THE MINISTER OF STATE (SHRI SACHIN PILOT) (INDEPENDENT CHARGE) IN THE MINISTRY OF
CORPORATE AFFAIRS
(a) to (e) A statement is laid on the Table of the House.
STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (e) OF THE STARRED QUESTION NO. 429 FOR ANSWER
IN LOK SABHA ON 25-04-2013
(a) & (b) Yes Madam, the Government has proposed to grant statutory status to Serious
Fraud Investigation Office (SFIO) and accordingly has incorporated enabling provisions in
Clause 211 of the Companies Bill, 2012.
In addition to according statutory status, the following are some of the other important
provisions relating to the functioning of SFIO proposed in the Companies Bill, 2012 :
# ‘Fraud’ defined and made cognizable;
# Coordination mechanism between SFIO and other investigating agencies statutorily
recognized;
# Investigation Report of SFIO shall be treated at par with investigation report filed
in the court by a Police Officer under Criminal Procedure Code;
# Powers of arrest for certain offences;
(c) & (d) During the last 3 years (2010-11, 2011-12 and 2012-13), 64 cases were referred
to SFIO; company-wise details are given in ANNEXURE-I. During this period, investigations have
been completed in 55 cases; company-wise details are given in ANNEXURE-II.
Out of these 55 cases in which investigations were ordered by the Ministry, 26 were ordered on
the basis of directions of various High Courts for investigations. In most of the cases referred
by High Courts, specific issues were referred for investigation and action taken was limited to
filing of investigation report to the courts. It is the prerogative of the High Courts to take
action on the investigation reports. However, the Ministry also issues instructions on the
findings in these reports if there are violations of law.
In cases referred by the Ministry under Section 235 of the Companies Act, sanctions are given
for prosecution whenever necessary. In 20 cases, 79 complaints have been filed under the
Companies Act and 6 complaints have been filed under the Indian Penal Code (IPC), 1860.
(e) Yes, Madam. It is under active consideration of the Ministry of Corporate Affairs to
develop a “Fraud Prediction Model†for generating early warning signals for prediction of fraud
and malfeasance in the corporate sector.
A High-powered Steering Committee has been set up with technical experts in various fields to
design a comprehensive framework for a fraud prediction model. The terms of reference, include
drawing up of a detailed plan for implementation including timeline for testing a pilot.
The Steering Committee has submitted its draft report to SFIO which is under consideration. It
is expected that the pilot testing of the model will be done within the current financial year
(2013-14). Model development being a highly iterative process, the pilot would start as “Fraud
Propensity Model†to be fine tuned over time into a predictive model.
