman of FLCIL) DIN. 00041905,
H.No.Adyar Villa,
Kotturpuram, Chennai - 600 085.
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COMP.A No. 269 of 2025
5. Dhanasekar (Deceased)
S/o.Saravanabavanantham,
Vallajah,
(Director of FLCIL) DIN.00211656,
32, South Boag Road,
T.Nagar, Chennai - 600 017.
6. AL.Vadivelu
S/o.Alagappa Chettiyar,
(Director of FLCIL),
H.No.10, 1st Floor,
MAC Sunny side,
Dr.Alagappa Road, Chennai - 600 084.
7. M.D.Narayan (Deceased)
(Director of FLCIL),
H.No.60, 9th Main Road,
Raja Mahal Vilas, Bangalore - 560 080.
8. Vice Admiral rustom khusro gandhi (deceased)
6A, Dolphin plot,
Bander Road, Colaba,
Mumbai - 400 005.
9. V.Srinivasalu
S/o.V.Subbaiah,
(CDC Nominee),
H.No.14/1, Kanakapura Road,
Near Lalbagh West Gate,
Bangalore South,
Basavangudi - 560 004.
10.N.Srinivasan (CDC Nominee)
D 32 Nizamudehin Post,
New Delhi -110 013.
11.Babu K Varghese
S/o.K.Joseph Verghese,
(Director of FLCIL),
DIN.00046699,
H.No.492, 3rd South Main Road,
Kapaleswar Nagar,
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COMP.A No. 269 of 2025
Neelankarai, Chennai -41.
Address also at No.10,
Ranganattan Avenue,
Uthandi, Chennai - 600 119.
12.Vishwanath Tumu
S/o.Seetharam Das Tumu,
(Director of FLCIL), DIN.02031020,
H.NO.10-2-289/74, Shanthi Nagar,
Humayun Nagar, Hyderabad -28.
13.Sathishkumar Anavangot
S/o.Nair Annikath Sethu Madavan,
(Director of FLCIL) DIN.00087283,
H.No.B002, Keshav Dugar,
1/30, East Avenue,
Kesavapuram, Chennai -28.
Address also at
H.No.102, Casa Grand Vitaliya,
Palanaswamy Street,
Race Course, Coimbatore - 641 018.
14.L.Sivaramakrishnan (Chief Financial Office of
FLCIL)
H.No.A-4, 20, Venkatesanagaram,
Extension 1st Virugambakkam,
Chennai - 600 0092.
Address also at H.No.9A,
Baskar Nagar, Nahru Nagar,
Saligramam, Chennai - 600 093.
15.V.Balaraman
S/o.K.V.Raman,
(Company Secretary of FLCIL),
H.No. Flat No.A-2, 32, Jambulingam Street,
Chennai - 600 034.
16.S.Hari Prasa
S/o.S.Sridhar,
(Company Secretary of FLCIL),
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COMP.A No. 269 of 2025
H.No.B-3, Narayani Apartments, Velian Nagar,
Valsaravakkam, Chennai - 600 087.
17.Deepa Chellam
D/o.B.Ruthnaswamy,
H.No.T-27, G.Block, TNHB Church, Road,
Mylapore, Chennai - 600 004.
18.N.Kumar
S/o.Natarajan Nagarajan,
(Company Secretary of FLCIL),
H.No.Old No.3, New No.13,
VGN Street,Dasarathapuram,
Salaigram, Chennai - 600 093.
Address also No.1E, B.S.Apartments,
Sayee Nagar, Virugambakkam,
Chennai -600 092.
..Respondent(s)
PRAYER:- Company Application filed to vacate the injunction granted in
Comp.A.No.276 of 2024 in CP No.255 of 2014 dated 09.08.2024 in so far it
applies to me (Respondent No.13).
For Applicant(s): Mr.R.Murari
Senior Counsel
For Ms.Hema Srinivasan
For Respondent(s): Mr. V. Chandrasekar
For the Official Liquidator
ORDER
The present Company Application has been filed to vacate the injunction
granted in Comp.A.No.276 of 2024 in CP No.255 of 2014 dated 09.08.2024 in
so far as Respondent No.13.
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COMP.A No. 269 of 2025
2. Heard Mr.R.Murari, learned Senior Counsel appearing for Ms.Hema
Srinivasan, learned counsel for the applicant and Mr. V. Chandrasekar, learned
counsel appearing on behalf of the Official Liquidator.
3. Mr.R.Murari, learned Senior Counsel appearing on behalf of the
applicant would submit that the applicant had joined the services of the
Company in liquidation as an employee in the Treasury Department in the year
1997 and had resigned from the services of the Company in liquidation on
22.11.2007 and was relieved on 18.01.2008. He would submit that in the
interregnum, he had climbed up the ranks in the Company and was holding the
post of a Senior Vice President Treasury on the date of his resignation. He
would submit that during his tenure, he had never been vested with any
authority which requires statutory compliance, financial decision making or
even an authority to sign any return, certificate, balance sheet, prospectus,
statement or other statutory documents.
4. He would further submit that the applicant had not derived any
financial benefits beyond his compensation for salary and other incentives. He
would further submit that the proceedings under PMLA was initiated against the
applicant on the basis that there had been a benefit on the proceeds of crime in
favour of the applicant. The same was challenged by the applicant in
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COMP.A No. 269 of 2025
proceedings of Crl.O.P.No.2488 of 2016, the PMLA proceedings was quashed.
As regards to the attachment proceedings under the SAFEMA, the Appellate
Tribunal by its order dated 21.11.2023 had set aside the provisional attachment
of the applicant’s immoveable properties and the said order had become final.
However, an appeal as against the Division Bench order quashing the PMLA
proceedings had been challenged by the Department and is pending
consideration of the Hon’ble Apex Court.

5. He would further contend that as there was no stay of the orders of
quashing. Hence, the finding of fact as rendered by the Division Bench of this
Court holding that the applicant was not benefitted of any proceeds of crime as
of this date is valid and binding. The SIFO proceedings which had been relied
upon by the Official Liquidator is also the subject matter of various proceedings
before the Court and the same has also been stayed by this Court. In that regard,
he would submit that the present proceedings initiated by the Official Liquidator
wholly relying upon the conclusions arrived at by the SFIO in its Report cannot
form a basis to sustain the application itself and in that regard, he would submit
that the interim relief that had been granted by this Court is liable to be vacated.
He would further submit that in view of the decisions made in a collateral
criminal proceedings, no prima facie could be said to have met out as against
the applicant.
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COMP.A No. 269 of 2025
6. He would further submit that a Report of the SFIO is devoid of merits
as it is not substantiated by any material evidences. That apart, he would submit
that even a perusal of the SFIO Report relates to the transactions beyond the
period of the resignation of the applicant. He would further rely upon the
judgment of the Hon’ble Apex Court reported in 2021 Vol.228 Comp Cas 185,
and would submit that there is an express bar contained under Section 212 (2) of
the Companies Act, 2013 which mandates that once a case is assigned to SFIO
no parallel investigations or proceedings by any other agency could be
continued. He would further submit that when a Division Bench of this Court
had found that the applicant was not a beneficiary of the proceeds of crime that
arose out of the offences committed in the Company in liquidation, the
applicant cannot be again arrayed as a party to the application seeking for
various reliefs including the relief against the applicant to deal with the very
same property that was the subject matter of the PMLA and SAFEMA
proceedings.
7. Drawing attention to the findings in the SFIO Report that the applicant
was neither a Director, share holder, key manager Personnel or an officer in
default, the proceedings as against the applicant is wholly unnecessary and
therefore, prays this Court to vacate the injunction granted which causes serious
prejudice to the applicant and also considering that the applicant is a senior
citizen.
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COMP.A No. 269 of 2025
8. Countering his arguments, Mr. V. Chandrasekar, learned counsel
appearing on behalf of the Official Liquidator would submit that the present
application seeking for vacating the interim order is wholly without any merits.
He would further submit that the applicant even though at the time when he had
demitted office was holding the post of a Senior Vice President, Treasury, he
was also the Acting Chief Financial Officer of the company in liquidation. He
had extended loan facilities to seven satellite companies under the same
management. He would submit that the said loans that were extended to the
seven satellite companies were for the reason to acquire the shares of the
company which had advanced loan to such satellite companies and thereafter,
diverted the funds within the same management. The applicant’s role in such
fraudulent transactions have been explicitly found in the investigation
conducted by the SFIO.
9. He would vehemently content that the applicant was one of the key
conspirators had acted in a fraudulent manner in which the companies funds
have been siphoned off. He would further submit that he had prepared
unsubstantial entries, inflated the income and assets in the books of accounts of
the company in liquidation when he was holding the post of the Acting Chief
Financial Officer of the Company in liquidation. In that process, there had been
various manipulations in the company’s records including its books of accounts.
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COMP.A No. 269 of 2025
10. Placing heavy reliance upon the Report filed by the SFIO, he would
submit that the applicant had played a crucial role in diverting the funds of the
company. He would further submit that the applicant had primarily performed
the functions of the Chief Financial Officer of the Company and had also given
his residential address as the address of the satellite companies through which
the funds of the Company were siphoned off. In that regard, he would submit
that there exist a prima facie case as against the applicant for his role in
siphoning of the funds of the Company. Hence, he seeks this Court to dismiss
the application.
11. I have considered the submissions made by the learned counsels
appearing on either side and perused the materials available on record before
this Court.
12. The Official Liquidator had taken out an application for the reliefs to
take on record the SFIO Report, to declare that the respondents had committed
fraudulent activities contravening the Provisions of the Companies Act, to hold
the respondents are personally liable without any liability for the debts and dues
of the company in liquidation and also to hold that the respondents are jointly
and severally liable to contribute Rs.1,200 Crores which is payable to the
creditors of the company in liquidation and for disgorgement of the assets of the
respondents for realisation of sum of Rs.1,302 Crores or any other further
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COMP.A No. 269 of 2025
amount as determined by this Court. Pending the said application, interim
reliefs were also sought for realising the monies from the moveable and
immoveable assets from various respondents, restrain them from creating any
third party interest in the moveable or immoveable properties, freeze their bank
accounts, the respondents respectively to disclose the moveable and
immoveable assets to freeze their securities owned and held by the respondents
and a further directions to the other Statutory authorities. Pending these
applications, an interim reliefs were also sought for.
13. The primordial contention of the applicant against whom the interim
orders were granted by this Court is that in a collateral criminal proceedings
initiated under the PMLA noting that the Applicant was not involved in the
allegations as made out therein had quashed the PMLA proceedings. It is to be
noted that as against the said proceedings, an Appeal before the Hon’ble Apex
Court is pending. However, without any interim orders based upon the same, a
provisional attachment order which was pending challenge before the Tribunal
under PMLA was also held in favour of the applicant. However, with a caveat
that if the orders of the Hon’ble Apex Court have a bearing on the said Appeals
that had been disposed of by the Appellate Tribunal, the Department was at
liberty to take appropriate remedies including a right to file a Review Petition.
In that regard, it can be safely concluded that the PMLA proceedings had not
met its logical conclusion.
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COMP.A No. 269 of 2025
14. The proceedings by the SFIO and the Report filed by it had not been
stayed at the instance of the applicant. The SFIO proceedings that were placed
before this Court, dealt with the role of the applicant and he had been described
to be a person as a key company personnel of the Company in liquidation. The
Report categorically indicates that even though he was holding the post of the
Senior Vice President in the year 2004-2005, he had been performing the
functions of a Chief Financial Officer as he had been handling banking
relationship, issuance of debentures and work relating to direct taxes. The
Report also further indicates that he had played a key role in implementation of
the fraudulent activities including floating of companies which had been shown
to be operating from the residence of the applicant.
15. The Report had also relied upon the documents from the applicant
indicating how the profits were escalated. Minutes of the Board Meetings have
also been culled out in the said Report wherein the applicant had been
authorised to be a Joint Signatory for issuing cheques. He had also issued letters
to the consortium banks claiming himself to be a member of the Credit
Committee, Asset Liability Management Committee and also of the Task Force
Committee. In spite of documented financial ill-health of the Company, in view
of the inflated profits and assets as boosted by the applicant which had
benefitted the Company from various higher loan disbursal in favour of the
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COMP.A No. 269 of 2025
Company in liquidation and was also responsible for siphoning off the monies
that had come into the coffers of the company in liquidation through bank loans,
leading to a loss of the public money.
16. In that regard, it should be noted that the proceedings initiated under
the PMLA had not attained finality. Similarly is the criminal proceedings that is
lodged pursuant to the SFIO Report. Hence, the contention of the learned Senior
Counsel that there had been a categorical finding absolving the applicant of all
the allegations of siphoning of funds holding are yet to be finally adjudicated
upon. It is to be noted that even if the assets of the Company has not gone to the
coffers of the applicant, under the Provisions of the Companies Act for having
held a post and during which tenure there is prima facie finding of fraud
committed, they are personally liable to compensate the loss that had occurred
for which their properties are liable to be proceeded with as adumbrated under
Section 35 of the Companies Act, 2013.
17. If the applicant is allowed to deal with the properties, it would cause
severe prejudice in recovering the assets of the company which would affect the
interest of the creditors of the Company. In that regard, this Court is of the view
that the interim order that had been granted by this Court cannot be wholly
vacated, but, however considering that the entire bank accounts of the applicant
had been directed to be frozen until further orders. This Court is of the view that
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COMP.A No. 269 of 2025
the applicant could be permitted to operate bank operates on condition that the
statement of withdrawal and the expenditure that had been incurred on the said
withdrawal amount to be filed as a proof every quarterly till the disposal of the
Comp.A.No.276 of 2024.
18. Accordingly, the interim order stands modified permitting the
applicant to operate his bank account on condition that the statement of
withdrawal and the expenditure that had been incurred on the said withdrawal
amount to be filed every quarterly till the disposal of the Comp.A.No.276 of
2024 and without any alteration or modification to the interim orders granted by
this Court on 09.08.2024. However, there shall be no order as to costs.

16.10.2026
Index: Yes/No
Speaking/Non-speaking order
Neutral Citation: Yes/No
GBA
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COMP.A No. 269 of 2025
K.KUMARESH BABU, J.
GBA
COMP.A No. 269 of 2025
IN
CP NO. 255 OF 2014
16.10.2026
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