SFIO is not barred from investigating an offence under the IPC.
IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 17th October, 2023
Pronounced on: 21st December, 2023
+ W.P.(CRL) 1891/2023 CRL.M.A. 17499/2023(Stay)
R.K. GUPTA & ORS. ..... Petitioner
Through: Mr. N. Hariharan, Senior Advocate
with Ms. Ranjana Roy Gawai, Ms.
Vashudha Sen, Mr. Vineet Wadhwa,
Mr. Sharian Mukherji, Mr. Mueed
Shah, Ms. Punya Rekha Angara and
Mr. Prateek Bhalla, Advocates.
versus
UNION OF INDIA THROUGH MINISTRY OF CORPORATE
AFFAIRS & ANR. ..... Respondents
Through: Mr. Amit Tiwari, Senior Panel Counsel
Mr. Chetanya Puri, Government
Pleader
Mr. Nitin Agnihotri, Prosecutor for the
SFIO with Mr. Shriram Tiwary,
Mr. Salman Razi, Mr. Upanshu,
Mr. Nitin Agnihotri, Advocates.
CORAM:
HONBLE MR. JUSTICE AMIT SHARMA
https://1drv.ms/b/s!AnA8RNRWqS7ZrdNdNgBYhPVjaODQww?e=aceUMW22.
Learned Senior Counsel submitted that as per the scheme of the Act as
well as the CrPC, the power of SFIO is limited to carry out an investigation
for offences under the Act only and therefore, investigation and subsequent
complaint filed under the various provisions of the IPC is not maintainable.
Attention of this Court was drawn to Sections 4 and 154 of the CrPC, which
provide as under:
4. Trial of offences under the Indian Penal Code and other laws.
(1) All offences under the Indian Penal Code (45 of 1860) shall be
investigated, inquired into, tried, and otherwise dealt with according to
the provisions hereinafter contained.
(2) All offences under any other law shall be investigated, inquired
into, tried, and otherwise dealt with according to the same provisions, but
Digitally Signed
By:RANJU BHALLA
Signing Date:21.12.2023
18:50:07
Signature Not Verified
W.P.(CRL) 1891/2023 Page 33 of 40
subject to any enactment for the time being in force regulating the
manner of place of investigating, inquiring into, trying or otherwise
dealing with such offences.
154. Information in cognizable cases.(1) Every information
relating to the commission of a cognizable offence, if given orally to an
officer in charge of a police station, shall be reduced to writing by him or
under his direction, and be read over to the informant; and every such
information, whether given in writing or reduced to writing as aforesaid,
shall be signed by the person giving it, and the substance thereof shall be
entered in a book to be kept by such officer in such form as the State
Government may prescribe in this behalf:...
23. It was pointed out that petitioners no.1 and 3 have been arrayed as
accused for alleged commission of offences under the under the IPC as well.
A conjoint reading of the aforesaid provisions of the CrPC makes it apparent
that only an officer in-charge of a police station can commence an
investigation under the IPC. It was submitted that such a power has not been
given to any of the officers of the SFIO. Reliance was placed on Manish
Rangari (supra) wherein it has been held as under:
7. I have carefully considered the rival submissions and perused the
application and the documents placed on record by the applicants.
Having done so, I am of the prima facie, view that the contentions raised
by the applicants have merit. Prima facie, it appears that while passing
the impugned Order dated 29/07/2019 taking cognizance of offence
against the applicants, the learned Special Court failed to take judicial
notice of the following legal aspects which go to the root of the matter,
thus rendering the impugned Order vulnerable.
(a) The various offences under the 2013 Act of which cognizance has
been taken came into force only with effect from 12/09/2013
(Section 449) and 01/04/2014 (Section 129 and 217), whereas the
underlying alleged violations at NSELs exchange platform have
all occurred on or before 31st July 2013 as per SFIOs own
complaint filed before the learned Special Court. Prima facie,
therefore, prosecution of the applicants under the 2013 Act
Digitally Signed
By:RANJU BHALLA
Signing Date:21.12.2023
18:50:07
Signature Not Verified
W.P.(CRL) 1891/2023 Page 34 of 40
appears to be impermissible under Article 20(1) of
the Constitution of India.
(b) As per Section 212(2) of the 2013 Act, prima facie it is seen
that the SFIO has jurisdiction to investigate offence under the
said Act only. Hence, the SFIOs investigation and subsequent
complaint for offences under the Penal Code, 1860 and under
the 1956 Act prima facie appears to be without jurisdiction. A
contrary interpretation would permit the SFIO to encroach
upon investigating powers of other investigating agencies
under other laws, which cannot be the intention of the
legislature.
(c) For the same underlying transactions arising out of the NSEL
payment defaults, the NSEL and others are already facing
prosecution for offences under the Penal Code, 1860 before the
learned MPID Court and the learned CBI Court, Mumbai.
Similarly, for various violations under the 1956 Act discovered
during inspection of NSEL by the Central Government, the NSEL
and others are already facing prosecution before the learned
Metropolitan Magistrate, Girgaon, Mumbai on complaints filed by
the Registrar of Companies. This factual position has not been
disputed by the other side. That being so, the subsequent
prosecution of the NSEL and others for the same underlying
transactions appears to be in breach of the embargo against
double jeopardy under Article 20(2) of the Constitution of
India and Section 300 of the Cr. P.C.
(d) Further, prima facie, I find merits in the submission of the learned
Counsel for the applicants that once the Honourable Supreme
Court, vide its Judgment dated 30/04/2019 in Civil Appeal No.
4476 of 2019 in 63 Moons Technologies Ltd. (supra) has held that
there is no public interest involved in recovery of the dues of the
traders who allegedly lost monies due to counter party defaults on
the exchange platform of the NSEL, the entire jurisdictional basis
of the SFIO investigation, which was ordered by the Central
Government in the purported public interest vide its Order dated
28th October 2016, has ceased to exist. In view thereof, the SFIO
Investigation Report dated 31st August 2018 and the subject
complaint filed by the SFIO before the learned Special Court,
appear to be without jurisdiction. Impugned Order, as such,
Digitally Signed
By:RANJU BHALLA
Signing Date:21.12.2023
18:50:07
Signature Not Verified
W.P.(CRL) 1891/2023 Page 35 of 40
becomes vulnerable, at least prima facie, case for consideration is,
as such, made out.
(emphasis supplied)
24. Per contra, learned Senior Panel Counsel on behalf of the respondent
submitted that provisions of Section 212(2) and Section 436(2) of the Act are
to be constructed harmoniously in a manner that does not restrict the power of
SFIO to investigate offences under the Act only. It was pointed out that
Section 436(2) of the Act gives power to the learned Special Court to try an
offence other than the offences under the Act at the same trial and that would
give jurisdiction to the SFIO for investigation as well as prosecution for
offences punishable under the IPC. Reliance was placed on a judgment
passed by a coordinate bench of this Court in Ashish Bhalla (supra), wherein
an FIR registered by the Economic Offences Wing on the basis of a similar
allegations which were part of an ongoing investigation being conducted by
SFIO was quashed on the ground that since the Companies Act is a special
act, the same would prevail over the general act, i.e., the IPC. It was further
held, in Para 91, that Further due to commonality of the allegations
involved, wherein, the subsequent allegations made in the impugned FIR are
already subsumed and thus shall be considered by the SFIO during the
proceedings conducted by it resulting from the first complaint dated
14.06.2021 made to the MCA..
25. Learned Senior Counsel, in rejoinder, submitted that Section 436(2) of
the Act does not give jurisdiction to the SFIO to investigate offences under
the IPC. It was further submitted that said bar is implicit in the Act itself.
Digitally Signed
By:RANJU BHALLA
Signing Date:21.12.2023
18:50:07
Signature Not Verified
W.P.(CRL) 1891/2023 Page 36 of 40
Attention of this Court was drawn to Sections 212(15) and 212(17) of the Act,
which provide as under:
212. Investigation into affairs of Company by Serious Fraud
Investigation Office.
*** *** ***
(15) Notwithstanding anything contained in this Act or in any other law
for the time being in force, the investigation report filed with the Special
Court for framing of charges shall be deemed to be a report filed by a
police officer under section 173 of the Code of Criminal Procedure, 1973
(2 of 1974).
*** *** ***
(17) (a) In case Serious Fraud Investigation Office has been investigating
any offence under this Act, any other investigating agency, State
Government, police authority, income-tax authorities having any
information or documents in respect of such offence shall provide all
such information or documents available with it to the Serious Fraud
Investigation Office;
(b) The Serious Fraud Investigation Office shall share any information
or documents available with it, with any investigating agency, State
Government, police authority or income-tax authorities, which may be
relevant or useful for such investigating agency, State Government,
police authority or income-tax authorities in respect of any offence or
matter being investigated or examined by it under any other law.
26. For the purpose of adjudication of the present issue, the relevant
provisions of the Act as well as the CrPC have to be read harmoniously.
Under Section 438 of the Act, it is provided that the CrPC shall apply to the
proceedings before the learned Special Court. The said provision provides as
under:
438. Application of Code to proceedings before Special
Court.Save as otherwise provided in this Act, the provisions of the
Code of Criminal Procedure, 1973 (2 of 1974) shall apply to the
proceedings before a Special Court and for the purposes of the said
provisions, the Special Court shall be deemed to be a Court of Session
Digitally Signed
By:RANJU BHALLA
Signing Date:21.12.2023
18:50:07
Signature Not Verified
W.P.(CRL) 1891/2023 Page 37 of 40
and the person conducting a prosecution before a Special Court shall be
deemed to be a Public Prosecutor.
Similarly, Section 436(2) of the Act, provides as under:
436. Offences triable by Special Courts.
*** *** ***
(2) When trying an offence under this Act, a Special Court may also try
an offence other than an offence under this Act with which the accused
may, under the Code of Criminal Procedure, 1973 (2 of 1974) be charged
at the same trial.
Section 4 of the CrPC provides as under:
4. Trial of offences under the Indian Penal Code and other laws.
(1) All offences under the Indian Penal Code (45 of 1860) shall be
investigated, inquired into, tried, and otherwise dealt with according to
the provisions hereinafter contained.
(2) All offences under any other law shall be investigated, inquired
into, tried, and otherwise dealt with according to the same provisions, but
subject to any enactment for the time being in force regulating the
manner of place of investigating, inquiring into, trying or otherwise
dealing with such offences.
It is pertinent to note that Section 4(2) of the CrPC provides that
investigation into offences under other statutes, like the present Act, shall be
done in accordance with the CrPC unless the statute provides for otherwise.
Section 212(15) of the Act provides that an investigation report filed before
the learned Special Court shall be treated as a report filed by a police officer
under Section 173 of the CrPC. Section 173(2) of the CrPC provides that as
soon as the investigation is complete the officer in charge of the police
station shall forward to a Magistrate empowered to take cognizance of the
offence on a police report, a report in the form prescribed by the State
Government.
Digitally Signed
By:RANJU BHALLA
Signing Date:21.12.2023
18:50:07
Signature Not Verified
W.P.(CRL) 1891/2023 Page 38 of 40
27. In view of the aforesaid provision, the investigation report within the
scheme of the Act will be treated as a police report, therefore, the officer
filing the said report shall also be considered an officer in charge of a police
station, although not specifically provided for in the said Act. The said
position is further fortified by the fact that if power has been given to the
learned Special Court under Section 436(2) of the Act to try offences other
than those under the Act, then the power of the SFIO to investigate into such
offences cannot be restricted. If during course of investigation under the
present Act, the concerned Investigating Officer comes across commission of
offences punishable under the IPC or any other law relating to the transactions
being investigated, then the same cannot give rise to distinct proceedings.
Such investigation can be carried out under Section 4(1) of the CrPC. If the
report which is subsequently filed is to be treated as a police report under
Section 173(2) of the CrPC, then the officer, as explained hereinabove, is to
be considered to be vested with powers of an officer in charge of a police
station.
28. From a conjoint and harmonious reading of the aforesaid provisions of
the CrPC and the present Act, it cannot be said that the SFIO is barred from
investigating an offence under the IPC.