{"id":394048,"date":"2026-08-22T15:30:53","date_gmt":"2026-08-22T10:00:53","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=394048"},"modified":"2026-08-22T15:31:49","modified_gmt":"2026-08-22T10:01:49","slug":"before-adverse-action-legal-shield-around-preliminary-investigations","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2026\/08\/22\/before-adverse-action-legal-shield-around-preliminary-investigations\/","title":{"rendered":"Before Adverse Action &#151; The Legal Shield Around Preliminary Investigations"},"content":{"rendered":"<div style=\"text-align: justify; line-height: 150%;\">\n<p style=\"font-weight: bold;\">Introduction<\/p>\n<p style=\"margin-bottom: 3%;\">Nothing rattles a boardroom quite like an unexpected visit from investigators. The urge to demand &#8220;show me your authority&#8221; is strong, but courts in India, the UK, and the US broadly agree &#8212; investigations should not be stalled by requests for disclosure.<\/p>\n<p style=\"margin-bottom: 3%;\">In a recent case before the Delhi High Court, pursuant to the government&#8217;s order to the Serious Fraud Investigation Office (SFIO) to investigate a group of companies, a charitable company (Petitioner) that had allegedly transacted with those companies was directed to produce extensive financial records.<a id=\"fnref1\" href=\"#fn1\" title=\"1. Mandke Foundation v. Union of India, 2026 SCC OnLine Del 5457.\"><sup>1<\/sup><\/a> The court declined to compel disclosure of the government order for two reasons: 1) the SFIO&#8217;s notice already disclosed enough about the inquiry&#8217;s nature and purpose to negate any claim of opacity; and 2) the risk of undermining the broader investigation with parallel proceedings before another High Court.<\/p>\n<p style=\"font-weight: bold;\">Non-interference as deference &#8212; Legal position in India<\/p>\n<p style=\"margin-bottom: 3%;\">The Delhi High Court&#8217;s ruling aligns with established Indian law: Courts generally avoid interfering with ongoing investigations or quash FIRs except in rare, exceptional cases.<a id=\"fnref2\" href=\"#fn2\" title=\"2. Neeharika Infrastructure (P) Ltd. v. State of Maharashtra, (2021) 19 SCC 401.\"><sup>2<\/sup><\/a> Show-cause notices are similarly immune to judicial intervention, since they do not impose adverse consequences. <a id=\"fnref3\" href=\"#fn3\" title=\"3. Union of India v. Kunisetty Satyanarayana, (2006) 12 SCC 28 : (2007) 2 SCC (L&amp;S) 304.\"><sup>3<\/sup><\/a><\/p>\n<p style=\"margin-bottom: 3%;\">In January 2026, the Supreme Court reinforced this approach, refusing to halt a preliminary Competition Commission of India investigation and emphasising that probes must proceed in accordance with law.<a id=\"fnref4\" href=\"#fn4\" title=\"4. Jiostar India (P) Ltd. v. CCI, SLP (C) No. 2867 of 2026.\"><sup>4<\/sup><\/a> Read holistically, these decisions establish a clear judicial pattern &#8212; unless an investigation results in adverse action affecting rights, preliminary steps remain shielded from early court intervention.<\/p>\n<p style=\"font-weight: bold;\">Is this a peculiarly Indian instinct?<\/p>\n<p style=\"margin-bottom: 3%;\">A similar calculus operates in the UK and the US. In England, an oil and gas company sought judicial review of the Serious Fraud Office&#8217;s (SFO) refusal to disclose material relating to an ongoing investigation. The High Court found no basis to compel disclosure, noting that even the applicable European Union (EU) Directive contemplates disclosure only &#8220;without prejudicing the course of ongoing investigations&#8221;.<a id=\"fnref5\" href=\"#fn5\" title=\"5. R. (on the application of Soma Oil &amp; Gas Ltd.) v. Director of the Serious Fraud Office, 2016 EWHC 2471 (Admin.).\"><sup>5<\/sup><\/a> It has further been held that only a wholly exceptional case could justify judicial review of the SFO&#8217;s decision to investigate, given that such discretion is broader than the discretion whether to prosecute.<a id=\"fnref6\" href=\"#fn6\" title=\"6. R. (Bermingham) v. Director of the Serious Fraud Office, 2007 QB 727 : (2007) 2 WLR 635 : 2007 EWHC 200 (Admin.).\"><sup>6<\/sup><\/a><\/p>\n<p style=\"margin-bottom: 3%;\">The closest American analogue &#8212; the federal grand jury subpoena&#8212; is, if anything, more restrictive. A recipient generally has no right to know the basis for suspicion, before complying. A subpoena issued through normal channels is presumed reasonable, and a motion to quash on relevancy grounds must fail unless there is no reasonable possibility that the material sought is relevant to the investigation&#8217;s general subject.<a id=\"fnref7\" href=\"#fn7\" title=\"7. United States v. R. Enterprises, Inc., 1991 SCC OnLine US SC 13 : 112 L Ed 2d 795 : 498 US 292 (1991).\"><sup>7<\/sup><\/a> The one narrow concession is that where a recipient does not know even the general subject-matter, a court may require the government to reveal it. That still falls well short of disclosing the grounds for suspicion or any equivalent of an authorising order.<\/p>\n<p style=\"font-weight: bold;\">The boundary is the real story<\/p>\n<p style=\"margin-bottom: 3%;\">None of the three jurisdictions give a party under investigation an enforceable right to the investigator&#8217;s file. The value of comparison lies not in that shared refusal, but in what each system treats as an exception.<\/p>\n<p style=\"margin-bottom: 3%;\">Indian Courts may intervene where an FIR or notice is issued without jurisdiction, is wholly illegal, or is manifestly <span style=\"font-style: italic;\">mala fide<\/span>. English Courts may intervene where an investigator&#8217;s conduct is genuinely irrational or in bad faith. American Courts may quash a subpoena where the government cannot show a legitimate purpose, or where compliance would be unreasonable or oppressive. The consistent thread is not blanket immunity for investigators, but a high evidentiary bar for anyone seeking to interrupt an investigation before it produces an adverse consequence.<\/p>\n<p style=\"font-weight: bold;\">What this means in practice<\/p>\n<p>The lesson is straightforward &#8212; do not expect a court to intervene at the preliminary stage, because in ordinary cases it will not. Three habits follow:<\/p>\n<p style=\"margin-left: 36pt; text-indent: -18pt;\">1. Engage and document &#8212; a prompt, good-faith written request to clarify the investigation&#8217;s scope, even if disclosure is not immediately achieved.<\/p>\n<p style=\"margin-left: 36pt; text-indent: -18pt;\">2. Do not treat a disclosure request as a substitute for compliance &#8212; withholding documents risks being read as non-cooperation, not principled objection.<\/p>\n<p style=\"margin-left: 36pt; text-indent: -18pt; margin-bottom: 3%;\">3. Recognise that disclosure may be refused to protect a wider inquiry or parallel proceedings. Let the investigation run rather than institute premature litigation.<\/p>\n<p style=\"font-weight: bold;\">Conclusion<\/p>\n<p style=\"margin-bottom: 3%;\">The real challenge for Directors and compliance professionals in India lies in truly understanding the boundaries that govern investigative conduct. The evolving landscape demands vigilance and thoughtful engagement, with readiness to adapt as investigations progress from preliminary inquiry to the stage where judicial scrutiny becomes both possible and necessary. By recalibrating their approach, organisations can better protect their interests and ensure compliance without unnecessary confrontation or risk.<\/p>\n<\/div>\n<hr\/>\n<p style=\"margin-left: 18pt; text-indent: -18pt;\"><strong><span style=\"color: #000080;\">*Partner, Cyril Amarchand Mangaldas.<\/span><\/strong><\/p>\n<p style=\"margin-left: 18pt; text-indent: -18pt;\"><strong><span style=\"color: #000080;\">**Associate, Cyril Amarchand Mangaldas.<\/span><\/strong><\/p>\n<p style=\"margin-left: 18pt; text-indent: -18pt;\"><a id=\"fn1\" href=\"#fnref1\">1.<\/a> <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-9003754382\" target=\"_blank\"><span style=\"font-style: italic;\">Mandke Foundation<\/span> v. <span style=\"font-style: italic;\">Union of India<\/span><\/a>, <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-9003754382\" target=\"_blank\"><span style=\"text-decoration: underline; text-underline-style: solid; text-underline-mode: continuous; text-underline-color: #0000ff; color: #0000ff;\">2026 SCC OnLine Del 5457<\/span><\/a>.<\/p>\n<p style=\"margin-left: 18pt; text-indent: -18pt;\"><a id=\"fn2\" href=\"#fnref2\">2.<\/a> <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-9001878352\" target=\"_blank\"><span style=\"font-style: italic;\">Neeharika Infrastructure (P) Ltd.<\/span> v. <span style=\"font-style: italic;\">State of Maharashtra<\/span><\/a>, <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-9001878352\" target=\"_blank\"><span style=\"text-decoration: underline; text-underline-style: solid; text-underline-mode: continuous; text-underline-color: #0000ff; color: #0000ff;\">(2021) 19 SCC 401<\/span><\/a>.<\/p>\n<p style=\"margin-left: 18pt; text-indent: -18pt;\"><a id=\"fn3\" href=\"#fnref3\">3.<\/a> <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0000037360\" target=\"_blank\"><span style=\"font-style: italic;\">Union of India<\/span> v. <span style=\"font-style: italic;\">Kunisetty Satyanarayana<\/span><\/a>, <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0000037360\" target=\"_blank\"><span style=\"text-decoration: underline; text-underline-style: solid; text-underline-mode: continuous; text-underline-color: #0000ff; color: #0000ff;\">(2006) 12 SCC 28<\/span><\/a> : (2007) 2 SCC (L&amp;S) 304.<\/p>\n<p style=\"margin-left: 18pt; text-indent: -18pt;\"><a id=\"fn4\" href=\"#fnref4\">4.<\/a> <span style=\"font-style: italic;\">Jiostar India (P) Ltd.<\/span> v. <span style=\"font-style: italic;\">CCI<\/span>, SLP (C) No. 2867 of 2026.<\/p>\n<p style=\"margin-left: 18pt; text-indent: -18pt;\"><a id=\"fn5\" href=\"#fnref5\">5.<\/a> <span style=\"font-style: italic;\">R. (on the application of Soma Oil &amp; Gas Ltd.)<\/span> v. <span style=\"font-style: italic;\">Director of the Serious Fraud Office<\/span>, 2016 EWHC 2471 (Admin.).<\/p>\n<p style=\"margin-left: 18pt; text-indent: -18pt;\"><a id=\"fn6\" href=\"#fnref6\">6.<\/a> <span style=\"font-style: italic;\">R. (Bermingham)<\/span> v. <span style=\"font-style: italic;\">Director of the Serious Fraud Office<\/span>, 2007 QB 727 : (2007) 2 WLR 635 : 2007 EWHC 200 (Admin.).<\/p>\n<p style=\"margin-left: 18pt; text-indent: -18pt;\"><a id=\"fn7\" href=\"#fnref7\">7.<\/a> <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0000437108\" target=\"_blank\"><span style=\"font-style: italic;\">United States<\/span> v. <span style=\"font-style: italic;\">R. Enterprises, Inc.<\/span><\/a>, <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0000437108\" target=\"_blank\"><span style=\"text-decoration: underline; text-underline-style: solid; text-underline-mode: continuous; text-underline-color: #0000ff; color: #0000ff;\">1991 SCC OnLine US SC 13 : 112 L Ed 2d 795 : 498 US 292 (1991)<\/span><\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>by Sara Sundaram* and Nikunj Agarwal**<\/p>\n","protected":false},"author":67011,"featured_media":394053,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30936,20271],"tags":[112926,14371,50564,71658,49094,112929,84702,112927,2805,53922,18281,112928],"class_list":["post-394048","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cam","category-experts_corner","tag-adverse-action","tag-disciplinary-proceedings","tag-due-process","tag-employee-rights","tag-employment-law","tag-internal-investigation","tag-legal-safeguards","tag-legal-shield","tag-natural_justice","tag-preliminary-investigation","tag-show-cause-notice","tag-workplace-investigation"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.0 (Yoast SEO v28.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Before Adverse Action: Legal Safeguards in Preliminary Investigations | SCC 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