NFRA Limited to Issue Directions, Not to Monitor Companies on its Compliance: Delhi HC Directs Petitioner to Seek Info via RTI [Read Order]

In a recent ruling, the Delhi High Court observed that the National Financial Reporting Authority ( NFRA ) has the power to issue directions under Section 132 of the Companies Act, 2013, but it does not have the authority to monitor whether those directions are followed by companies.

Vivek Chhatre, the petitioner, filed a Letters Patent Appeal challenging the order of a Single Judge, who had earlier disposed of his writ petition concerning alleged non-compliance by Mahindra Holidays & Resorts India Ltd. (MHRIL) with NFRA’s directions issued on 29 March 2023.

The petitioner had earlier approached the High Court in 2022, raising concerns about accounting and audit irregularities involving MHRIL. That petition was disposed of by directing NFRA to consider the petitioner’s complaints. In response, NFRA issued an order in March 2023 giving directions to MHRIL and its auditors.

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In the subsequent writ petition filed in 2024, the petitioner argued that MHRIL had not complied with NFRA’s directions and that NFRA had not taken any steps to ensure compliance. The petitioner also argued that he was not aware of what action, if any, had been taken by NFRA after the March 2023 order.

The petitioner’s counsel argued before the Division Bench that he was unaware of any follow-up action taken by NFRA, so the court should direct NFRA to disclose the steps taken and ensure that its directions are implemented.

The Division Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela observed that NFRA had already passed an order in March 2023 and there is a mechanism available under the Right to Information Act, 2005 (RTI Act). The court directed the petitioner to seek information about follow-up action under the RTI route.

The court further observed that if the petitioner is not satisfied with the response or denial under the RTI Act, he has the remedy of appealing under the provisions of that law. Since a mechanism already exists for obtaining such information, the court was not inclined to entertain the appeal.

The court dismissed the Letters Patent Appeal, stating that the matter does not warrant judicial interference. The writ petition was disposed of.

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