Cognizable IPC offences in securities dispute keep FIR alive despite parallel SEBI investigation

Allegations that securities were induced into a DEMAT account on assurances, dividends were paid for a period, and the securities were later not returned, together with claims of conspiracy, unauthorised sale and misappropriation, disclosed cognizable IPC offences and not a mere contractual dispute; quashing under writ jurisdiction was therefore unwarranted. The pendency of a SEBI investigation did not bar or displace criminal investigation into IPC offences arising from the same facts, because SEBI's jurisdiction is confined to violations of the SEBI Act and the rules and regulations made under it. The criminal proceedings were allowed to continue.

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Issues: (i) Whether the FIR disclosed cognizable offences warranting interference under the writ jurisdiction; (ii) Whether the pendency of a SEBI investigation required quashing of the FIR alleging offences under the Indian Penal Code.

Issue (i): Whether the FIR disclosed cognizable offences warranting interference under the writ jurisdiction.

Analysis: The allegations in the FIR were that the complainant had been induced to transfer securities into a DEMAT account on specified assurances, that dividends and returns were received for a period, and that the securities were later not returned despite repeated requests. The complaint further alleged conspiracy, unauthorized sale, and misappropriation of securities. On a plain reading, these assertions disclosed a criminal wrong and not merely a bare contractual dispute.

Conclusion: The FIR disclosed cognizable offences and no ground for quashing was made out.

Issue (ii): Whether the pendency of a SEBI investigation required quashing of the FIR alleging offences under the Indian Penal Code.

Analysis: SEBI's jurisdiction is confined to violations of the SEBI Act, 1992 and the rules and regulations made thereunder. Its investigation does not extend to prosecution for offences under the Indian Penal Code, 1860. The existence of SEBI proceedings therefore did not exclude or displace criminal investigation into IPC offences arising from the same allegations.

Conclusion: The SEBI investigation did not warrant quashing of the FIR.

Final Conclusion: The petition failed on both grounds, and the criminal proceedings were permitted to continue.

Ratio Decidendi: A writ petition seeking quashing of an FIR will not succeed where the complaint, on its face, discloses cognizable IPC offences, and parallel SEBI action does not bar investigation or prosecution for those IPC offences.

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