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2023 (12) TMI 1019 - HC - Companies LawPower of the SFIO to Investigate Offences under the IPC - Powers of SFIO restricted to investigate offences under the Companies Act only - Further Investigation by the SFIO. Power of the SFIO to Investigate Offences under the IPC - HELD THAT - The heading of Section 219 of the Act reflects that the said provision relates to role of certain related companies, which has surfaced during the course of investigation being conducted under Section 212 or other provisions of the Act and therefore, approval would be required in terms of Sections 219(a), (b) and (c) of the Act. The provision of Section 219(d) of the Act has to be construed by applying the rule of ejusdem generis - In the present case, it is reasonable to construe the aforesaid clauses (a), (b) and (c) of Section 219 of the Act as constituting a distinct category or class, i.e., related companies . The language and the object behind the aforesaid clauses is with respect to investigation of affairs of a company other than the company for which investigation has been ordered under Section 212 of the Act. In that context, clause (d) of Section 219 of the Act will apply to a Managing Director or Manager or Employee of the company referred to in clauses (a), (b) and (c) of the said Section. Section 219(a), (b) or (c), comes across role of Managing Director, Manager or employee of the said related companies, then no prior approval for investigation would be required. In other words, protection has been given only to the Managing Director or Manager or employee of the company being investigated under Section 212 of the Act and not for the Managing Director or Manager or Employee of the companies being investigated under Section 219 (a), (b) or (c) of the Act. The aforesaid position is not acceptable - In the considered opinion of this Court, once an approval has been given under Section 212 of Act to investigate into the affairs of a company, the same would also relate to a Managing Director or Manager or Employee of the said company. The pre-condition of a prior approval under Section 219 of the Act applies to related companies and their Managing Director, Manager or employees as provided for in the said Section. It is an admitted case that petitioner no. 3 was mentioned in the original order dated 03.05.2016 issued by the MCA under Section 212 of the Act. So far as petitioner no. 2 is concerned, it is the case of the SFIO that since the affairs of the company were not being investigated, therefore, no approval was required in terms of Section 219(a) of the Act - It is a matter of record that subsequent sanction has been obtained from the Central Government before filing the complaint by the SFIO in terms of Section 212(14) of the Act. Petitioner no. 2 is being prosecuted for a single transaction, as explained above. It is always open for petitioner no. 2, during the course of trial, to demonstrate that prejudice leading to a miscarriage of justice has been caused on account of not obtaining approval under Section 219(c) of the Act. Powers of SFIO restricted to investigate offences under the Companies Act only - HELD THAT - It is pertinent to note that Section 4(2) of the CrPC provides that investigation into offences under other statutes, like the present Act, shall be done in accordance with the CrPC unless the statute provides for otherwise. Section 212(15) of the Act provides that an investigation report filed before the learned Special Court shall be treated as a report filed by a police officer under Section 173 of the CrPC - the investigation report within the scheme of the Act will be treated as a police report, therefore, the officer filing the said report shall also be considered an officer in charge of a police station, although not specifically provided for in the said Act. The said position is further fortified by the fact that if power has been given to the learned Special Court under Section 436(2) of the Act to try offences other than those under the Act, then the power of the SFIO to investigate into such offences cannot be restricted. If during course of investigation under the present Act, the concerned Investigating Officer comes across commission of offences punishable under the IPC or any other law relating to the transactions being investigated, then the same cannot give rise to distinct proceedings. Such investigation can be carried out under Section 4(1) of the CrPC. If the report which is subsequently filed is to be treated as a police report under Section 173(2) of the CrPC, then the officer is to be considered to be vested with powers of an officer in charge of a police station . From a conjoint and harmonious reading of the aforesaid provisions of the CrPC and the present Act, it cannot be said that the SFIO is barred from investigating an offence under the IPC. Further Investigation by the SFIO - HELD THAT - It is further pertinent to note that this Court has perused the record and does not find any document to show that after the learned Special Court has taken cognizance on 20.09.2022, the petitioners herein have been asked to join any further investigation by the SFIO. The present petition is dismissed.
Issues Involved:
1. Jurisdiction or legal sanction/authority with the SFIO to investigate petitioners no. 1 and 2. 2. Powers of SFIO restricted to investigate offences under the Companies Act only. 3. Further investigation by the SFIO. Jurisdiction or Legal Sanction/Authority with the SFIO to Investigate Petitioners No. 1 and 2: The petitioners argued that the SFIO lacked authority to investigate them under Sections 212(1) or 219 of the Companies Act, as they were not named in the orders authorizing the investigation. The court noted that Section 219(d) of the Act, which requires prior approval for investigating related entities, does not apply to Key Managerial Personnel (KMP) like petitioner no. 1. For petitioner no. 2, the court observed that although the SFIO investigated its affairs, the absence of prior approval under Section 219(c) does not invalidate the cognizance taken by the Special Court. The court emphasized that defective investigation does not vitiate the trial unless it causes a miscarriage of justice, referencing *Fertico Marketing and Investment Private Limited v. Central Bureau of Investigation*. Powers of SFIO Restricted to Investigate Offences Under the Companies Act Only: The petitioners contended that the SFIO's authority is limited to investigating offences under the Companies Act and not the IPC. The court harmonized Sections 212(15), 212(17), and 436(2) of the Companies Act with Section 4 of the CrPC, concluding that the SFIO can investigate IPC offences if they arise during the investigation under the Companies Act. The court referenced *Ashish Bhalla v. State & Anr.*, which held that the Companies Act, being a special act, prevails over the IPC. The court also noted that the SFIO's investigation report is treated as a police report under Section 173 of the CrPC, thereby granting the SFIO authority to investigate IPC offences. Further Investigation by the SFIO: The petitioners argued that the SFIO cannot conduct further investigation once an investigation report is filed. The court rejected this argument, citing Section 173(8) of the CrPC, which allows for further investigation. The court found no evidence that the SFIO had conducted further investigation after the Special Court took cognizance on 20.09.2022. Conclusion: i. Petitioner no. 1, as a KMP, does not need separate approval for investigation under Section 219(d). ii. The investigation into petitioner no. 2's affairs falls under Section 219, but the lack of prior approval does not invalidate the Special Court's cognizance. iii. The SFIO is not barred from investigating IPC offences. iv. The SFIO can conduct further investigation in accordance with the law. The petition was dismissed, and interim orders were vacated. The judgment emphasized that these findings do not reflect an opinion on the merits of the case.
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