SFIO's investigative powers extend beyond Companies Act to include IPC offences found during company investigations

The Delhi HC held that SFIO's investigative powers extend beyond Companies Act offences to include IPC offences discovered during company investigations. Section 219 requires prior approval only for investigating related companies and their officials, not the original company's personnel already covered under Section 212 approval. The court applied ejusdem generis rule to interpret Section 219(d) as applying to officials of related companies mentioned in clauses (a)-(c). SFIO investigation reports are treated as police reports under Section 173 CrPC, granting SFIO officer-in-charge powers. The petition was dismissed.

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Issues Involved:
1. Jurisdiction or legal sanction/authority with the SFIO to investigate petitioners no. 1 and 2.
2. Powers of SFIO restricted to investigate offences under the Companies Act only.
3. Further investigation by the SFIO.

Jurisdiction or Legal Sanction/Authority with the SFIO to Investigate Petitioners No. 1 and 2:

The petitioners argued that the SFIO lacked authority to investigate them under Sections 212(1) or 219 of the Companies Act, as they were not named in the orders authorizing the investigation. The court noted that Section 219(d) of the Act, which requires prior approval for investigating related entities, does not apply to Key Managerial Personnel (KMP) like petitioner no. 1. For petitioner no. 2, the court observed that although the SFIO investigated its affairs, the absence of prior approval under Section 219(c) does not invalidate the cognizance taken by the Special Court. The court emphasized that defective investigation does not vitiate the trial unless it causes a miscarriage of justice, referencing *Fertico Marketing and Investment Private Limited v. Central Bureau of Investigation*.

Powers of SFIO Restricted to Investigate Offences Under the Companies Act Only:

The petitioners contended that the SFIO's authority is limited to investigating offences under the Companies Act and not the IPC. The court harmonized Sections 212(15), 212(17), and 436(2) of the Companies Act with Section 4 of the CrPC, concluding that the SFIO can investigate IPC offences if they arise during the investigation under the Companies Act. The court referenced *Ashish Bhalla v. State & Anr.*, which held that the Companies Act, being a special act, prevails over the IPC. The court also noted that the SFIO's investigation report is treated as a police report under Section 173 of the CrPC, thereby granting the SFIO authority to investigate IPC offences.

Further Investigation by the SFIO:

The petitioners argued that the SFIO cannot conduct further investigation once an investigation report is filed. The court rejected this argument, citing Section 173(8) of the CrPC, which allows for further investigation. The court found no evidence that the SFIO had conducted further investigation after the Special Court took cognizance on 20.09.2022.

Conclusion:

i. Petitioner no. 1, as a KMP, does not need separate approval for investigation under Section 219(d).
ii. The investigation into petitioner no. 2's affairs falls under Section 219, but the lack of prior approval does not invalidate the Special Court's cognizance.
iii. The SFIO is not barred from investigating IPC offences.
iv. The SFIO can conduct further investigation in accordance with the law.

The petition was dismissed, and interim orders were vacated. The judgment emphasized that these findings do not reflect an opinion on the merits of the case.

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