Pre-cognizance hearing not mandatory for SFIO complaints filed under Companies Act: Punjab & Haryana HC

The Punjab and Haryana High Court has ruled that pre-cognizance hearing under Section 223 of the Bharatiya Nagarik Suraksha Sanhita (BNSS) is not mandatory for complaints filed by the Serious Fraud Investigation Office (SFIO) [Vivo India Private Limited v Serious Fraud Investigation Office, Ministry of Corporate Affairs, Union of India].

Justice Subhas Mehla said that the procedure under the Companies Act, 2013 – which allows the SFIO to investigate into the affairs of a company, is distinct from the procedure provided under the BNSS. 

“Consequently, it is held that prosecution complaints instituted by the SFIO pursuant to investigation under Section 212 of the Act, 2013 are not governed by the proviso to Section 223 of the BNSS, and the proposed accused have no vested right to claim a pre-cognizance hearing before the Special Court,” the Court held.

The Court noted that Sections 4 and 5 of the BNSS clarify that the provisions of the penal law shall not supersede the procedure prescribed by any special law.

“A bare reading of Section 436(1)(d) [of Companies Act] reflects that there is no statutory requirement of affording a pre-cognizance hearing to the accused before taking cognizance upon a complaint. The provision is clear in its design and does not contemplate any preliminary opportunity of hearing before cognizance is taken. Therefore, it cannot be said that the Act, 2013 is silent on the aspect of procedure for cognizance; rather, it provides a specific mechanism without any statutory requirement of pre‐cognizance notice," it added. 

The Court further said that there is a distinction between a private complaint filed by an individual and a statutory complaint moved by a public servant following a detailed investigation under Section 212 of the Companies Act.

The investigation report of the SFIO is to be treated as a police report and thus the proviso to Section 223 of the BNSS cannot be invoked to introduce an additional pre-cognizance stage, the Court emphasized.

The Court was dealing with a petition moved by Vivo India Private Limited against which SFIO has filed a complaint case before a Gurugram court. The mobile company challenged the trial court’s refusal to grant it a pre-cognizance hearing under Section 223 of the BNSS. 

In the judgment passed on July 7, the High Court ruled that the Gurugram court’s order did not suffer from any illegality, perversity or jurisdictional error. It, thus dismissed the plea moved by Vivo.  

“By its express language, Section 223 of the BNSS applies only to 'a Magistrate having jurisdiction while taking cognizance of an offence on complaint.' The present complaint, however, arises under the Act, 2013 and has been filed before a Special Court designated under Section 435(2)(a) of the Act, which is presided by Sessions Judge or Additional Sessions Judge for serious corporate offences including those under Sections 447 and 448 of the Act,” the Court said. 

Senior Advocate RS Rai with Advocates VP Singh, Priyank Ladoia, Rubina Virmani, Kshitiz Rao, Arjun Narang, Puneet Dhanoa and Ananya Singh represented Vivo.

Senior Advocate Arvind Moudgil, Central Government Counsel Tajeshvar Singh Sullar along with Advocates Anshuman Singh, Shubhleen Dhariwal, Yan Dasi, Ahana Bali and Priya appeared for the SFIO.

Senior Prosecutor Pradeep Yadav with Advocates Puneeta Sethi and Gautam Bhardwaj appeared for the Union of India.

[Read Judgment]