TaxTMI 
TaxTMI 
2023 (9) TMI 1104
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....al Procedure, 1973 ["Cr.P.C."], the petitioner is seeking quashing of FIR no. 06/2023 dated 12.01.2023 registered under Section(s) 406/420/120-B of the Indian Penal Code, 1860 ["IPC"] at P.S. Economic Offences Wing, New Delhi ["EOW"] and all proceedings emanating therefrom. BACKGROUND: 2. Before dwelling into the facts involved, this Court notes that barring the present litigation, there is already a spate of litigations ongoing inter-se the petitioner-Mr. Ashish Bhalla and respondent no. 2/ complainant-Mr. Vishvendra Singh before various forum(s) including this Court within and outside the jurisdiction of this Court. The petitioner claims to be an architect and an urban designer besides being a development professional having experience of working on various projects in addition to teaching 'Housing and Urban Design' in different Institutions and Universities. The petitioner also claims to have tied up with service providers and financial institutions in addition to being also engaged with various distressed projects in NCR. In fact, the respondent no. 2/ complainant and one Mr. Sunil Gandhi, who were former friends/ associates of the petitioner in one M/s A.N. Buildwell Pri....
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....ly members lie Abhijeet Bhalla, Suparna Bhalla through complicated web of Shell companies but Ashish Bhalla and his family members do not become directors to avoid legal liabilities. Following Companies besides more than 100 additional shell Companies form part of WTC Group of Companies and are collectively called as 'WTC Group'"[Hereinafter referred to as "second complaint"]. The said second complaint resulted in the registration of the impugned FIR on 12.01.2023. The petitioner is seeking quashing of the impugned FIR in this petition. 6. De hors the pendency of aforesaid second complaint of the respondent no. 2, the MCA in furtherance of the first complaint, sent another notice to WTC Noida calling upon the SFIO to commence investigation into the affairs of the WTC group of Companies under Section 212 of the 2013 Act on 14.01.2022, whereafter, search, seizure and raid operations were carried out by the SFIO as part of the investigation at the premises of WTC, Noida on 26.04.2022. After an Investigating Officer was appointed to look into the affairs of the WTC, Noida by the SFIO under Section 212 of the 2013 Act on 05.05.2022, the SFIO on 29.09.2022 approached National Company ....
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....y the concerned investigating authorities/agencies in respect of the FIR No. 06/2023 dated 12.01.2023 registered at P.S. Economic Offences Wing, New Delhi, pending the final adjudication of the accompanying petition, and/or;" 10. The State although has not filed a Status Report but has been supporting the case of the respondent no. 2, details whereof are entailed hereinbelow. 11. The respondent no. 2, in its reply claims that the impugned FIR cannot be quashed because vide letter no. 9833/Accounts/UP RERA/2022-23 dated 26.08.2022, UPRERA has recorded that the petitioner has overdrawn an amount to the tune of Rs. 1,061.71 Crores from all the WTC registered projects with RERA. The SFIO in W.P.(Crl.) 1249/2022 entitled WTC Noida Development Company Private Limited vs. Union of India through Ministry of Corporate Affairs & Ors. filed before this Court, vide its affidavit dated 28.09.2022, has also confirmed the massive diversion of funds by the petitioner. Besides this, the respondent no. 2 in the impugned FIR has also elaborated the position/ details about the alleged 'Ponzi scheme'/ siphoning of funds to the tune of Rs. 1,500 Crores run by the petitioner and his group of Compan....
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....1 whereby SFIO is to look into the "... ... affairs of a company... ..." based on the complaint dated 14.06.2021 made by the respondent no. 2 as also another one dated 03.08.2021 made by Mr. Sunil Gandhi. It is thereafter that SFIO proceedings have commenced and are already undergoing. Thus, the impugned FIR is not maintainable in view of Section 212(1) and (2) of the 2013 Act. 13.6. Once an investigation has been initiated under Section 212 of the 2013 Act into the "... ... affairs of a company... ..." by SFIO, any subsequent parallel proceeding/ investigation by a different agency under the same set of facts is barred by law and the only recourse available is to either quash or transfer the subsequent proceedings to the appropriate agency being SFIO. 13.7. When proceedings/ one FIR is pending before SFIO, the subsequent proceedings/ impugned FIR is liable to be quashed or transferred, as per the mandate of Article 14 of The Constitution of India. Reliance for the said proposition was placed upon T.T. Antony v. State of Kerala (2001) 6 SCC 181 and Babubhai v. State of Gujarat (2010) 12 SCC 254. 13.8. The bar under Section 212(2) of the 2013 Act contains ....
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....ud' allegedly committed by the petitioner herein. 14.2. If the complaint under investigation by SFIO and the impugned FIR under investigation by EOW are allowed to continue at the same time, it will tantamount to abuse of the process of law. Reliance for the said proposition was placed upon Arnab Ranjan Goswami vs. Union of India (2020) 14 SCC 12. 14.3. The respondent no. 2 is indulging in forum shopping which is not and cannot be permissible. Reliance for the said proposition was placed upon Vijay Kumar Ghai (supra). 14.4. The impugned FIR being subsequent is non-est in law as the impugned FIR itself contains allegations under the 2013 Act and IPC which cannot be segregated. Reliance for the said proposition was placed upon Stepping Stone Pvt. Ltd. vs. State of Rajasthan 2022 (1) RLW 618 (Raj) and Anil Hiralal Shah vs. State of Rajasthan SLP(Crl.) no. 7325/2022 order dated 04.01.2023; and 14.5. The offences under Section(s) 405 and 415 cannot go together and in any event since the petitioner has already returned and, is also returning the monies owed to the investors subject to RERA regulations, no mens-rea can be attributed towards him under Se....
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....ng which is consistent with the provisions of the Statute taking into account the consequences of alternative constructions. Reliance for this proposition was placed upon Anant Thanur Karmuse vs. State of Maharashtra (2023) 5 SCC 802. 16.5. In any event, applying the principle that party cannot choose a forum to investigate into the offence, the petitioner herein cannot thus seek quashing of the impugned FIR as it is before EOW which is admittedly before a different forum than that SFIO. 16.6. There is no ground taken in the present petition pertaining to parallel proceedings in the impugned FIR before EOW not being possible during the pendency of the ongoing SFIO proceedings. As such, the arguments addressed thereto cannot be gone into by this Court; 16.7. Also, it is a matter of fact that the petitioner has not challenged the other ongoing investigations conducted by the Enforcement Directorate or UPRERA. CASE OF RESPONDENT NOS. 3, 35 to 37 & 40 to 45 OPPOSING PETITIONER: 17. In support of the contentions advanced by learned counsel for the respondent no. 2, the respondent no. 3 Mr. Rajiv Dawar appearing in person ably assisted by learned counsel ....
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....ed upon State of Maharashtra & Anr. vs. Sayyed Hassan Sayyad Subhan & Ors. (2019) 18 SCC 145. 17.6. In any event, the offences mentioned in the complaint made to the MCA resulting in the initiation of proceedings before SFIO and those made in the subsequent complaint resulting in the registration of the impugned FIR involved in the present proceedings are separate, as they are having different ingredients. Reliance for this proposition was placed upon Vandana Yadav & Ors. vs. Sate of UP & Ors. MANU/UP/1115/2023; and 17.7. The offence envisaged in the impugned FIR is supplemental to other penal laws. Reliance for this proposition was placed upon State of West Bengal vs. Narayan K. Patodia (2000) 4 SCC 447 and also upon the words "Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force" finding mention in Section 447 of the 2013 Act. 18. This Court has heard both learned senior counsels Mr. Sudhir Nandrajog and Mr. Preetesh Kapur appearing for the petitioner ably assisted by the learned counsel for the petitioner along with learned senior counsel Mr. Pramod Kumar Dubey appearing for the respon....
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....he aforesaid objection has a material bearing upon the position in the present circumstances as they stand today, which is primarily based on the interpretation and applicability of Section 212 of the 2013 Act, despite, there being no direct reference thereto in the pleadings before this Court. 22. It is a matter of fact that the aforesaid issue qua interpretation and applicability of Section 212 of the 2013 Act is a pure legal issue, which is a question of law. As per settled law and under the facts and circumstances involved such a legal issue can be taken up at any stage, more so, whence it is having a material connection and bearing upon the merits involved herein. Reliance is placed upon K. Lubna & Ors. vs. Beevi & Ors. Civil Appeal No. 2442/2023 dated 13.01.2020 Supreme Court wherein the Hon'ble Supreme Court has held as under:- "9. On the legal principle, it is trite to say that a pure question of law can be examined at any stage, including before this Court. If the factual foundation for a case has been laid and the legal consequences of the same have not been examined, the examination of such legal consequences would be a pure question of law" Reliance....
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....he 2013 Act, not only introduced but, in fact, gave a new lease of life, as it was able to infuse a new dimension to SFIO proceedings. SECTION 447 OF THE COMPANIES ACT, 2013: 27. Section 447 of the 2013 Act plays a very pivotal role in SFIO proceedings as much depends upon the phraseology and the interpretation thereof. Particularly whence the 'explanation' of Section 447^2 of the 2013 Act defines 'fraud' per-se in respect of affairs of a Company which is inclusive of any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the Company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss, the relevance of the said Section 447 of the 2013 Act is such that it is forming the very essence of the SFIO proceedings conducted under Section 212 of the 2013 Act. As per Section 447 of the 2013 Act, anyone found guilty of fraud shall be punishable qua any liability, including that of, repayment of any debt under the 2013 Act or any other law along with impr....
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....ch documents wherein, if required, further investigation into the affairs of the Company can also be called for. Thus, it is incumbent upon the Registrar or the Inspector, as the case may be, to make/ give a report to the Central Government. 31. Section 209 of the 2013 Act empowers such Registrar or Inspector to proceed with search and seizure, albeit after obtaining an order to that effect from the Special Court, if upon information having reasonable ground to believe that the books and papers of Company or relating to its affairs have been falsified/ destroyed/ mutilated/ altered/ secreted. It is also specified therein that the provisions of Cr.P.C. shall apply, mutatis mutandis, to all search and seizure operations made under Section 209. 32. As per Section 210 of the 2013 Act, if the Central Government is of the opinion that there subsists a need to investigate into the said affairs of the Company, as per the report of the Registrar or Inspector, as the case may be, or on intimation of a Special Resolution passed by a Company or in public interest, as the case may be, conduct investigation into the affairs of the Company or conduct such investigation where there is an ord....
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.... Act, an Investigating Officer shall investigate into the "... ...affairs of the company" and shall have the powers of an Inspector under Section 217 of the 2013 Act. 38. As per Section 212(5) of the 2013 Act, the Company, including its past and present officers and employees, shall "... ...provide all information, explanation, documents and assistance... ..." to and as required by the Investigating Officer. 39. Section 212(6) of the 2013 Act is in the form of a non-obstante clause wherein it is specified that de hors what is contained in the Cr.P.C. "... ...[offence covered under Section 447] of this Act shall be cognizable......" wherein the conditions qua release or bail of an accused of any offence under those sections are also enumerated. These are stringent conditions contained in a Special legislation in comparison to any General legislation. Not only that, it is also specified in the second proviso to Section 212(6) referred herein "... ...that the Special Court shall not take cognizance of any offence... ..." unless there is "... ...complaint in writing... ..." made by either the Director, SFIO or any authorised officer of the Central Government. 40. It is then sp....
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....aving any information or documents in respect of such offence then such other investigation agency is bound to provide all such information or documents available with it to the SFIO. 48. Last, but not the least, as per Section 212(17)(b) of the 2013 Act, the SFIO is also bound to 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 with the other investigating agency. 49. In the opinion of this Court, all the sub-sections of Section 212 of the 2013 Act have to be harmoniously read together as they are all not only inter-connected but dependent upon each other as well. SECTION 436 OF THE COMPANIES ACT, 2013: 50. Section 436^5 which deals with the offences triable by a Special Court, irrespective of what is contained in the Cr.P.C., is another relevant provision of the 2013 Act for the adjudication of the present petition. 51. In fact, the provisions of Section 43....
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....d by a specialized team comprising of "... ... persons of ability, integrity and experience ... ..." as per Section 211 of the 2013 Act. [Id. Para 33.]. SECTION 36 OF THE COMPANIES ACT, 2013: 55. Section 36 of the 2013 Act which plays a pivotal role, provides for punishment in case anyone is found to be fraudulently inducing persons to invest money, is of utmost significance as the issues involved in the present case also revolve around the same analogy. As per Section 36 of the 2013 Act, if any person is found guilty of knowingly or unknowingly making any statement, promise or forecast, which is false, deceptive or misleading or has deliberately concealed any material facts for inducing such/ another person to enter into or to offer to enter into any agreement with an objective of "... ...acquiring, disposing of, subscribing for, or underwriting, securities... ..." or with the purpose of securing a profit to any of the parties from securities or fluctuations in the value thereof or for "... ...obtaining credit facilities... ... " from any bank or financial institution, then the said person shall be liable for action under Section 447 of the 2013 Act. SECTION 448 OF THE CO....
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....he question of filing, continuance and prosecution of the proceedings before EOW. When those before the SFIO are already in subsistence is indeed a matter of concern calling for adjudication by this Court. 59. For determining the same, this Court has to keep in mind that the legislature in its wisdom, while taking into consideration the earlier facts, complexities involved and the types of cases arising which were all primarily including 'fraud', has especially included various experts from diverse fields in the SFIO for smooth functioning of the department under Section 211 of the 2013 Act. The legislature, furthermore, has taken special care of carving out the provisions of Section 212 of the 2013 Act with all the provisions in itself as it contains the role(s), step(s), specification(s), procedure(s) and purpose(s) as to be undertaken and followed by the SFIO [Id. Para 34-49]. 60. It is once again noteworthy that a cumulative reading of Section 212 of the 2013 Act leads this Court to the definitive conclusion that the proceedings therefrom can be initiated, if the Central Government finds it "... ...necessary to investigate into the affairs... ..." of a Company by the SFIO....
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....ized of a case to look into the affairs of a Company, all such (pending) cases with other investigating authorities investigating cases under other laws having relation to/ directly related to offences under the Companies Act, 2013 have to be transferred to the SFIO. 63. Furthermore, as already opined, Section 212 of the 2013 Act is a complete code in itself wherein all the provisions contained therein are, not only interdependent upon each other and thus have to be harmoniously read together conjointly with each other, especially when it concerns readings of the provisions of Section 212(2) and Section 212(17)(a) and Section 212(17)(b) of the 2013 Act. [Id. Para 47] 64. It is reiterated that as per Section 212(2) of the 2013 Act, no other agency can proceed with the investigation when SFIO is seized of the matter. Similarly, Section 212(17)(a) of the 2013 Act enumerates a situation whence the SFIO is already seized of the case and thereafter, a case has come before "... ... any other investigating agency... ..." it shall provide all such documents available with it to the SFIO. 65. In the opinion of this Court, as per Section 212 (17)(b) which enumerates a situation, ther....
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....il." Unless the words are clear, the court should not so construe the proviso as to attribute an intention to the legislature to give with one hand and take away with another. To put it in other words, a sincere attempt should be made to reconcile the enacting clause and the proviso and to avoid repugnancy between the two." 66. Thus, in the opinion of this Court, a holistic reading of the aforesaid provisions contained in Section(s) 212(2) and 212(17)(a) of the 2013 Act, the only conclusion possible to be drawn is that after any transfer as per Section 212(17)(a) of the 2013 Act to SFIO, no other agency can proceed further with investigation of such offence involving the same nature, particularly, if the said offence is arising out of the same facts and circumstances. It is trite that the provisions of a statute have to be read together as a whole to avoid inconsistency/ repugnancy and to give constructive meaning and effect to the purpose and intent of the legislature. Reliance is placed upon Wiseman And Another And Borneman And Others [[1969] 3 WLR 706] wherein House of Lords has held as under:- "LORD MORRIS OF BORTH-Y-GEST My Lords, that the conception of....
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....the subsequent impugned FIR before the EOW to continue. 70. Furthermore, in terms of the provisions of Section 212 of the 2013 Act, it is clear that the word "assign" used in Section 212(3) means a total assignment to the SFIO for looking into the "affairs of the company" as the same means to include within itself each and everything connected with the Company and all past and present officials engaged with it. The assignment of an investigation into the "affairs of the company" is of widest amplitude, moreover, considering "... ...in respect of any offence under this Act... ..." it would necessarily encompass all acts of wrongdoings in relation to offences under the 2013 Act. Reliance is placed upon Rahul Modi (supra) wherein the Hon'ble Supreme Court has held as under:- "33. The very expression "assign" in Section 212(3) of the 2013 Act contemplates transfer of investigation for all purposes whereafter the original investigating agencies of the Central Government or any State Government are completely denuded of any power to conduct and complete the investigation in respect of the offences contemplated therein. The idea under sub-section (2) is complete transfer of in....
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....e available to investigations conducted under Section 210. For instance, when a case has been assigned to the SFIO, no other agency may investigate the affairs of the company and all files concerning the affairs of the company should be transferred to the SFIO. Further, certain offences if discovered in the course of an SFIO investigation, bail would only be made available at a much higher threshold than under Section 437 of the Criminal Procedure Code. The SFIO is also bestowed with greater powers of arrest. Upon completion of the investigations by the SFIO it must submit its report to the Central Government upon which the Government may direct it to initiate prosecution against the officers of the Company. Although the constitutional validity of Section 212 is not presently under challenge in the present petition, based on the above observations by Justice Shelat in Barium Chemicals (supra), there ought to be a higher threshold of severity and scrutiny before the SFIO may be assigned a case. In the absence of a higher threshold Section 212 courts the risk of falling foul of Article 14 and an interpretation that renders a provision invalid ought to be avoided." 71. In the opini....
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....the name of illegal 'Assured Return' in the guise of real estate projects in Gujarat, Uttar Pradesh, Punjab & Haryana. Accused: WTC group of companies where ownership vests with one Ashish Bhalla or his family members lie Abhijeet Bhalla, Suparna Bhalla through complicated web of Shell companies but Ashish Bhalla and his family members do not become directors to avoid legal liabilities. Following Companies besides more than 100 additional shell Companies form part of WTC Group of Companies and are collectively called as 'WTC Group'. Accused: WTC group of companies where ownership vests with one Ashish Bhalla or his family members lie Abhijeet Bhalla, Suparna Bhalla through complicated web of Shell companies but Ashish Bhalla and his family members do not become directors to avoid legal liabilities. Following Companies besides more than 100 additional shell Companies form part of WTC Group of Companies and are collectively called as 'WTC Group'. Persons named: (1) WTC Noida Development Company Pvt. Ltd. (2) Magic eye Developers Pvt ltd. (3) Spire Tech Park Pvt. Ltd. (4) WTC Faridabad Infrastructure Development Pvt. Ltd. (5) Abaxial Design Pvt. Ltd. (6) Pro....
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.... collected more than Rs. 5,000 Crores and have also siphoned/misappropriated the same due to lackadaisical approach of authorities First two paragraphs: The present complaint is being made in respect of a massive financial fraud committed by WTC Group. The said group is owned by one Ashish Bhalla in which whose Flagship Company named 'WTC Naida Development Pvt Ltd (WTC) along with other companies, having the felonious backing/ endorsement/ patronage of WTCA, are consistently engaged in siphoning off funds in India and abroad thereby also Committing serious violations of FEMA, Prevention of Money Laundering Act 2002, GST Act. Income Tax Act, SEBI Act, 1992, SEBI (CIS] Regulations 1998, RERA Act 2016, IPC, Companies Act, etc. It is worth noting that the active participation of WTCA in the instant fraud, duping thousands of gullible investors, is apparent from the fact that every project (including residential where WTCA is not even authorized to grant franchise, as per their own constitution/byelaws) launched by Ashish Bhalla's group of companies bear the name of 'WTC or 'World Trade Center' for the purpose of betraying gullible investors who always get captiva....
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....sent case which cannot be done by any other agency except EOW. As such it is prayed that your good self may kindly register my complaint against all accused companies as it is clear from all above that the sole objective is to run and operate illegal Ponzi Schemes and Serious Fraud with public at large. These frauds are punishable under Companies Act, Income Tax Act, GST Act, Indian Penal Code, RERA, SEBI Act, PMLA, FEMA and other relevant laws". (Emphasis supplied) * Only the names of the agency have been changed in both the complaints, everything else is verbatim/ similar. 74. Perusal of the records, especially that of the aforesaid first complaint and the impugned FIR before this Court, reveal that respondent no. 2, though is the complainant before two different forums, however, he is only a Power of Attorney holder of Mr. Sunil Gandhi, having no direct connection with the Project qua which the proceedings have been initiated by the SFIO or which is involved before EOW in FIR No. 006/2023. In the opinion of this Court, facts emerging from the aforesaid are such which reflect that the respondent no. 2 has been clearly indulging in forum shopping. The respondent no. 2 ....
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.... investors and allotees. Investors and allottees into believing money is being utilized for construction. Section 452: Allegations amounts to wrongfully utilizing property of company (including cash) or the purposes other than those expressed or directed in the articles and authorised by the 2013 Act. The funds collected are siphoned off by taking part of the money from investors in cash and then not accounting for the same. Section 447 [Explanation (i)]: Allegation amounts to act and omission to gain undue advantage from investors and allottees. Section 448: Falsification of financial statements and account books. Rate per sq. ft. as shown to have been realized is much lower than rate being paid by customers. However, since assured returns are on total amount, the assured returns can be seen to be much higher. Section 447 [Explanation (i)]: Allegation amounts to act and omission to gain undue advantage from investors and allottees. Section 448: Falsification of financial statements and account books. Huge amount of funds collected from investors have been siphoned out to various shell companies in the name of payments for contracts, consultancy se....
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.... Section 36: Allegations essentially amount to using deceptive or misleading statements to induce people to invest in acquiring and subscribing to securities. Multiple sale/ booking of same space in the projects. Section 447 [Explanation (i)]: Allegation amounts to act with intention to deceive and to gain undue advantage from investors and allotees. Section 452: Allegations amounts to wrongfully utilizing property of company (including cash) or the purposes other than those expressed or directed in the articles and authorised by the 2013 Act. Adjusting assured returns owed to allottees and investors by making false claims of adjusting future instalments and by allotting additional area in future projects without consent of customers. Section 447 [Explanation (i)]: Allegation amounts to act with intention to deceive and to gain undue advantage from investors and allotees. 78. The aforesaid makes it amply clear that the allegations raised by respondent no. 2 as contained in the impugned FIR are all covered within Section(s) 447, Section 452, Section 36 of the 2013 Act. It is thus more than apparent therefrom that the present FIR is nothing but an attempt to wreck ....
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....) 7 SCC 124 wherein the Hon'ble Supreme Court has held as under:- "19. This Court in the widely celebrated judgment of State of Haryana v. Bhajan Lal [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] considered in detail the scope of the High Court powers under Section 482 CrPC and/or Article 226 of the Constitution of India to quash the FIR and referred to several judicial precedents and held that the High Court should not embark upon an inquiry into the merits and demerits of the allegations and quash the proceedings without allowing the investigating agency to complete its task. At the same time, this Court identified the following cases in which FIR/complaint can be quashed : (SCC pp. 378-79, para 102)... ... xxxx 21. This Court in Inder Mohan Goswami v. State of Uttaranchal [Inder Mohan Goswami v. State of Uttaranchal, (2007) 12 SCC 1 : (2008) 1 SCC (Cri) 259] observed : (SCC p. 11, para 27) "27. The powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. The court must be careful to see that its decision in exercise ....
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....int is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence. (v)***" " Reliance is also placed upon Ramesh Chandra Gupta vs. State of Uttar Pradesh & Ors. 2022 SCC OnLine SC 1634 wherein the Hon'ble Supreme Court has held as under:- "15. This Court has an occasion to consider the ambit and scope of the power of the High Court under Section 482 CrPC for quashing of criminal proceedings in Vineet Kumar v. State of Uttar Pradesh1 decided on 31st March, 2017. It may be useful to refer to paras 22, 23 and 41 of the above judgment where the following was stated: "22. Before we enter into the facts of the present case it is necessary to consider the ambit and scope of jurisdiction under Section 482 CrPC vested in the High Court. Section 482 CrPC saves the inherent power of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any court or otherwise to secure the ends of justice. 23. This Court time and again has examined the scope of jurisdiction of the High Court under Section 482 CrPC and l....
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.... are materials to indicate that a criminal proceeding is manifestly attended with mala fides and proceeding is maliciously instituted with an ulterior motive, the High Court will not hesitate in exercise of its jurisdiction under Section 482 CrPC to quash the proceeding under Category 7 as enumerated in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 which is to the following effect: '102.(7) Where a criminal proceeding is manifestly attended with mala fides and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.' Above Category 7 is clearly attracted in the facts of the present case. Although, the High Court has noted the judgment of State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 but did not advert to the relevant facts of the present case, materials on which final report was submitted by the IO. We, thus, are fully satisfied that the present is a fit case where the High Court ought to have exercised its jurisdiction under Section 482 CrPC and quashed the criminal proceedings." 16. The exposition of law on the subject ....
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.... person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."" GENERALI SPECIBUS NON DEROGANT: 79. Generalia Specialibus Non Derogant (General things do not derogate from special things). It is trite that if there is any kind of conflict between 'special law' and a 'general law', the former would take precedence. It is a matter of fact that the 2013 Act which is a 'special law', which was enacted only in the year 2013 as against the Cr.P.C. which is a 'general law' which was enacted much before to that in year ....
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....guage used." To this may be added a rider : in a case of reasonable doubt, the construction most beneficial to the subject is to be adopted. But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. "The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the court as to what is just or expedient". The expressed intention must guide the court. Another rule of construction which is relevant to the present enquiry is expressed in the maxim, generalia specialibus non derogant, which means that when there is a conflict between a general and a special provision, the latter shall prevail. The said principle has been stated in Craies on Statute Law, 5th Edn., at p. 205, thus: "The rule is, that whenever there is a particular enactment and a general enactment in the same statute, and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of th....
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....ending Act was to provide for the assessment or re-assessment of persons who had, to a substantial extent, evaded payment of taxes during the war years and for matters connected therewith. But at the time sub-section (1-A) was inserted in Section 34, the period of limitation provided with regard to issue of notices under Section 34(1)(a) was 8 years and for cases falling under Section 34(1)(b) it was 4 years; but, as the Income Tax (Amendment) Act, 1954, came into force only on July 17, 1954, the said periods of limitation prescribed in respect of escaped concealed incomes during the said period had run out except in respect of one or two years. So, with the twin object of extending the time and expediting the assessment, the second proviso was introduced therein to the effect that no such notice should be issued after March 31, 1956. But, notwithstanding the said Act, presumably notices could not have been issued against all the evaders of tax with incomes of rupees one lakh or more during the said period. Parliament also wanted to bring to tax escaped concealed incomes during the period not covered by the said years. With that object, in 1956 Section 34 was amended by the Finance....
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....e making the later rule is deemed to know the existing law on the subject. If the subsequent law does not repeal the earlier rule, there can be no presumption of an intention to repeal the earlier rule; (ii) When two provisions of law-one being a general law and the other being a special law govern a matter, the court should endeavour to apply a harmonious construction to the said provisions. But where the intention of the rule-making authority is made clear either expressly or impliedly, as to which law should prevail, the same shall be given effect. (iii) If the repugnancy or inconsistency subsists in spite of an effort to read them harmoniously, the prior special law is not presumed to be repealed by the later general law. The prior special law will continue to apply and prevail in spite of the subsequent general law. But where a clear intention to make a rule of universal application by superseding the earlier special law is evident from the later general law, then the later general law, will prevail over the prior special law. (iv) Where a later special law is repugnant to or inconsistent with an earlier general law, the later special law will prevai....
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....will give way. ... The language of Note (3) is crystal clear and is for removal of any ambiguity by using positive and negative terms. It applies to all the Special Rules whenever a ratio or percentage is prescribed in the Rules. It also emphatically states that it has to be computed on the cadre strength of the post to which the recruitment is to be made and not on the basis of the vacancies existing at that time." (emphasis supplied) 16. In Prasad Kurien [(2008) 3 SCC 529 : (2008) 1 SCC (L&S) 856], while considering the Special Rules, the Kerala Excise and Prohibition Subordinate Service Rules, 1974, vis-à-vis Note (3) to Rule 5 of the General Rules, this Court followed the dictum in S. Prakash [(1999) 5 SCC 624 : 1999 SCC (L&S) 997] . 17. These decisions reiterate the position that if the intention of the rule- making authority is to make a later general rule to apply to all services in the State, for which different earlier special rules exist, then the existing special rules will give way to such later general rule. That is, where the general rule is made subsequent to the special rule and the language of the general rule signified that it was....
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....and in any event, in case of a conflict, the provisions of Section 212 of the 2013 Act shall have an overriding effect upon the provisions of the Cr.P.C. in respect of offences relating to a Company. It is once again reiterated that it is trite law that special piece of legislation overrides the general piece of legislation. Reliance is placed upon Serious Fraud Investigation Office vs. Rahul Modi & Anr. (supra) wherein the Hon'ble Supreme Court has held as under:- "34. It is well settled that while laying down a particular procedure if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Furthermore, the provision has to be seen in the context in which it occurs in the statute. There are three basic features which are present in this matter: 1. Absolute transfer of investigation in terms of Section 212(2) of the 2013 Act in favour of SFIO and upon such transfer all documents and records are required to be transferred to SFIO by every other investigating agency. 2. For completion of investigation, sub-section (12) of ....
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....ssing the order under appeal. " REGISTRATION OF SECOND FIR VERSUS ALREADY REGISTERED FIR: 81. It is trite law that subsistence of two FIRs is not maintainable as they can neither be filed nor allowed to co-exist or continue at the same time, particularly, whence they are arising out of the same set of facts and allegations, more so, whence the complainant happens to be the same in both the FIRs. Thus, in such an event, in the opinion of this Court and as laid down by the Hon'ble Supreme Court, the subsequent FIR calls for quashing as the fundamental right of a citizen/ person as provided under Part III of The Constitution of India and the power of the Police under Cr.P.C. has to be balanced and a person cannot be subjected to fresh investigation(s) under the same set of allegations qua the same offence(s). Reliance is placed upon T.T. Antony vs. State of Kerala (2001) 6 SCC 181 wherein the Hon'ble Supreme Court has held as under: - "27. A just balance between the fundamental rights of the citizens under Articles 19 and 21 of the Constitution and the expansive power of the police to investigate a cognizable offence has to be struck by the court. There cannot be any....
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....d/ or indirectly connected with the affairs of the said Company [Id. Para 43]. This Court finds that the same is different from the provisions of the Cr.P.C. under Chapter XII. 84. A bare on perusal of the various provisions of the 2013 Act, taken together/ collectively in a harmonious manner and also taking note of the enshrined principles of natural justice which require that essentially philosophy of law has to be followed in a just, fair and judicious manner to strike and maintain a fine balance of equities and based on what has been held by the Hon'ble Supreme Court in T.T. Antony (supra) coupled with the fact that a specialised agency, i.e. SFIO is already seized of the investigation, and the rights enshrined under Part III of The Constitution of India along with provisions under Section 212(17)(a) of the 2013 Act as discussed earlier, in the opinion of Court, the impugned FIR cannot be allowed to subsist in the present form. Reliance is placed upon Maneka Gandhi vs Union of India (1978) 1 SCC 248 wherein the Hon'ble Supreme Court has held as under:- "9. We may commence the discussion of this question with a few general observations to emphasise the increasing imp....
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....en said, is only 'fair play in action'. Nor do we wait for directions from Parliament. The common law has abundant riches : there may we find what Byles, J., called 'the justice of the common law' ". Thus, the soul of natural justice is "fair-play in action" and that is why it has received the widest recognition throughout the democratic world. In the United States, the right to an administrative hearing is regarded as essential requirement of fundamental fairness. And in England too it has been held that "fair-play in action" demands that before any prejudicial or adverse action is taken against a person, he must be given an opportunity to be heard. The rule was stated by Lord Denning, MR in these terms in Schmidt v. Secretary of State or Home Affairs [(1969) 2 Ch D 149 : (1969) 1 All ER 904] - "where a public officer has power to deprive a person of his liberty or his property, the general principle is that it has not to be done without his being given an opportunity of being heard and of making representations on his own behalf". The same rule also prevails in other Commonwealth countries like Canada, Australia and New Zealand. It has even gained access to the United Na....
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....he money and resources involved and also all the parties involved herein, if the impugned FIR is transferred to the SFIO, which shall take over the same along with the already pending proceedings before it arising out of the complaint dated 14.06.2021. There is no doubt about the fact that the SFIO proceedings can proceed with respect to the offences under the 2013 Act and also under the IPC. In fact, it is not the other way around as the EOW cannot take over the investigation qua the offence(s) under the 2013 Act which is the specific domain of the SFIO, is a matter of fact which needs not be gone into by this Court as the same is not involved herein. Interestingly a co-ordinate Bench of Rajasthan High Court, while dealing with somewhat similar facts as involved herein, in Stepping Stone (supra) held as under: - "18. Be that as it. may, it would be too pre-mature for this court to draw conclusions with regard to the aforesaid aspects. However, as pointed out earlier in the foregoing parts, it would be in the interest of justice that the investigation relating to FIR and subsequent complaint of using the proceeds of fraud committed in buying shares, be conducted by SFIO in....
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....h at the root of the offences alleged before it." 87. A shadow per-se is without meaning and is non-existent on its own accord, thus, a shadow cannot be treated differently. The facts therein are such that in view of the aforesaid discussions the subsequent impugned FIR is nothing but a shadow of the first complaint dated 14.06.2021 made by the respondent no. 2 to the MCA which has led to the initiation of the SFIO proceedings. Interestingly, though the scheme of the 2013 Act and the functions/ procedure of the investigation of the said agency i.e. SFIO in comparison to that of the other independent agency in the impugned FIR namely EOW, respectively follow the 2013 Act and the Cr.P.C. respectively, leading to similar consequences. 88. In the present case, the ingredients of offences under Sections 406 and 420 of the IPC, as detailed hereinabove, are well and truly covered/ contained by the provisions of the 2013 Act [Id. Para 77]. Reliance is placed upon Dr. Vimla vs Delhi Administration 1963 Supp (2) SCR 585 wherein the Hon'ble Supreme Court has held as under:- "5. Before we consider the decisions cited at the Bar, it would be convenient to look at the relevant pro....
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....anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing 'dishonestly'. "Fraudulently" is defined in Section 25 thus: "A person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise". The word "defraud" includes an element of deceit. Deceit is not an ingredient of the definition of the word "dishonestly" while it is an important ingredient of the definition of the word "fraudulently". The former involves a pecuniary or economic gain or loss while the latter by construction excludes that element. Further, the juxtaposition of the two expressions "dishonestly" and "fraudulently" used in the various sections of the Code indicates their close affinity and therefore the definition of one may give colour to the other. To illustrate, in the definition of "dishonestly", wrongful gain or wrongful loss is the necessary ingredient. Both need not exist, one would be enough. So too, if the expression "fraudulently" were to be held to involve the element of injury to the person or persons deceived, it would be reasonable to assume that the injury should be....
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....ted that pecuniary detriment is unnecessary. In Baycraft v. Creasy [(1801) 2 East 92] LeBlanc, J., observed: "by fraud is meant an intention to deceive; whether it be from any expectation of advantage to the party himself or from the illwill towards the other is immaterial". This passage for the first time brings out the distinction between an advantage derived by the person who deceives in contrast to the loss incurred by the person deceived. Buckley, J., in Re London & Globe Finance Corporation Ltd. [(1903) 1 Ch 732] brings out the ingredients of fraud thus: "To deceive is, I apprehend, to induce a man to believe that a thing is true which is false, and which the person practising the deceit knows or believes to be false. To defraud is to deprive by deceit; it is by deceit to induce a man to act to his injury. More tersely it may be put, that to deceive is by falsehood to induce a state of mind; to defraud is by deceit to induce a course of action." The English decisions have been elaborately considered by the Court of Criminal Appeal in R. v. Welha [(1960) 1 All ER 260, 264, 266]. In that case, hire-purchase finance companies advanced money on....
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....efit derived by the person deceiving another may amount to an act to defraud that other. 9. A Full Bench of the Madras High Court, in Kotamraju Venkatraadu v. Emperor [(1905) ILR 28 Mad 90, 96, 97] had to consider the case of a person obtaining admission to the matriculation examination of the Madras University as a private candidate producing to the Registrar a certificate purporting to have been signed by the headmaster of a recognized High School that he was of good character and had attained his 20th year. It was found in that case that the candidate had fabricated the signature of the headmaster. The court held that the accused was guilty of forgery. White, C.J., observed: "Intending to defraud means, of course, something more than deceiving." 10. He illustrated this by the following example: "A tells B a lie and B believes him. B is deceived but it does not follow that A intended to defraud B. But, as it seems to me, if A tells B a lie intending that B should do something which A conceives to be to his own benefit or advantage, and which, if done, would be to the loss or detriment of B, A intends to defraud B." The learned Chief Ju....
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....ct the word "property" in Section 405 to "movable property" as held in Jugdown Sinha v. Queen Empress [ILR 23 Cal 372]. In that case also the learned Judges gave no reason for their view and just referred to the Bombay case [(1869) 6 Bom High Ct Rep (Crown Cases) 33]. Further, the learned Judges observed at page 374: "In this case the appellant was at most entrusted with the supervision or management of the factory lands, and the fact that he mismanaged the land does not in our opinion amount to a criminal offence under Section 408." xxxx 76. On the other hand, a Full Bench of the Calcutta High Court took a different view in Nrigendro Lall Chatterjee v. Okhoy Coomar Shaw [21 WR (Criminal Rulings) 59, 61]. The Court said: "We think the words of Section 405 of the Penal Code are large enough to include the case of a partner, if it be proved that he was in fact entrusted with the partnership property, or with a dominion over it, and has dishonestly misappropriated it, or converted it to his own use." Similar view was expressed in Emperor v. Jagannath Raghunathdas [33 BLR 1518] Beaumont, C.J., said at P. 1521: "77. But, in my opinion, the wo....
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.... Court that part quashing of a FIR is permissible under law. Reliance is placed upon Lovely Salhotra & Anr. vs State (NCT of Delhi) & Anr. (2018) 12 SCC 391 wherein the Hon'ble Supreme Court has held as under:- "3. We have taken into account the facts of the matter in question as it appears to us that no cognizable offence is made out against the appellants herein. The High Court was wrong in holding that the FIR cannot be quashed in part and it ought to have appreciated the fact that the appellants herein cannot be allowed to suffer on the basis of the complaint filed by Respondent 2 herein only on the ground that the investigation against co-accused is still pending. It is pertinent to note that the learned Magistrate has opined that no offence is made out against Co-accused 2, 3, 4 and 6 prima facie. According to us, the FIR in question filed against the appellants herein by Respondent 2 is only an afterthought with the sole intention to pressurise the appellants not to prosecute their criminal complaint filed by them under Section 138 of the Negotiable Instruments Act, 1881." Reliance is further placed upon Hitesh Verma v. State of Uttarakhand (2020) 10 SCC 710 wher....
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....eneral Act, the IPC. 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. 92. Therefore, the discussions entailed hereinabove has led this Court to the conclusion that the second complaint dated 15.08.2021 to the EOW resulting in registration of the impugned FIR is not maintainable in the current form, moreover, whence the first complaint dated 14.06.2021 and the second complaint dated 15.08.2021 are verbatim and are involving the same set of facts and are against the very same individual(s) and are made by the same complainant i.e., respondent no. 2. Further, in view of Section 212(17)(a) read with Section 212(2) of the 2013 Act and based upon all the contentions raised by the learned (senior) counsels for the parties coupled with the documents on record, in the considered opinion of this Court, the impugned FIR is liable to be quashed and transferred to the SFIO as the proceedings thereunder are not maintainable in the eyes of law. CONCLUSIONS:....
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....235, the Central Government - (a) shall appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct, if- (i) the company, by special resolution ; or (ii) the Court, by order, declares that the affairs of the company ought to be investigated by an inspector appointed by the Central Government ; and (b) may do so if, 1 [in its opinion or in the opinion of the Tribunal], there are circumstances suggesting- (i) that the business of the company is being conducted with intent to defraud its creditors, members or any other persons, or otherwise for a fraudulent or unlawful purpose or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose; (ii) that persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members ; or (iii) that the members of the company have not been given all the information with respect to its affairs which....
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....opportunity to show cause why such approval should not be accorded. Section 247. INVESTIGATION OF OWNERSHIP OF COMPANY..-(1) Where it appears to the Central Government that there is good reason so to do, it may appoint one or more inspectors to investigate and report on the membership of any company and other matters relating to the company, for the purpose of determining the true persons - (a) who are or have been financially interested in the success or failure, whether real or apparent, of the company ; or (b) who are or have been able to control or materially to influence the policy of the company. [(1A) Without prejudice to its powers under this section, the Central Government shall appoint one or more inspectors under sub-section (1), if the 2 [Tribunal], in the course of any proceedings before it, declares by an order that the affairs of the company ought to be investigated as regards the membership of the company and other matters relating to the company, for the purpose of determining the true persons - (a) who are or have been financially interested in the success or failure, whether real or apparent, of the company ; or (b) who a....
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....he Central Government out of moneys provided by Parliament, unless the Central Government directs that the expenses or any part thereof should be paid by the persons on whose application the investigation was ordered. 2. Section 447. Punishment for fraud-Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud: Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years. Explanation.-For the purposes of this section- (i) "fraud" in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from....
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...., that it is necessary to investigate into the affairs of a company by the Serious Fraud Investigation Office- (a) on receipt of a report of the Registrar or inspector under section 208; (b) on intimation of a special resolution passed by a company that its affairs are required to be investigated; (c) in the public interest; or (d) on request from any Department of the Central Government or a State Government, the Central Government may, by order, assign the investigation into the affairs of the said company to the Serious Fraud Investigation Office and its Director, may designate such number of inspectors, as he may consider necessary for the purpose of such investigation. (2) Where any case has been assigned by the Central Government to the Serious Fraud Investigation Office for investigation under this Act, no other investigating agency of Central Government or any State Government shall proceed with investigation in such case in respect of any offence under this Act and in case any such investigation has already been initiated, it shall not be proceeded further with and the concerned agency shall transfer the relevant documents and reco....
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....rised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of any offence punishable under sections referred to in sub-section (6), he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. (9) The Director, Additional Director or Assistant Director of Serious Fraud Investigation Office shall, immediately after arrest of such person under sub- section (8), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Serious Fraud Investigation Office in a sealed envelope, in such manner as may be prescribed and the Serious Fraud Investigation Office shall keep such order and material for such period as may be prescribed. (10) Every person arrested under sub-section (8) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place....
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....e by Special Courts.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),- (a) 3[all offences specified under sub-section (1) of section 435] shall be triable only by the Special Court established for the area in which the registered office of the company in relation to which the offence is committed or where there are more Special Courts than one for such area, by such one of them as may be specified in this behalf by the High Court concerned; (b) where a person accused of, or suspected of the commission of, an offence under this Act is forwarded to a Magistrate under sub-section (2) or sub-section (2A) of section 167 of the Code of Criminal Procedure, 1973 (2 of 1974), such Magistrate may authorise the detention of such person in such custody as he thinks fit for a period not exceeding fifteen days in the whole where such Magistrate is a Judicial Magistrate and seven days in the whole where such Magistrate is an Executive Magistrate: Provided that where such Magistrate considers that the detention of such person upon or before the expiry of the period of detention is unnecessary, he shall order such person to be f....