Serious Fraud Investigation Office Sends Notices To Law Firms, Legal Consultants To Disclose Information On IL&FS

The Serious Frauds Investigation Office (SFIO) has sent notices to law firms and legal consultants to disclose all information about IL&FS during the 10 year period when these firms had advised and represented the real estate lender.

The SFIO notices have been sent under Section 217 (1) of the Companies Act which empowers investigating officers to seek information from officials, other employees or agents of a company, including those who had an association with it in the past.

Significantly, SFIO’s notices indicate that action could be taken against entities which do not give information under Section 217(8) of the Companies Act and the agency could recommend penal action against those failing to co-operate without providing reasons.

As per Section 217 (8), “if any person fails without reasonable cause or refuses, he shall be punishable with imprisonment for a term which may extend to six months and with fine which shall not be less than Rs 25,000 but which may extend to Rs 1 lakh, and also with a further fine which may extend to Rs 2,000 for every day after the first during which the failure or refusal continues”.

Incidentally, all professional communication between attorney and clients is protected under laws like the Indian Evidence Act, 1872; the Advocates Act, 1962 and Bar Council of India Rules. As a matter of fact, the attorney-client privilege continues even after employment has ceased.

However, that privilege could be waived if disclosures are made with the client’s consent.

It may be recalled that on September 30, 2018, the Ministry of Company Affairs under which the SFIO functions, had authorized the agency to probe into the affairs of IL&FS and its subsidiaries.