Gujarat High Court

Bhavsar Himanshu @ Pintu Bharatbhai vs State Of Gujarat on 26 June, 2025

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                            R/CR.MA/21717/2021                                     ORDER DATED: 26/06/2025

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                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                             R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
                                           FIR/ORDER) NO. 21717 of 2021

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                                          BHAVSAR HIMANSHU @ PINTU BHARATBHAI
                                                         Versus
                                                STATE OF GUJARAT & ANR.
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                       Appearance:
                       MR PIYUSH TRIVEDI for MR PRATIK B BAROT(3711) for the Applicant(s)
                       No. 1
                       DS AFF.NOT FILED (N) for the Respondent(s) No. 2
                       MR TIRTHRAJ PANDYA, ADDL. PUBLIC PROSECUTOR for the
                       Respondent(s) No. 1
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                          CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI

                                                           Date : 26/06/2025

                                                            ORAL ORDER

Learned advocate for the petitioner does not press present petition qua the offences of the IPC is concerned and his prayer is limited to the offence of the Securities Contract Regulation Act. Accordingly, present petition stands dismissed as not pressed qua offences of the IPC and I.T. Act are concerned.

1. Rule returnable forthwith. Learned APP for the respondent - State wavies service of notice of Rule for and on behalf of the respondent State.

2. By way of this application under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973, petitioner prayed to quash and set

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aside FIR being C.R.No.11206062210543 registered with Satlasana Police Station, for the offences punishable under Sections 13 and 14 of the Securities Contract Regulation Act qua the petitioner herein.

3. Brief facts of the case are as under:-

3.1 Respondent No.2 who is a Police personnel serving at Satlasana Police Station, Dist.: Mehsana as in capacity of the original first informant in nutshell comes up with a case that on a secret information received by them about in a field near to the house of accused Thakor Kiranji Parthiji by a usage of mobile phone, certain persons have indulged into 'dabba trading', there are accounts being kept by such persons and are present at the scene of offence. It is further a case that on the strength of such a secret information received by the Police party by calling the Panchas and asking them to accompany Police party, all of them reached the scene of offence at around witnessing the presence of around five persons with mobile phones, tablets and notebooks as also they were seen doing something in their mobile phones. As soon as Police party tried to cordon them and a raid was conducted, all of them leaving behind the mobile phones and notebooks started running away from the scene of offence, in a process, three persons were nabbed at the spot itself whose identity upon inquiring was revealed as Thakor Ajitji Parthiji, Thakor Prakashji @ Popatji @ Amratji and Thakor Sureshji Moghaji as original accused Nos. 1 to 3 of the said FIR. It is the case that since notebooks and mobile phones were left behind by the accused persons about four notebooks and

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certain mobile phones as also certain written pages and a tablet was recovered by the Police party. Police party upon verifying the mobile phones found and switching it on, they found an application in the form of market plus, in all the three mobiles recovered from the three accused persons nabbed at the spot. In short, after every article found at the scene of offence was recovered by drawing a panchnama to that effect there was a further inquiry made from the three accused persons nabbed at the spot, to which, it was learnt that two of the accused persons who are not caught at the scene of offence were Thakor Manishji Virsangji and one Rizvanbhai Shaikh. It was revealed that co-accused Rizvanbhai Shaikh under whom, all the three accused persons were working on salary basis, so therefore, with a case that the accused persons with the help of an application known as Market Plus, there was an attempt by them to cheat Government of India, thereby causing financial loss to the entire economic structure of the Government of India as also without procuring any licence of stock exchange, the accused persons were indulged into a transaction of shares and by indulging into such illegal trade inasmuch as prices of shares were artificially made to shoot up by maintaining records to that effect, an act of criminal breach of trust and cheating was committed by the accused persons resulting into registration of FIR against the petitioner. Hence, present petition.

4. The principal contention advanced by learned advocate appearing on behalf of petitioner is that cognizance of the offences under the Act cannot be taken on the basis of a police report, in view of the statutory bar contained in Section 26 of

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the Act. Accordingly, he submits that the filing of the FIR against the petitioner is a clear abuse of the process of law.

4.1 In support of his submission, reliance has been placed on the judgment of a Co-ordinate Bench in the case of Milanbhai Manubhai Shah v. State of Gujarat (Special Criminal Application No. 1841 of 2018), as well as the decision in Bhagirathsinh Rajendrasinh Solanki & 13 others v. State of Gujarat (Special Criminal Application No. 10070 of 2016).

4.2 He, therefore, concluded his submissions by praying that the present petition be allowed and that the FIR, along with all consequential proceedings arising therefrom, be quashed.

5. On the other hand, learned APP prays to pass necessary orders.

6. I have heard learned advocates for the petitioner and learned APP for the respondent-State.

7. At the outset, I may refer Section 26 of the Act, which is as under:-

"26. Cognizance of offences by courts.

(1) No court shall take cognizance of any offence punishable under this Act or any rules or regulations or bye-laws made thereunder, save on a complaint made by the Central Government or State Government or the Securities and Exchange Board of India or a recognised stock exchange or by any person.

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(2) No court inferior to that of a Court of Session shall try any offence punishable under this Act."

8. A bare perusal of Section 26 of the Act makes it evident that the Court is barred from taking cognizance of any offence punishable under the Act, except upon a complaint made by the Central Government, State Government, the Securities and Exchange Board of India (SEBI), a recognized stock exchange, or by any person as specified therein.

8.1. It is thus well-settled that while the police may register an FIR and investigate the offence, the Court cannot take cognizance thereof unless a complaint, as defined under Section 2(d) of the Code of Criminal Procedure, 1973, is filed before the competent Court by a person authorized under Section 26 of the Act.

8.2. The issue raised by the petitioner stands squarely covered by the judgment rendered in Milanbhai Manubhai Shah (supra), wherein the Co-ordinate Bench had referred to its earlier decision dated 27.04.2015 passed in Special Criminal Application No.4780 of 2014. Paragraph 7 of the said judgment, being relevant, is reproduced hereinbelow:

"7. The issue raised in this writapplication is squarely covered by an order passed by this Court dated 27/04/2015 in the Special Criminal Application No.4780 of 2014. The order dated 27/04/2015 is extracted hereunder:-

Rule returnable forthwith. Mr.Shah, the learned APP waives service of notice of Rule for and on behalf of the respondents.

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By this writ application under Article 226 of the Constitution of India, the applicantsoriginal accused have prayed for the following reliefs:

(A) Your Lordships may be pleased to quash and set aside FIR being C.R. NO.II68 of 2011 for the offence under Sections 23(1) of the Securities Contract (Regulation) Act, 1956 and under Section 15H(A) of the Securities and Exchange Board of India Act, 1992 and the chargesheet filed thereupon (Annexure A) and the impugned order dated 19.09.2014 passed by the learned 3rd Additional Sessions Judge at Mahesana in application below Exhibit 4. (Annexure B).

(B) Pending admission, hearing and final disposal of this petition Your Lordships may be pleased to stay the further proceedings pursuant to the FIR being C.R. NO.II68 of 2011, registered at Mahesana B Division Police Station on 25.05.2011 for the offence under Sections 23(1) of the Securities Contract (Regulation) Act, 1956 and under Section 15H(A) of the Securities and Exchange Board of India Act, 1992 and the chargesheet filed thereupon (Annexure A).

On 18th November 2014 the following order was passed:

"Issue notice for final disposal to the respondents, returnable on 18th December 2014. Mr.Pujari waives service of notice for and on behalf of the respondents. It appears that the respondent no.2, a Police Constable of Mehsana BDivision Police Station, Mehsana, received an information, and based upon such information, lodged an FIR against the applicants herein for the offence punishable under Section 23(1) of the Securities Contracts (Regulation) Act, 1956 and Section 15H(A) of the

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Securities and Exchange Board of India Act, 1992. It also appears that on conclusion of the investigation, chargesheet has been filed and the case as on today is pending in the Court of the 3 rd Additional Sessions Judge, Mehsana, being sessions triable case.

It appears that the applicants herein filed an application for discharge under Section 227 of the Code of Criminal Procedure. However, the same came to be rejected by the learned 3rd Additional Sessions Judge, Mehsana, vide order dated 19th September 2014. It is this order before me which is the subject matter of challenge.

Prima facie, I am of the view that while rejecting the discharge application, the learned Judge appears to have missed the effect of Section 26 of the Act, 1956 and Section 26 of the SEBI Act, 1992.

My attention has been drawn to Section 26 of the Securities Contracts (Regulation) Act, 1956, which is with regard to cognizance of offences by courts. Section 26 reads thus :

26. Cognizance of offences by courts.(1) No court shall take cognizance of any offence punishable under this Act or any rules or regulations or byelaws made thereunder, save on a complaint made by the Central Government or State Government or the Securities and Exchange Board of India or a recognized stock exchange or by any person.

(2) No court inferior to that of a Court of Session shall try any offence punishable under this Act.

The plain reading of Section 26 of the Act, 1956 would suggest that no court will be able to take cognizance of any offence punishable under the Act except on a complaint made by the Central Government or State Government or Securities &

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Exchange Board of India or a recognized Stock Exchange or any person.

Let me assume for the moment that the respondent no.2 herein would fall within the ambit of 'any person'. The issue which falls for my consideration is, whether the court before whom the chargesheet is filed can take cognizance of the offence. The word 'complaint' figuring under Section 26 of the Act means, a complaint in writing before the court as defined under Section 2(d) of the Code of Criminal Procedure. I am conscious of the fact that Section 25 makes the offence under Section 23 of the Act a cognizable offence. Since Section 23 is a cognizable offence, the police would definitely have the power to investigate. To this extent, there is no problem. The police has investigated, chargesheet is filed. Now the stage has come for the court to take cognizance. In my view, the Sessions Court will not be able to take cognizance on the police report in view of the specific bar contained in Section 26 of the Act. The same is the position with Section 26 of the Securities and Exchange Board of India Act, 1992. Section 26 reads thus :

26. Cognizance of offences by courts.(1) No court shall take cognizance of any offence punishable under this Act or any rules or regulations made thereunder, save on a complaint made by the Board.

(2) No court inferior to that of a court of session shall try any offence punishable under this Act.

The law in this regard is wellsettled. Although the police has the power to investigate the offence alleged against the applicant and chargesheet has been filed, the Court will not be able to take cognizance in view of the specific bar. The investigation carried out by the police can be used for the purpose of filing a complaint in writing before the appropriate court. To be precise, whatever

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materials have been collected by the Investigating Officer could be used by the authority for the purpose of filing a complaint before the competent court.

Having heard Mr.Gadhavi, the learned advocate appearing on behalf of the applicants and having gone through the materials on record, I am of the view that the applicants have been able to make out a strong prima facie case to have an interim order of stay of further proceedings of Sessions Case No.20 of 2014 pending in the Court of the 3rd Additional Sessions Judge, Mehsana. I, accordingly, grant such relief. Direct service is permitted."

Mr. NJ Shah, the learned APP appearing for the State very fairly submitted that the position of law being well settled, the prosecution must fail.

In the aforesaid view of the matter, this application is allowed. The proceedings of Sessions Case No.20 of 2014 pending in the Court of 3rd Additional Sessions Judge, Mehsana are hereby quashed. All consequential proceedings pursuant thereto stand terminated. Rule is made absolute. Direct service is permitted."

9. I have no hesitation in accepting indeed, I unreservedly accept the submission advanced by learned advocate for the petitioner, having due regard to the settled position of law as succinctly elucidated in the aforesaid judgments.

10. The net result of the foregoing discussion is that the writ petition succeeds and is accordingly ALLOWED.

11. The FIR being C.R.No.11206062210543 registered with Satlasana Police Station, for the offences punishable under

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Sections 13 and 14 of the Securities Contract Regulation Act qua the petitioner herein are hereby quashed and set aside. Rule is made absolute. Direct service is permitted.

12. However, it is clarified that this order shall not preclude the competent authority from initiating prosecution by filing a criminal complaint, based on the material collected during the course of investigation in connection with the aforesaid FIR, in accordance with law.

13. FIR in question and subsequent proceedings arising there- from in respect of the offences punishable under the IPC and I.T. Act stand continued; without being influenced by any observations made in this order.

(J. C. DOSHI,J) SHEKHAR P. BARVE