2026 (3) TMI 259 - HC - Companies Law

Interference with criminal investigation denied as no exceptional circumstances; interim protection and recall of warrants refused.

Challenge to stay an ongoing criminal investigation and recall of non-bailable warrants was considered against the threshold for interference with ... Application seeking interim protection has been moved after the issuance of non-bailable warrants (NBWs) - Power to stay investigation under inherent jurisdiction limited to rare cases of miscarriage of justice - abuse of process - filing of subsequent FIR permissible where allegations and scope differ - Misappropriation and siphoning off funds belonging to Exclusive Capital Limited (ECL) - claim to possess Compulsory Convertible Preference Shares (CCPS). Power to stay investigation under inherent jurisdiction limited to rare cases of miscarriage of justice - HELD THAT: - The Court applied the principle in Neeharika Infrastructure [2021 (4) TMI 1244 - SUPREME COURT] and its reiteration in Siddharth Mukesh Bhandari [2022 (8) TMI 1422 - SUPREME COURT] that interference with an ongoing investigation by exercise of inherent powers is permissible only in the rarest of rare cases, such as where non-interference would result in a miscarriage of justice or where the FIR discloses no cognizable offence. The Court undertook a surface-level evaluation of the FIR and concluded that prima facie cognizable offences were disclosed and that there was no exceptional circumstance to justify staying the investigation or granting relief in the nature of no coercive action. The Court emphasised that detailed adjudication is inappropriate at the investigation stage and that ordinarily the accused should pursue remedies such as anticipatory bail. [Paras 35, 37, 39, 41, 48] No stay of investigation or interim protection; applications seeking stay/interim protection dismissed. Filing of subsequent FIR permissible where allegations and scope differ - Whether the second FIR was barred by reason of an earlier FIR on related facts - HELD THAT: - The Court compared the subject-matter and scope of the two FIRs and found them materially different: the earlier FIR concerned a specific entrustment for purchase of a property, whereas the later FIR alleged multiple instances of misappropriation and diversion by the company's directors. The Court distinguished Amitbhai Anilchandra Shah [2013 (4) TMI 903 - SUPREME COURT] on its facts, noting that in that case the second FIR related to the same incident where cognizance had been taken; no such position obtained here. Consequently, mere existence of an earlier FIR did not render the subsequent registration impermissible. [Paras 45, 46, 48] Second FIR not barred by the prior FIR; objection on that ground rejected. Issuance of non-bailable warrants sustainable where accused evades lawful process - HELD THAT: - The Court noted the prosecution's case that the petitioner repeatedly failed to comply with notices and did not join investigation despite undertakings, prompting the issuance of non-bailable warrants. The Court held that where the investigating agency produces material showing the accused has evaded lawful process, issuance of warrants cannot be faulted. Reliance on authorities recalling warrants was considered distinguishable on facts where accused had participated in investigation or joined custody; those factual bases were absent here. [Paras 31, 32, 33, 50, 51] Non-bailable warrants not recalled; the application for recall dismissed. Criminal proceedings permissible even where parallel civil remedies exist if cognizable offence is prima facie disclosed - HELD THAT: - The Court observed that locus standi in criminal matters is not confined to particular classes of complainants and that shareholders with a stake in the company may initiate criminal proceedings. It found that the NCLT had already recorded findings indicative of oppression and mismanagement and that the FIR's averments, examined at a surface level, disclosed prima facie criminality distinct from civil-company proceedings. Therefore, the mere existence of parallel company or civil proceedings did not render the criminal complaint an abuse of process. [Paras 42, 43, 44, 49] The complaint cannot be treated as a colourable device to convert civil dispute into crime merely because civil remedies exist; the contention that the FIR is purely civil is rejected. Final Conclusion: The applications for stay of investigation, interim protection from arrest and for recall of non-bailable warrants were dismissed after the Court held that the FIR prima facie disclosed cognizable offences, the second FIR was not barred by an earlier FIR, the warrants were issued lawfully in view of the petitioner's non-cooperation, and parallel civil proceedings did not preclude criminal investigation. Crl.M.C. No. 321/2026 listed for further hearing. Issues: Whether the petitioner is entitled to (i) stay of the ongoing investigation in FIR No. 0142/2025, (ii) interim protection from arrest, and (iii) recall of non-bailable warrants issued against him.Analysis: The Court examined whether the FIR prima facie discloses no cognizable offence or whether there is such abuse of process or likelihood of miscarriage of justice as to justify staying investigation or granting interim protection. The Court applied the principles in Neeharika Infrastructure Private Limited v. State of Maharashtra and Siddharth Mukesh Bhandari v. State of Gujarat that interference with an ongoing investigation is permissible only in rare and exceptional cases where no cognizable offence is disclosed or non-interference would cause miscarriage of justice. Relevant procedural provisions considered include Section 75 and Section 35(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 and the availability of anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973. The Court conducted a surface-level comparison of the earlier FIR (No. 89/2024) and the impugned FIR (No. 0142/2025) and found the allegations and scope of investigations to be materially different. The record showed that an NCLT order had found mismanagement/oppression and an Observer had reported irregularities; further, the petitioner had given undertakings but failed to join investigation and remained inaccessible despite notices under Section 35(3) BNSS, 2023. In these circumstances the Court held there was prima facie material disclosing cognizable offences under Sections 420, 409 and 120B of the Indian Penal Code, 1860, and found no exceptional circumstance warranting exercise of inherent jurisdiction to stay investigation or recall warrants.Conclusion: The applications seeking stay of investigation, interim protection from arrest, and recall of non-bailable warrants are dismissed; the petitioner is not entitled to the reliefs sought.