NCLT Kochi Restrains Popular Finance Group Companies From Alienating Assets In SFIO-Initiated Winding-Up Pleas

The National Company Law Tribunal (NCLT) at Kochi has restrained Mary Rani Popular Nidhi Limited and other group companies from creating any third-party interest in, transferring, alienating, encumbering, or mortgaging its movable and immovable assets while considering a winding-up petition filed by the Union of India through the Serious Fraud Investigation Office (SFIO).

The development comes months after the Kerala High Court closed a plea filed by the MRPN Minority Shareholders Customers Welfare Association, which had complained that no action had been taken on the SFIO's final investigation report.

The court recorded the Centre's submission that criminal complaints had already been filed before an Ernakulam court and that winding-up proceedings against the company were being initiated.

The restraint order has also been passed against companies including Saan Popular Finance Limited, MRPN Chits Private Limited and Amala Popular Nidhi Limited, among others, vide separate orders. The companies are part of the Popular Finance Group, which is alleged to have orchestrated the multi-crore Popular Finance scam.

The winding-up petition against Mary Rani Popular Nidhi Limited seeks the winding up of the company and appointment of the Official Liquidator.

According to the SFIO, the company was incorporated for unlawful purposes, its affairs were conducted in a fraudulent manner and in a manner prejudicial to public interest, and it had failed to file financial statements and annual returns for five consecutive financial years. The agency told the Tribunal that an investigation report dated February 27, 2025 necessitated the filing of the winding-up petition.

A coram of Judicial Member Vinay Goel observed:

“At this stage, it would not be appropriate to record any conclusive findings without affording an opportunity of hearing to the other side. The principles of natural justice warrant issuance of notice to the Respondent so as to enable it to place its version before this Tribunal.”

The SFIO sought interim relief restraining the company from creating any third-party interest in or transferring, alienating or encumbering its assets. It also sought the appointment of a Provisional Liquidator to safeguard and manage the affairs of the company.

After considering the submissions and documents placed on record, the Tribunal held that a prima facie case had been made out in favour of the Union of India and that limited interim protection would not prejudice the rights of the company.

“Accordingly, the Respondent Company is restrained from creating any third-party interest or from transferring, alienating, encumbering, or mortgaging any of the movable and immovable assets of the Company without prior permission of this Tribunal,” it noted.

The Tribunal, however, declined to appoint a Provisional Liquidator, holding that such relief ought not to be granted at this stage without affording the respondent company an opportunity of hearing.

Clarifying that its observations were only prima facie in nature and would not affect the merits of the case, the Tribunal directed issuance of notice to the company and posted the matter for further hearing on June 5, 2026.

For Petitioner: Renjith R