The Supreme Court quashed the High Court's decision and held that the investigation against the appellant company was unnecessary. The Court determined that the company had no connection to the alleged offender, so the freeze and bank guarantee orders were unfounded.
Brief Facts of the Case:
A Criminal Appeal was filed before the Supreme Court challenging the impugned order and decision of the Gujarat High Court. The High Court upheld the bank guarantee requirement, prompting the appellant company to appeal the decision.
Brief Background of the Case:
The appellant company, a Foreign Institutional Investor, was allowed by the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) to trade shares and securities in the Indian Stock Market. However, due to certain litigations, the company ceased trading in the Indian markets in 2006. At this point, the appellant company had shares and money in its bank account with ICICI Bank.
Procedural History:
The appellant company was subject to two freeze orders under Section 102 of the Criminal Procedure Code, 1973. The first freeze order was imposed against the appellant company in October 2006, and the second freeze order was imposed in August 2010.
These abovementioned freeze orders were levied against the appellant company on the grounds of the necessity of investigation of an alleged crime. The second freeze order incapacitated the appellant company to repatriate an amount of Rs. 38.52 crores, which was realized in favour of the appellant company pursuant to an order passed by the Securities Appellate Tribunal. The appellant company approached the High Court against the imposition of the bank guarantee, but the High Court reiterated the imposition of the bank guarantee.
Observations of the Court:
The Supreme Court stated that the lower Courts had imposed a bank guarantee and freeze order against the appellant company based solely on the grounds of criminal proceedings against Dharmesh Doshi (hereinafter referred to as “Alleged offender”), who was alleged to be connected to the appellant company. However, the Alleged offender, who was never an employee, shareholder, director, or key managerial person in the appellant company, has since been discharged of the alleged offences by the trial Court. It was also noted that the trial faced by the Alleged offender was in his individual capacity and not on behalf of the appellant company.
As such, the freeze order against the appellant company's properties was not legally justifiable since the appellant company was not connected to the alleged crime and had not been named in the FIR or chargesheet. The freeze order had caused huge losses to the appellant company, and since the investigation against the appellant company was redundant, the freeze order and bank guarantee were also redundant. The condition imposed upon the appellant to furnish a bank guarantee was not liable to be sustained and was therefore set aside.
The decision of the Court:
The Supreme Court quashed the impugned decision and order of the High Court. The Court stated that an investigation against the appellant company was unnecessary since the company did not employ the Alleged offender. Consequently, the Supreme Court overturned the freeze and bank guarantee orders against the appellant company.
Case Title: M/s. Jermyn Capital LLC Dubai v Central Bureau Of Investigation & Ors.
Case No.: Criminal Appeal No. 1434 of 2023
Citation: 2023 Latest Caselaw 458 SC
Coram: Hon’ble Mr. Justice Krishna Murari and Hon’ble Mr. Justice Sanjay Kumar
Advocates for Petitioner: Mr. Sunil Fernandes, AOR, Ms. Nupur Kumar, Adv., Ms. Priyansha Sharma, Adv., Mr. Divyansh Tiwari, Adv. and Ms. Diksha Dadu, Adv.
Advocates for Respondent: Mr. K.M. Nataraj, ASG, Mrs. Aishwarya Bhati, ASG, Mr. Sharath Nambiar, Adv., Mr. Vatsal Joshi, Adv., Mr. Vinayak Sharma, Adv., Ms. Indira Bhakar, Adv., Mr. Anuj S. Udupa, Adv., Mr. Nakul Chengappa, Adv., Mr. Chithransh Sharma, Adv., Mr. Anukalp Jain, Adv., Mr. Padmesh Mishra, Adv., Mr. Yuvraj Sharma, Adv., Mr. Akshay Nain, Adv., Mr. Arvind Kumar Sharma, AOR, Ms. Swati Ghildiyal, AOR, Ms. Devyani Bhatt, Adv. and M/s. K J John And Co, AOR
Read Judgement @LatestLaws.com
Picture Source :
