In a significant setback for the Serious Fraud Investigation Office (SFIO), the Mumbai Bench of the National Company Law Tribunal has dismissed the Union government’s petition seeking disgorgement of ₹100.50 crore from Apollo Hospitals’ Suneeta Reddy, her husband Dwaraknath Reddy and Sindya Securities & Investments Pvt Ltd (SSIPL).

The NCLT, in its July 7 order, rejected SFIO’s case seeking to declare the three respondents knowingly involved in fraudulent conduct and to impose joint and several liability without limitation upon them. SFIO had also sought disgorgement of ₹100.50 crore with interest and realisation of attached assets for payment to alleged victims of the fraud.

The order was passed by Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar in Union of India through Serious Fraud Investigation Office v. Suneeta Reddy & Others.

What was SFIO’s case?

The controversy arose from SFIO’s investigation into the affairs of the Aircel group comprising Aircel Limited, Aircel Cellular Limited and Dishnet Wireless Limited.

Suneeta Reddy had served as chairperson of the boards of the companies under investigation between March 2006 and February 2018. She and her husband had incorporated SSIPL, which was the Indian partner in the corporate structure through which Maxis acquired its interest in Aircel.

At the heart of SFIO’s case was an IP Call Option Agreement dated January 20, 2006, involving SSIPL and Deccan Digital Networks Pvt Ltd (DDNPL).

According to SFIO, SSIPL subsequently received ₹100.50 crore from Global Communication Services Holding Ltd (GCSHL) on September 21, 2016 for consenting to termination of the call-option arrangement and a voting arrangement.

SFIO contended that the relevant shares and associated rights had already been pledged to Aircel’s lenders and that the ₹100.50 crore consequently formed part of the collateral that should have gone to the banks. It characterised the receipt of the money by SSIPL as a fraud upon lenders against outstanding adjudicated liabilities of ₹19,788.77 crore.

The investigation report went considerably further. SFIO alleged that the call-option agreement had been deliberately kept outside the purview of the banks and that false representations had been made in the 2014 Share Pledge Agreement. It concluded that Suneeta Reddy, Dwaraknath Reddy and SSIPL had obtained an undue benefit of ₹100.50 crore.

Where SFIO’s case came unstuck

The NCLT’s detailed examination of the underlying agreements, however, produced a markedly different conclusion.

One of the central difficulties for SFIO was the Tribunal’s finding concerning the April 26, 2014 Share Pledge Agreement.

SSIPL was not a party to that agreement. More importantly, the NCLT examined the contractual protections available to the lenders and found that the pledge agreement itself protected their interests.

The Tribunal held that Clause 2.8 effectively prevented rights over pledged shares from being exercised without lenders’ consent while the credit facilities remained outstanding. In its view, this meant that lenders remained protected against an existing option even where that option had not been disclosed.

That finding went directly to the foundation of SFIO’s fraud theory.

NCLT finds no false or deceptive inducement

The Tribunal also rejected the argument that Suneeta Reddy’s position required her personally to disclose SSIPL’s call option.

After examining the 2014 agreement, the Bench said it could find no statement, promise or forecast by DDNPL that could be characterised as false, deceptive or misleading.

It further observed that SSIPL was an independent legal entity and found no basis for imposing upon Suneeta Reddy a personal obligation to disclose an option vested in SSIPL merely because her family held the company and she was a director of relevant Aircel entities and DDNPL.

The NCLT consequently concluded that, as far as the transaction challenged in the petition was concerned, no case of fraud in the affairs of the Aircel entities had been made out.

Crucially, lenders suffered no prejudice

Perhaps the most consequential finding for SFIO concerned the lenders themselves.

The Tribunal held that the rights and interests of the lenders were not prejudiced in any manner by the non-disclosure of the IP Call Option Agreement.

Consequently, the NCLT found that the alleged non-disclosure could not be treated as having been undertaken with an intention to deceive or injure the lenders.

This substantially weakened the causal link SFIO needed between the alleged concealment, fraud and the supposed undue benefit.

Why was ₹100.50 crore actually paid?

The NCLT also disagreed with SFIO’s characterisation of the ₹100.50 crore itself.

Its examination of the Call Option Termination Agreement showed that the transaction was wider than simply extinguishing a call option.

The agreement dealt with termination of the call-option agreements, the Deccan and Aircel shareholder agreements and, importantly, voting and support arrangements necessary for the proposed merger between Reliance Communications and Aircel.

The Tribunal therefore described the ₹100.50 crore as consideration for a “bundle of rights.”

Even if some value was attributed to the call option, the NCLT found that GCSHL’s payment to SSIPL was essentially contractual consideration for obtaining SSIPL’s consent so that DDNPL could vote in the manner required for implementation of the proposed merger.

It therefore held that the payment could not be characterised as a fraudulent transaction undertaken to obtain an undue advantage or benefit. 

Section 212(14A) hurdle proves decisive

SFIO had invoked Section 212(14A) of the Companies Act, 2013, which permits the Central Government to approach the NCLT for disgorgement where an SFIO investigation report establishes fraud in a company and a person or entity has obtained an undue advantage or benefit because of that fraud.

The NCLT held that the ₹100.50 crore transaction was between shareholders at different levels of the Aircel structure and could not be treated as a transaction taking place in the affairs of the Aircel entities merely because it related to their share capital.

The Bench further emphasised that Section 212(14A) requires an undue advantage or benefit to flow from the fraud.

On the facts before it, that statutory threshold was not satisfied. The Tribunal therefore held that no disgorgement order could be passed under Section 212(14A).

SFIO petition dismissed

The result was a comprehensive defeat for the reliefs sought by SFIO in this proceeding.

The Tribunal declined to declare Suneeta Reddy, Dwaraknath Reddy and SSIPL personally liable without limitation and ultimately held that “no case is made out” for an order under Section 212(14A).

It accordingly dismissed and disposed of the company petition. Order dated 07.07.2026 in UOI through SFIO vs Suneeta Reddy.pdf

The order is significant because the ₹100.50 crore claim did not fail merely on a technical procedural objection. The NCLT went into the contractual architecture underpinning the transaction and found that the lenders’ interests remained protected, that the alleged non-disclosure did not establish the deception alleged by SFIO, and that the payment itself represented contractual consideration associated with a broader corporate transaction.

For SFIO, therefore, the case ultimately came apart at its central premise: the agency alleged that ₹100.50 crore represented an undue benefit flowing from fraud; the NCLT found that the statutory and contractual foundations necessary to sustain that proposition had not been established.