Gujarat High Court
Anil Amrutlal Chauhan vs State Of Gujarat on 8 September, 2025
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R/CR.MA/17078/2019 ORDER DATED: 08/09/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 17078 of 2019
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ANIL AMRUTLAL CHAUHAN & ORS.
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR PREMAL S RACHH(3297) for the Applicant(s) No. 1,2,3,4,5,6
DS AFF.NOT FILED (R) for the Respondent(s) No. 2
MR CHINTAN DAVE, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 08/09/2025
ORAL ORDER
1. By way of this application under Article 226 of the
Constitution of India read with Section 482 of the Code of
Criminal Procedure, 1973, petitioners prayed to quash and set
aside FIR being C.R.No.II-150 of 2018 registered with City 'C'
Division Police Station, Jamnagar for the offences punishable
under Sections 13, 15, 16, 17, 19,23(1)(b)(c)(e) and (f) of the
Securities Contract (Regulation) Act, 1956 qua the petitioners
herein.
2. Brief facts of the case are as under:-
2.1 That the respondent no.2 PSI, on the basis of information
received by him while patrolling in an area in Jamnagar city
along with other police officers, raided the shop of petitioner no.1
on 25.09.2018 and lodged the impugned FIR alleging that the
petitioners were trading in securities in contravention of the
provisions of the Act and thereby have committed the offences
punishable u/s. 13, 15, 16, 17, 19, 23(1)(b)(c)(e) and (f) of the
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Act. On conclusion of investigation, charge sheet no.208/2018
came to be filed against the present petitioners. Hence, present
petition.
3. The principal contention advanced by learned advocate
appearing on behalf of petitioners 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 the
Act. Accordingly, he submits that the filing of the FIR against the
petitioner is a clear abuse of the process of law.
3.1 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).
3.2 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.
4. On the other hand, learned APP prays to pass necessary
orders.
5. I have heard learned advocates for the petitioner and
learned APP for the respondent-State.
6. At the outset, I may refer Section 26 of the Act, which is as
under:-
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"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.
(2) No court inferior to that of a Court of Session
shall try any offence punishable under this Act."
7. 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.
7.1. 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.
7.2. 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:
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"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.
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).
(C) To pass such other further order as deemed fit in
the facts and circumstances of the case.
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
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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 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
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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 & 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
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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 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."
8. 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.
9. The net result of the foregoing discussion is that the writ
petition succeeds and is accordingly allowed.
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10. The impugned FIR being C.R.No.II-150 of 2018 registered
with City 'C' Division Police Station, Jamnagar for the offences
punishable under the Securities Contract (Regulation) Act, 1956
as well as consequential proceedings initiated in pursuance
thereof qua present petitioners is quashed and set aside. Rule is
made absolute. Direct service is permitted.
(J. C. DOSHI,J)
SATISH
