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2019 (12) TMI 1607 - HC - Companies Lawoffences alleged against the accused are falling within the purview of Serious Fraud Investigation under the provisions of Companies Act or not - Whether the offences of similar nature, relating to the affairs of the Company if investigated into under different First Information Reports by Police would cause prejudice to the accused? - Whether the Court can direct investigation into the offences, registered under different F.I.Rs. but pertaining to similar/ same act of accused be transferred to one agency for effective investigation? HELD THAT - The law is well settled by the Apex Court in its recent judgment that failure to repay a loan is not a criminal offence unless there is a fraudulent intent. A careful perusal of the provisions of Companies Act, 2013, demonstrates that the irregularities in conducting the business and affairs of the company would stand on a special category for investigation and that is the reason why experts in various fields of the Corporate Law are sought to be appointed as members of the team of investigators. It is evident that criminal acts under Sections 409, 410 and 420 of I.P.C. are general offences/crimes, whereas the case on hand falls within the offence relating to company affairs is falling within a special category that requires special kind of investigation unlike normal investigation into general offences under I.P.C. - It is the duty of the State to ensure that every citizen of the Country should have the free and fair investigation and trial. The preamble and the Constitution are compulsive and not facultative, in that free access to the form of justice is integral to the core right to equality, regarded as a basic feature of our Constitution. Therefore, such a right is a constitutional right as well as a fundamental right. Such a right equally be protected to the accused and to the victim depending upon the facts of the case. Therefore, such a right is not only a constitutional right but also a human right. Any procedure which comes in a way of a party in getting a fair trial would be violation of Article 14 of the Constitution of India. Thus, the investigation should be judicious, fair, transparent and expeditious to ensure compliance with the basic rule of law. These are the fundamental canons of our criminal jurisprudence and they are quite in conformity with the constitutional mandate contained in Articles 20 and 21 of the Constitution of India. The underlying ratio of criminal jurisprudence is to protect the rights of not only the aggrieved but also of the accused. Where similar offences are registered in various police stations and they are falling within the Companies Act (a special legislation) and normal police are investigating into the offences at various police station limits, this will lead to absurdity, confusion, conflict of views and consume long time. On the other hand, it will cause harassment to the accused besides humiliation as she will be forced to run from pillar to post every day during investigation. Respondent are directed to assign the investigation in the aforesaid crimes to SFIO, Hyderabad, by obtaining necessary orders from the State Government, if necessary - 2nd petitioner shall be released on her furnishing a personal bond for Rs.50,00,000/- with two sureties to the like amount to the satisfaction of the Metropolitan Sessions Judge, Nampally, Hyderabad - Petition disposed off.
Issues Involved:
1. Legality of FIR registrations against the petitioners. 2. Jurisdiction of police versus Serious Fraud Investigation Office (SFIO). 3. Applicability of Companies Act, 2013 versus Telangana Protection of Depositors of Financial Establishments Act, 1999. 4. Right to fair investigation and trial. 5. Conditions for bail and cooperation with investigation. Issue-wise Detailed Analysis: 1. Legality of FIR Registrations Against the Petitioners: The petitioners challenged the registration of multiple FIRs as illegal, arbitrary, unconstitutional, and violative of principles of natural justice and fundamental rights. They argued that the police had no authority to register FIRs under the Companies Act, 2013, citing Sections 212(2), 435(6), and 436. The petitioners contended that grievances related to company investments should be addressed by the Registrar of Companies or the SFIO, not the police. 2. Jurisdiction of Police Versus Serious Fraud Investigation Office (SFIO): The petitioners argued that once the SFIO is involved, no other investigation agency, including the police, should proceed with the investigation. The Government Pleader for Home countered that the police have jurisdiction to investigate offences under the Indian Penal Code (IPC) and the Telangana Protection of Depositors of Financial Establishments Act, 1999. The court noted that the SFIO, as per Section 212 of the Companies Act, has exclusive jurisdiction over company-related frauds, and any other investigating agency must transfer relevant information to the SFIO. 3. Applicability of Companies Act, 2013 Versus Telangana Protection of Depositors of Financial Establishments Act, 1999: The petitioners claimed that the Companies Act, a central legislation, should prevail over the state legislation of Telangana Protection of Depositors of Financial Establishments Act, 1999. They argued that the alleged offences fall under the Companies Act, which requires specialized investigation by the SFIO. The court agreed, emphasizing that offences related to company affairs require special investigation skills and should be handled by the SFIO. 4. Right to Fair Investigation and Trial: The court highlighted the importance of fair and transparent investigation and trial, protected under Articles 14, 21, and 39-A of the Constitution of India. It noted that the investigation should be free from bias and prejudice, ensuring justice for both the accused and the victims. The court observed that the petitioners were being subjected to multiple investigations by different police stations, causing harassment and prejudice. 5. Conditions for Bail and Cooperation with Investigation: The court directed the release of the 2nd petitioner on bail, subject to certain conditions, including furnishing a personal bond, depositing a significant amount, and cooperating with the SFIO investigation. The court emphasized that the 2nd petitioner should not leave the country without permission, surrender her passport, and not interfere with the investigation or intimidate the investors. Conclusion: The court concluded that the offences alleged against the petitioners fall within the purview of the Companies Act, 2013, and should be investigated by the SFIO. It directed the transfer of all relevant FIRs to the SFIO for investigation and set conditions for the 2nd petitioner's bail to ensure cooperation with the investigation and protection of investors' interests. The court emphasized the need for a fair and specialized investigation to uphold the rule of law and justice.
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