Interim protection from arrest in company dispute granted where FIR overlapped with alleged mismanagement and prima facie mala fides.

Allegations in the FIR and company proceedings both concerned mismanagement, fraud, forgery, siphoning of company funds, and improper administration of a company. The dispute had already been brought before the NCLT, and the statutory scheme under the Companies Act, 2013 contemplates inquiry, investigation, and prosecution through designated company-law mechanisms. On a prima facie view, the criminal complaint was treated as capable of scrutiny for mala fides and abuse of process, particularly where repeated FIRs followed denial of interim relief in company proceedings. Interim protection from arrest was therefore granted while investigation in the FIR was allowed to continue.

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Issues: Whether the petitioners were entitled to interim protection from arrest in connection with the FIR during pendency of the petition challenging the FIR on the ground that the dispute arose out of company affairs governed by the Companies Act, 2013 and appeared to be mala fide.

Analysis: The allegations in the FIR and the company proceedings both centered on alleged mismanagement, fraud, forgery, siphoning of company funds, and improper administration of the company. The statutory scheme under the Companies Act, 2013 provides for inquiry, investigation, and prosecution through the Registrar, Central Government, SFIO, and Special Court. The petitioners had already invoked the jurisdiction of the NCLT in relation to the same controversy. On a prima facie view, the dispute was found to fall within the class of cases where the criminal proceeding could be examined under the principles governing mala fide prosecution and abuse of process. The Court also found that repeated FIRs were lodged after interim relief was denied in the company proceedings, strengthening the plea of mala fides.

Conclusion: Interim protection from arrest was granted to the petitioners, while investigation in the FIR was permitted to continue.

Ratio Decidendi: Where the allegations substantially concern company mismanagement and alleged fraud already subjected to proceedings under the Companies Act, 2013, and the criminal process appears prima facie mala fide, interim protection from arrest may be granted pending adjudication of the writ petition.

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