Mridula Maurya is a self-made businesswoman ranked amongst the top ten influential business leaders of the country as per the latest edition of a globally renowned business journal. Ms. Mridula is a CMD (Chairperson-cum-Managing Director) of ‘Sanjivini Healthcare Limited (SHL)’, a chain of multispecialty hospitals having a presence in 45 metro and urban cities of India, covering more than 20 states. Dr. Mridula is a cardiologist with wide experience in interventional cardiology. The management of SHL was considering in-organic means to diversify, through which they can also enhance their operational efficiency. After tones of discussion, deliberation, and consultancy, it was decided that SHL will acquire substantial control in ‘Vigor Path Labs (VPL)’, a chain of complete diagnostic centers and pathology labs in almost all the major cities of the country, including the cities where there are branches of SHL. VPL offers a broad range of tests on blood, urine, and other human body viscera. The use of VPL labs as in-house labs for testing will enhance the operational efficiency of SHL. 

The proposed acquisition of control in VPL by SHL will result in the creation of a combination under section 5 of the Competition Act, 2002, so the notice was furnished to the Commission (CCI) for approval on 10th March 2020. The Commission was of the opinion that the combination has an adverse effect on competition but such adverse effects can be eliminated by suitable modifications to such combination, hence the Commission proposed appropriate modifications to the combination which were informed to SHL and VPL on 12th March 2020. SHL accepted some of the modifications suggested and for the remaining modifications, it submitted its suggestions/amendments back to the Commission on 25th March, 2020. Thereafter the Commission has neither issued directions nor passed any order approving/rejecting the combination. A substantial share in VPL is owned by Mr. Raghuvir Rajput and his family. The family of Mr. Raghuvir is settled in London, his children and grandchildren are born and brought up there, even holding a British passport as they are British citizens. Mr. Raghuvir along with his brother-in-law, Mr. Nawal Kishore is running various businesses in India. Mr. Raghuvir commutes frequently between Britain and India. First amongst these businesses is of pharmaceuticals named ‘RN Pharma Lab Limited (RNPLL)’ having two major departments API and CRAMS. The API unit of RNPLL imports a major amount of raw ingredients from China. RNPLL regularly clears the invoices within the stipulated credit period, which is usually lesser than the time limit prescribed by the Regulator. RNPLL also imported some of the materials from a supplier based in Vietnam for the very first time under a deferred payment arrangement of three and half years. Due to a delay in the realization of revenue, RNPLL was in financial distress, and further lockdown due to COVID-19 hit the liquidity. Outstanding dues in respect of imports are nearly USD 2.4 million. RNPLL is seeking an extension for the period of import settlement from the authorized dealer with respect to one of its major import transactions (PO G-212) where the date of the invoice was 7th April 2020, the date of shipment was 10th April 2020, and date of IGM and arrival at the port was 14th April 2020 and Bill of Entry was furnished on 15th April 2020. RNPLL is hopeful for immediate recovery as well as improvement in both top and bottom lines apart from its financial liquidity because the pharmacy business has a great opportunity to revive by developing a vaccine for COVID-19. 

Another business is of real estate development named ‘Fair Deal Developers and Realtors (FDDR)’. The major reason for venturing into such a real estate business is the operating experience of Mr. Nawal Kishore on the same. Mr. Nawal Kishore is basically a civil contractor who himself is a promoter of Consort Infra and Construction Limited (CICL). He knows the operational aspects well but is not equally good in the financial and legal aspects of the business. CICL got a government contract through a tender, upon which stay is imposed after agitation from farmers, whose lands were acquired for such contract. Around 20-22% of work is completed, but the invoice can only be raised after completion of the first stage (i.e. 25% work), that’s too after obtaining a certificate from a government engineer. Hence, the entire amount spent so far by CICL for 20-22% of construction work is blocked. Other projects of CICL are also impacted by shoot-up prices of construction materials and non-availability of labour at competitive prices which resulted in an overrun of budget. These factors resulted in failure to servicing of debts on time. Finally, CICL was pushed to Corporate Insolvency Resolution Plan (CIRP) due to occurring of default on 5th March 2020. The resolution process took more time than expected, hence an extension to the prescribed time limit was sought by the resolution professional based upon the resolution passed by the committee of creditors. The Adjudicating Authority granted an extension of further 75 days to the resolution professional to complete CIRP. Resolution professional again filed another application for granting an extension of further 80 days. 

FDDR is developing its second housing project. Based on its experience with the first project, it decided to make certain changes in the building layout and specification, which were not originally in the sanctioned plan. Hence, permission from 78 out of 150 total allottees was taken in advance in writing to approve the changes. One amongst the 78 allottees, had got an allotment of two apartments. A letter from the authorized architect with the recommendation of the changes has been obtained in advance. FDDR comes under the scanner of Initiating Authority in respect of one of its property which is alleged to be ‘Benami’. The Initiating Officer after recording the reasons in writing served a show-cause notice that ‘why the property should not be treated as Benami property, on the principal officer of FDDR. The initiating officer believes that he must conduct an investigation in order to fetch some conclusive pieces of evidence against FDDR regarding the Benami nature of the property. While traveling in India, unfortunately, the car of Mr. Raghuvir met a road accident; smashed into HMV. Highway patrol rushed to the accident site took the injured to the nearby hospital, including Mr. Raghuvir; where he was declared as, brought dead, by doctors. Mr. Nishankh Rajput, son of Mr. Raghuvir Rajput came to India, along with other family members to perform his last rites. The rest of the family apart from Mr. Nishankh Rajput returned back to London. 

Mr. Nishankh Rajput stays in India to execute the testament of the will of his deceased father. Mr. Nishankh Rajput who is the nominee to his deceased father in his bank account in India approached the bank for the closure of the account and withdrawal of the amount. Considering Mr. Nishankh Rajput is a beneficial owner, the bank asked him to verify his identity by showing his Aadhaar card. Since Mr. Nishankh Rajput didn’t have an Aadhaar card, hence he showed other proof of his identity. The banker showed sympathy with him but denied providing any service until the Aadhaar card was furnished as proof of identity Whether the initiating officer is authorized to conduct an investigation on his own against FDDr .

Does he require any approval for the same?

Answer rating: 100% (QA)

The initiating officer is authorized to conduct an investigation on his own against FDD... View the full answer