Parallel investigation by other agencies not permitted when SFIO is probing affairs of a company: Delhi High Court

The Delhi High Court recently ruled that once the Serious Fraud Investigation Office (SFIO) starts investigating the affairs of a company under the Companies Act, a parallel investigation by any other agency is not permissible. [Ashish Bhalla v. State & Anr].Justice Saurabh Banerjee delved into the genesis of the amendments made to the Companies Act in 2013 and came to the conclusion that Section 212 of the Companies Act is nothing less than a Code in itself. The provision enables the Central government to ask SFIO to investigate the affairs of a company. The Court said all the sub-sections of Section 212 have to be harmoniously read together as they are not only inter-connected but also dependent upon each other.“Once the investigation into the affairs of a Company has been initiated by the SFIO, there is no reason for any other agency to conduct investigation into the affairs of such a Company, more so whence the SFIO under Section 212 of the 2013 Act itself is a specialized agency consisting of experts from diverse fields with the expertise, knowledge and requisite information under Section 211 of the 2013 Act having a demarcated/ specialised mechanism,” the Court said..It further ruled that SFIO has a vast power to investigate and enquire into the affairs of a company once it has been given the green signal by the Central government.The Court also said that though the Companies Act is a special legislation, the provisions of Code of Criminal Procedure (CrPC) are “very much applicable” to the SFIO proceedings.It also noted that Section 212(2) of the Act provides that no other agency in the country can proceed further with the investigation when SFIO is assigned the case. The Court added that once SFIO is seized of a case, all 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.”However, the Court also clarified that SFIO is required to share any relevant information which it comes across during investigation, pertaining to offences other than those relating to the 2013 Act, with other agencies..The Court made the observations while quashing a First Investigation Report (FIR) registered by the Economic Offences Wing (EOW) of Delhi Police in January this year under Sections 406 (criminal breach of trust), 420 (Cheating and dishonestly inducing delivery of property) and 120B (criminal conspiracy) of the Indian Penal Code in relation to the WTC Group of Companies. The Ministry of Corporate Affairs in 2022 had asked the SFIO to commence investigation into the affairs of the WTC. SFIO in April 2022 conducted search, seizure and raid operations at the premises of WTC in Noida.The Court said the investigation conducted by the EOW is liable to be quashed as the SFIO was already conducting investigation in the matter under the 2013 Act, “which being a Special Act will prevail over the General Act, the IPC.”.It said that the EOW FIR is nothing but a shadow of the first complaint made by the same complainant to the MCA, leading to initiation of the SFIO proceedings.“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,” it added. Pertinently, the EOW FIR was quashed only with respect to the petitioner Ashish Bhalla. A total of 14 persons including companies were named in the FIR but only Bhalla had approached the High Court for quashing the case..Senior Advocates Sudhir Nandrajog, Preetesh Kapur and Advocates Nistha Gupta, Prateek Singh Kundu, Shaunak Kashyap, Kanav Agarwal, Manan Takkar and Aditi Prakash represented the petitioner.Additional Public Prosecutor Ajay Vikram Singh represented the EOWSenior Advocate Pramod Kumar Dubey and Advocates Indresh Upadhyay, Brijesh Upadhyay, Satyam Sharma, Aditi, Kanush Dhawan and Amit Negi represented the intervenorsAdvocates Praveen Mahajan and Bhavya Manchanda, Advocates also appeared for impleadersAdvocates Satya Prakash Yadav, Rajiv Dawar and Sameer Dawar, Rohit Kathuria, Dhruv Verma and Sagar Chauhan represented various respondents. [Read Judgment]

Parallel investigation by other agencies not permitted when SFIO is probing affairs of a company: Delhi High Court

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