This case marked a notable milestone in the history of Indian Jurisprudence, particularly in the area of Corporate law and Criminal law. The dispute arose out of a jurisdictional conflict between two primary investigating agencies, namely the Serious Fraud Investigation Office ("SFIO") a specialised agency under the Ministry of Corporate Affairs and the Economic Offences Wing ("EOW") a unit of the Delhi Police. The case is of significant importance as it critically examines the jurisdictional boundaries and specific roles of prominent investigating agencies providing a clarification to help avoid jurisdictional overlap particularly when dealing with complex financial crimes.
Brief Background
The genesis of the dispute in Ashish Bhalla v. State (NCT of Delhi), lies in the complaint filed by Mr. Vishvendra Singh, with the Ministry of Corporate Affairs ("MCA") alleging that Mr Ashish Bhalla and his family members were involved in fraudulent and illegal siphoning of funds to the tune of more than Rs.1500 crores to various companies based in India and abroad through a web of shell companies that form part of the WTC Group of Companies, by way of a Ponzi scheme under the guise of real estate projects in the states of Gujarat, Uttar Pradesh, Punjab and Haryana. The Complainant also alleged that though the ownership of the Group of Companies rests with Mr. Ashish Bhalla, neither him nor any of his family members adorn the role of the directors of the company to escape legal liabilities.
Pursuant to the complaint, MCA issued notice to one of the Groups entity – WTC Noida, ordering the inspection of the records of WTC group of companies under section 206 of the Companies Act, 2013 ("The Act"). Further, the MCA, under section 212 of the Act issued an order authorising and assigning SFIO to conduct investigations into the irregularities of WTC Noida.
Simultaneously, in the interim, the Complainant filed a second Complaint against Mr. Ashish Bhalla before the Commissioner of Police, Delhi and the Economic Offences wing of the Delhi Police. The allegations levelled in this complaint were identical to the ones raised in the first complaint before the MCA.
The second complaint before the EOW resulted in the registration of an FIR despite there being an ongoing investigation by the SFIO.
It is in light of these facts that Mr Ashish Bhalla was compelled to approach the High Court of Delhi invoking the inherent powers of the Court under Section 482 of the Criminal Procedure Code, 1973, seeking quashing of the impugned FIR.
Findings
In the present case, the Court was faced with a complex issue of determining the Jurisdictional boundaries of the two investigating agencies. The crux of the petitioner's contention was that the FIR registered by the EOW, and the pursuant investigations were not maintainable and permissible by virtue of Section 212(2) of the Companies Act, 2013.
The Court was required to critically examine the provision of Section 212(2), which states that, "...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 records in respect of such offences under this Act to Serious Fraud Investigation Office...."
The Petitioner further contended that it is by virtue of the aforementioned section that SFIO investigation takes precedence over the investigations under the Criminal Procedure Code initiated by the EOW and that the impugned FIR filed by the EOW is not maintainable and ought to be quashed.
Accordingly, the Complainant and the State put forth the contentions that the purpose of Section 212 is to authorise the Central Government with the discretion to empower SFIO to initiate legal proceedings in cases where it deems fit. They further contended that there is nothing in the provisions of the Companies Act 2013, that specifically bars institution of criminal proceedings under other relevant sections of the Indian Penal Code, 1860before a different forum. It was also argued that Section 26 of the General Clauses Act, 1897 , permits prosecution under two different enactments where any act or omission constitutes an offence under two or more enactments. The counsel representing the Respondents based reliance on the case of The State of Maharashtra V. Sayyed Hassan Sayyad Subhan, in which a division bench of the Supreme Court of India comprising of Justice S.A. Bobde and Justice L. Nageswara Rao opined that the same set of facts in conceivable cases can constitute offences under two different enactments and parallel investigation can be conducted under the two different enactments.
In the overview of the factual matrix and the legal propositions argued, the Court held that the impugned FIR registered by the EOW is liable to be quashed and the investigation be transferred to SFIO. The Delhi High Court bench headed by Justice Saurabh Banerjee was of the opinion that, the investigation proceeding being conducted by the SFIO will have precedence over the EOW investigations by virtue of it arising out of the Companies Act, 2013, which being a special act will prevail over the general act i.e. the Indian Penal Code. The Court affirmed that from a reading of the provisions of Section 212(2) of the Companies Act, 2013, the intention of the legislature was clear that once investigation was initiated by the SFIO it would take precedence over any investigation being conducted by other agencies. Factually, the Court observed that the two complaints were identical in their context without any notable difference between the two.
In view of the above facts and legal positions, the Court proceeded to order quashing of the impugned FIR registered before the EOW. Further, in view of section 212 of the Companies Act, 2013, the Court ordered the transfer of all the documents and findings of the investigation conducted by the EOW to the SFIO.
Conclusion
The Delhi High Court's decision has significant implications in the domain of corporate and criminal jurisprudence when dealing with Financial Crimes that involve a plethora of offences. The Judgement thus given in the case, provides a clear precedent regarding the jurisdictional boundaries between different investigating agencies, preventing any further jurisdictional overlap by establishing clear guidelines that would ensure more efficient and focussed investigations.
The ruling can also be seen in the light of protecting the interest of Corporations by limiting the scope and potential of multiple investigations into the same subject matter, hence, preventing gross abuse of due process of law.
In summary, the case of Ashish Bhalla v. State (NCT of Delhi) was a watershed moment in Indian Jurisprudence. The Delhi High Court's ruling not only resolved a specific jurisdictional dispute but also provided valuable guidelines for future cases by clarifying the roles and responsibilities of different law enforcement agencies.
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