Supreme Court: In a criminal appeal filed against the interim orders passed by the Allahabad High Court, wherein the Court has stayed the proceedings of the FIRs registered against the IndiaBulls officers and has also stayed the proceedings registered by the Directorate of Enforcement against them, the division bench of Bela M. Trivedi* and Prasanna B. Varale, JJ. while setting aside the impugned orders, opined that the High Court could not have stayed the investigations and restrained the investigating agencies from investigating into the cognizable offences as alleged in the FIRs and Enforcement Case Information Report (‘ECIR’), particularly when the investigations were at a very nascent stage.
Background:
IndiaBulls Housing Finance Limited (‘IHFL’) is a non-banking financial institution incorporated under the provisions of the Companies Act. IHFL deals with public money. The major source of funds for the loans to be advanced by IHFL, is either the loans from the other banks or from the public in the form of non-convertible debentures.
Kadam Developers Pvt. Ltd., one of the Shipra Group entities, Kadam had a sub-lease of a parcel of land allotted to it by the predecessor of Yamuna Expressway Industrial Development Authority. Between 2017-2020, IHFL had sanctioned 16 loan facilities to the tune of Rs. 2,801 crores to the Shipra Group. There being defaults in the repayment of loan amount, IHFL had issued notices recalling all the loans advanced to the Shipra Group.
IHFL ultimately sold the shares of Kadam developers pledged with it to one Final Step Developers. The mortgaged properties, Shipra Mall at Ghaziabad and the parcel of law at Noida were sold by the IHFL towards the recovery of its dues from the Shipra Group.
On 09-04-2023, an FIR came to be filed by a Director of Shipra Hotels, against IHFL and its officers for the offences under Sections 420, 467, 468, 471, 120-B, 323, 504 and 506 of Penal Code, 1860 (‘IPC’).
The High Court passed the impugned Orders wherein it stayed the proceedings of the FIRs registered against the IndiaBulls officers and has also stayed the proceedings registered by the Directorate of Enforcement against them.
Analysis:
The Court noted that the impugned interim orders have been passed by the High Court under the umbrella of the order dated 04-07-2023 passed by this Court in Gagan Banga v State of West Bengal1, creating an impression that the impugned orders were passed in furtherance of the said order, though this Court had passed the said order leaving it open to the High Court to decide the writ petitions on their own merits.
The Court opined that it is a matter of serious concern that despite the legal position settled by this Court in catena of decisions, the High Court has passed the impugned orders staying the investigations of the FIRs and ECIR in question in utter disregard of the said settled legal position.
Without undermining the powers of the High Court under Section 482 of Code of Criminal Procedure, 1973 (‘CrPC’) to quash the proceedings if the allegations made in the FIR or complaint prima facie do not constitute any offence against the accused, or if the criminal proceedings are found to be manifestly malafide or malicious, instituted with ulterior motive etc., the Court opined that the High Court could not have stayed the investigations and restrained the investigating agencies from investigating into the cognizable offences as alleged in the FIRs and the ECIR, particularly when the investigations were at a very nascent stage.
It further reiterated that the inherent powers under Section 482 of CrPC do not confer any arbitrary jurisdiction on the High Court to act according to whims or caprice. Statutory power must be exercised sparingly with circumspection and in rare cases. Thus, by passing such orders of staying the investigations and restraining the investigating agencies from taking any coercive measure against the accused pending the petitions under Section 482 CrPC, the High Court has granted blanket orders restraining the arrest without the accused applying for the anticipatory bail under Section 438 of CrPC.
After taking note of Neeharika Infrastructure (P) Ltd. v. State of Maharashtra, (2021) 19 SCC 401, wherein the Court while strongly deprecating the practice of the High Courts in staying the investigations or directing not to take coercive action against the accused pending petitions under Section 482 of CrPC, has issued the guidelines, the Court said that the impugned orders passed by the High Court are in utter disregard and in the teeth of the said guidelines issued in this case.
The Court clarified that it would be open for the IndiaBulls officers to take all legal contentions or take recourse to the legal remedies as may be available to them in accordance with law.
[Enforcement Directorate v. Niraj Tyagi, 2024 SCC OnLine SC 134, decided on 13-02-2024]
*Judgment Authored by: Justice Bela M. Trivedi
Know Thy Judge | Supreme Court of India: Justice Bela Madhurya Trivedi
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1. W.P. (Crl) being no. 166 of 2023
