Punjab-Haryana High Court
Pippal Singh vs State Of Haryana & Ors on 26 June, 2024
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CRM
CRM-M-50541-2018
Reserved on: 24.05.2024
Date of Pronouncement : 26.06.2024
Pippal Singh ...Petitioner
VERSUS
State of Haryana & Others ...Respondents
Respondents
CORAM: HON'BLE MR. JUSTICE HARKESH MANUJA
Present : Mr. Pratham Sethi, Advocate for the petitioner
Mr. Rajiv Sidhu, DAG,
AG, Haryana.
****
HARKESH MANUJA, J.
By way of present petition filed under Section 482
Cr.P.C., prayer has been made for issuance of directions to
respondents
espondents to send/transfer the FIR No. 0576 dated 22
22.11.2017
.11.2017
registered u/s 420 IPC at Police Station Rattia, District Fatehabad,
Haryana to the competent/Special Court of New Delhi in line with the
orders dated 06.07.2018 and 05.10.2018 passed by this Court in
CRM-M
M 14044 of 2018 and CRM-M
M 14425 of 2018 both titled as
'Pippal Singh V/s State
State of Punjab and others'
others'.
Factual aspects
a
2. Briefly stated, facts of the case are that above stated FIR
was registered against the petitioner on a complaint received from
Satnam Singh resident of Village Khudana, Rattia, District
Fatehabad relevant part of which is reproduced hereunder:
Fatehabad, hereunder:-
"To, the SHO police Station Rattia regarding fraud committed upon
me. Sir, it is requested that I Satnam Singh son of Bhola Singh,
caste Majbi Sikh,resident of Khandua, Tehsil Rattia, District
Fatehabad, on dated 23.11.2012 Pippal Singh Sidhu Son of Balbir
Singg caste Jatt Sikh resident of Village Chak Somia Wala, District
Ferozepur Punjab the managing Director of Nicer Green Forest
Infrastructure Developers India Ltd. The office of this company is
situated in Sardoolgarh,
Sardoolgarh, Punjab. That Pippal Singh Sidhu came to
our village Khandua and he has conducted one seminar in our
village and he called myself
self and my friends in Seminar conducted in
our village Khandua, and told us that if you invest money in the
company, then you will get more interest th than
n bank. Then Pippal
Singh Sidhu opened FD and RD in the company and got deposited
Rs. 4 lacs from me on different dates in the company and from my
other known persons he got deposited RS. 35000/ 35000/- from Lakhbir
Singh son of Najar
Najar Singh, R/o Bodha, Rs 90000/
90000/- from Gurmeet
Chand son of Gopi Chand village Barabadi, Rs. 50000/ 50000/- from
Balwinder Singh son of Jagir Singh R/o Khandua, Rs. 1 lac 25000/-
25000/
from Balkar Singh son of Ghagar Singh r/o Khandua, Rs. 2 lacs from
Gurpreet Singh son of of Balwinder Singh, r/o Village Khandua, Rs.
Rs. 250000/-
250000/ Kulbir Singh son of Balkar Singh r/o village Khandua,
Rs. 650000/-
650000/ from Jagtar Singh son of Maherder Singh r/o Village
Jagatgarh Bandar,Punjab, Rs. 2 lac from Balwant Singh son of
Kartar Singh, r/o Fatehabad,
Fatehabad, Rs, 1 lac 10000/
10000/- lacs from Baba Singh
son of Gurbachan Singh r/o village Rajitgarh, Rs. 550000 from
Nirmal Singh son of Jagir Singh ro village Bhagwanpur Hingna, and
all of us has deposited around 20 lacs in the company of Pippal
Singh Sidhu in view of getting more interest and now he is not
returning our money and the company is also closed and has
committed fraud with us. Kindly take a legal action against Pippal/
Singh Sidhu and NGHI Developers India Ltd. MGK Agriculture
Holding Developers (India
(India Ltd) We will be thankful to you.
Sd/ Satnam Singh"
Accordingly, FIR was registered against the petitioner u/s
420 IPC, Sec 2(b) Chit Fund Act, 1982 (hereinafter referred as Chit
Fund Act) and Section 3 of The Haryana Protection Of Interest Of
Depositors In Financial
Financial Establishment Act, 2013 ((hereinafter
hereinafter referred
as HPIDFE Act).
2.1 It is admitted position of the fact that three different
companies, registered with "Registrar of Companies' were formed
and being run by the petitioner, whose names are as under:-
i) Naiser Green Forest Limited
ii) Naiser Green Housing andnd Infrastructure Developer Ltd.
iii) N.G.H.I Developers India Ltd.
Ltd.
It is also relevant to note here that all these companies
were ordered to be closed by SEBI on different dates and are
presently facing proceedings before Securities Appellate Tribunal
(SAT) Court/appellate courts which are pending at different stages.
Arguments from petitioner side
3. Learned Counsel for the petitioner made submissions on
various grounds.
4. Firstly, he drew attention of this Court towards the fact
that four other FIRs having similar allegations against the petitioner
were registered at PS City Ferozpur District Ferozpur. Details of
these FIRs are as below:
i) FIR No. 151 dated 22.07.2015
ii) FIR No. 191 dated 26.09.2015
iii) FIR No. 243 dated 09.12.2015
iv) FIR No. 40 dated 17.02.2016
4.1 Learned counsel submitted that proceedings in all those
cases were transferred from the Court of Ld. JMIC, Ferozepur to
the Ld. District & Sessions Judge, Special Court SEBI, Patiala House
vide Order dated 20.02.2023 passed in Transfer Petition (Criminal)
Nos 613--616
616 of 2019 before Hon'ble Supreme Court titled as "State
State
of Punjab v. Pippal Singh & Ors"
Ors
4.2 Learned Counsel further dr
drew attention of the court
towards the fact that petitions CRM--M-37528-2019, CRM-M-36476
36476-
2019, CRM
CRM-M-17795-2019
2019 & CRM
CRM-M-17542-2019 were also
disposed of in view of the direction by this court that n
necessary
ecessary
application
ication be moved by respondent
respondent-State within two months to
transfer the case before the Special SEBI Court
Court, New Delhi.
4.3 In view of the above, he sought p
parity and requested to
transfer the present FIR on the line of FIR's already transferred to the
Special SEBI Court in the abovementioned cases.
5. To submit his second argument, he drew attention of the
court towards the relevant provisions of different statues which are
reproduced as below:
THE CHIT FUNDS ACT, 1982
Section 2 (b) "chit" means a transaction whether called chit, chit
fund, chitty, kuri [, fraternity fund, Rotating Savings and Credit
Institution] or by any other name by or under which a person enters
into an agreement with a specified number of persons that every one
of them shall subscribe a certain sum of money (or a certain quantity
of grain instead) by way of periodical instalments over a definite
period and that each such subscriber shall, in his turn, as a
determined by lot or by auction of by tender or in such other manner
as may be specified in the chit agreement, be entitled to the [net chit
amount].
Explanation. --A A transaction is not a chit within the meaning of this
clause, if in such transaction, --
(i)
i) some alone, but not all, of the subscribers get the [net chit
amount] without any liability to pay future subscriptions; or
(ii) all the subscribers get the [gross chit amount] by turns with a
liability to pay future subscriptions;
(c) "chit agreement" means the document containing the articles of
agreement between the foreman and the subscribers relating to the
chit
The Haryana Protection Of Interest Of Depositors In
Financial Establishment Act, 2013
2(d) "financial establishment" means an individual, a ann association of
individuals, a firm or a company registered under the Companies
Act, 1956 (Central Act 1 of 1956) or limited liability partnership
registered under the Limited Liability Partnership Act, 2008 (Central
Act 6 of 2009) accepting deposit under any scheme or arrangement
or in any other manner but does not include a corporation or a
cooperative society owned or controlled by any State Government or
the Central Government or a banking company as defined under
clause (c) of section 5 of the Banking Regulation Act, 1949 (Central
Act 10 of 1949);
xxxx xxxx
3. (1) A financial establishment which commits default in repayment
of deposit or benefit in the form of interest, bonus, profit or in any
other form as promised or fails to render any specified service
promised against such deposit, or fails to render any sspecific
pecific service
agreed against the deposit with an intention of causing wrongful gain
to one person or wrongful loss to another person or commits such
default due to its inability arising out of impracticable or commercially
not viable promises made while accepting such deposit or arising out
of deployment of money or assets acquired out of the deposits in
such a manner as it involves inherent risk in recovering the same
when needed, shall be deemed to have committed a default or failed
to render the specific
specific service, fraudulently. (2) If any financial
establishment defaults any repayment of deposit on maturity along
with any benefit in the form of interest, bonus, profit or in any other
form as promised or fails to render service as assured against the
deposit, every person including the promoter, partner, director,
deposit,
manager or any other person or an employee responsible for the
management of or conducting of the business or affairs of such
financial establishment shall be punished with imprisonment for a
termm which may extend upto seven years and with fine upto two lakh
rupees. Such financial establishment shall also be liable for a fine
which shall not be less than five lakh rupees or where such deposit
is quantifiable in terms of money twice the defrauded a amount
mount
whichever is more: Provided that in the absence of special and
adequate reasons recorded, the imprisonment shall not be less than
three years with fine which shall not be less than fifty thousand
rupees as against each individual and not less than tw two
o lakh rupees
against such financial establishment.
xxxx xxxx
4. (1) Notwithstanding anything contained in any other law for the
time being in force,--
force,
(i) where upon complaint received from the depositor or otherwise,
the District Magistrate is satisfied that any financial establishments
has failed--
failed
(a) to return the deposit after maturity or on demand by the
depositor; or
(b) to pay interest or other assured benefit; or
(c) to provide the service promised against such deposit; or
(ii) where
where the District Magistrate has reason to believe that any
financial establishment is acting in a calculated manner detrimental
to the interests of the depositor, with intention to defraud them and if
the District Magistrate is satisfied that such financial establishment is
not likely to return the deposits or make payment of interest or other
benefits assured or to provide the services against which the deposit
is received, the District Magistrate may, in order to protect the
interest of the depositors of such
such financial establishment, after giving
an opportunity of hearing and recording reasons in writing, issue an
order by publishing it in the Official Gazette, for attaching the money,
property or assets belonging to or believed to have been acquired by
such financial establishment either in its own name or in the name of
any other person, from and out of the deposits collected by the
financial establishment, or if it transpires that such money or other
property or assets, is not available for attachment or a are
re not
sufficient for repayment of the deposits, may order attachment of
such other property or assets of the said financial establishment or
the personal assets of the promoters, partners, directors, managers,
members or any other person of the said finan financial
cial establishment, as
the District Magistrate may deem fit.
(2) On the publication of the order under subsub-section
section (1), all money,
properties and assets of the financial establishment and in the name
of the persons mentioned therein shall forthwith vest in the
competent authority appointed by the District Magistrate pending
further order from the designated court.
(3) On receiving a complaint under sub sub-section
section (1), the District
Magistrate shall forward such complaint, along with his report
to the Government
Government at the earliest and shall send a copy of the
complaint to the concerned Superintendent of Police in the
district for investigation.
(4) The attachment shall be made in the manner provided for
attachment of property in execution of a decree under the Cod Codee of
Civil Procedure, 1908 (Central Act 5 of 1908)
SECURITY AND EXCHANGE BOARD OF INDIA ACT, 1992
11AA. Collective investment scheme
scheme. --
(1) Any scheme or arrangement which satisfies the conditions
referred to in sub-section
sub (2) [or sub sub-section (2A)] shall be a
collective investment scheme:
[Provided that any pooling of funds under any scheme or
arrangement, which is not registered with the Board or is not
covered under sub-section
sub section (3), involving a corpus amount of one
hundred crore rupees or more sha shallll be deemed to be a collective
investment scheme.]
(2) Any scheme or arrangement made or offered by any [person]
under which,--
which,
(i) the contributions, or payments made by the investors, by
whatever name called, are pooled and utilized for the purposes of
the scheme or arrangement;
(ii) the contributions or payments are made to such scheme or
arrangement by the investors with a view to receive profits,
income, produce or property, whether movable or immovable,
from such scheme or arrangement;
(iii) the property,
property, contribution or investment forming part of
scheme or arrangement, whether identifiable or not, is managed
on behalf of the investors;
(iv) the investors do not have day day-to-day
day control over the
management and operation of the scheme or arrangement.
[(2A) Any scheme or arrangement made or offered by any person
satisfying the conditions as may be specified in accordance with the
regulations made under this Act.]
(3) Notwithstanding anything contained in sub sub-section (2) [or sub-
sub
section (2A)], any scheme
scheme or arrangement
arrangement--
(i) made or offered by a cooperative society registered under the
Co--operative
operative Societies Act, 1912 (2 of 1912) or a society being a
society registered or deemed to be registered under any law relating
to co-operative
co societies for the time
me being in force in any State;
(ii) under which deposits are accepted by non non-banking
banking financial
companies as defined in clause (f) of section 45 45-II of the Reserve
Bank of India Act, 1934 (2 of 1934);
(iii) being a contract of insurance to which the Insurance Act, 1938
(4 of 1938), applies;
(iv) providing for any scheme, pension scheme or the insurance
scheme framed under the Employees' Provident Funds and
Miscellaneous Provisions Act, 1952 (19 of 1952);
(v) under which deposits are accepted under ssection ection 58A of the
Companies Act, 1956 (1 of 1956);
(vi) under which deposits are accepted by a company declared as a
Nidhi or a Mutual Benefit Society under section 620A of the
Companies Act, 1956 (1 of 1956);
(vii) falling within the meaning of chit bus
business
iness as defined in clause
(e) of section 2 of the Chit Funds Act, 1982 (40 of 1982);
(viii) under which contributions made are in the nature of
subscription to a mutual fund;
[(ix) such other scheme or arrangement which the Central
Government may, in consultation
consultation with the Board, notify,]
shall not be a collective investment scheme.]
5.1 Learned Counsel further submitted that if definitions
provided under the statutory provisions mentioned above were taken
into consideration,
consideration neither his case was covered under the purview of
Chit Funds
Fund Act, 1982 qua which Section 420 IPC could be invoked;
invoked
nor provisions of HPIDFE Act, 2013 could be made applicable in the
present case as no complaint was forwarded by the District
Magistrate to the police for investigati
investigation
on in accordance with Section
4(3)
(3) of the HPIDFE Act.
5.2 He also submitted that offence, if any, would fall within
the purview
urview of "Collective Investment Scheme" defined under
regulation 11AA of SEBI (Collective Investment Schemes)
Regulations, 1999 (hereinafter referred as CIS Regulations).
). He also
referred to the relevant provisions of The Securities And Exchange
Board Of India Act, 1992 (hereinafter
ereinafter referred as SEBI Act
Act), which
are reproduced here under:
" 20A.Bar
20A. of jurisdiction:
No order passed by the Board [or the Adjudicating Officer] under this
Act shall be appealable except as provided in [section 15T or] section
20 and no civil court shall have jurisdiction in respect of any matter
which the Board [or the Adjudicating Officer] is empo empowered
wered by, or
under, this Act to pass any order and no injunction shall be granted by
any court or other authority in respect of any action taken or to be
taken in pursuance of any order passed by the Board [or the
Adjudicating Officer] by, or under, this A Act.
24. Offences:
(1) Without prejudice to any award of penalty by the adjudicating
officer under this Act, if any person contravenes or attempts to
contravene or abets the contravention of the provisions of this Act or
of any rules or regulations made th thereunder,
ereunder, he shall be punishable
with imprisonment for a term which may extend to [ten years, or with
fine, which may extend to twenty-five
twenty five crore rupees or with both].
(2) If any person fails to pay the penalty imposed by the adjudicating
officer or fails to comply with any of his directions or orders, he shall
be punishable with imprisonment for a term which shall not be less
than one month but which may extend to [ten years, or with fine,
which may extend to twenty-five
twenty five crore rupees or with both
26. Cognizance
nizance of offences by courts
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."
Board.
5.3 He further submitted that in view of the collective reading
of Sections
Section 24, 26 and 20A of the SEBI Act
Act,, for any offence falling
within its domain, there was a statutory bar against taking of
cognizance by Court other than Special SEBI Court and only SEBI
Board was
as having power to lodge a complaint before the competent
court. Since, in the present case, there was alleged breach of
provisions of CIS Regulations as only Special SEBI Court was
empowered to take cognizance of the offence on the basis of
complaint filed by SEBI Board.
5.4 In support of his contentions, he placed reliance upon the
judgment of Madhya Pradesh High Court in "Alka Shrivastava vs
State of MP",
MP", bearing case M.CrC. No. 23883/2020 decided on
22.09.2020, wherein the
the FIR was quashed and this judg
judgment was
challenged by the State by way of Special Leave to Appeal (Crl.) No.
7737/2022, titled as "The State of Madhya Pradesh v. Alka
Shrivastava & Another" before the Hon'ble Supreme Court, but the
same was dismissed vide order dated 26.08.2022 while upholding
the order passed by Madhya Pradesh High Court.
6. Thirdly,
dly, he contended that provisions of Cr
Cr.P.C. were not
to be made applicable in the present case in accordance with the
principle Generalia Specialibus Non Derogant (General things do not
derogate from special things) or if there was any kind of conflict
between 'special law' and 'general law', the former would prevail.. In
this context, he
he placed reliance upon the judg
judgment
ment of Hon'ble Apex
Court in "CIT v. Shahzada Nand
nd & Sons"
Sons",, reported as 1966 SCC
OnLine SC 24. He also emphasized that following the same principle,
Hon'ble Delhi High Court in "Ashish Bhalla v. State & Another",
Another"
reported as 2023 SCC OnLine Del 5818, while dealing with the
allegations of the fraudulent and illegal siphoning of funds which
culminated into a complaint by the Serious Fraud Investigation Office
(SFIO) on one hand and FIR on the other hand by Economic
Offences Wing (EOW), was pleased to quash the FIR lodged by
EOW.
7. Lastly, he submitted that
at registration of multiple
ultiple FIRs qua
the same offence was not permissible and in support of his
contentions he placed reliance upon "Amitbhai Anilchandra Shah
v. CBI",, reported as (2013) 6 SCC 348.
Arguments from respondent State
8. On the other hand, learned State Counsel submitted that
although proceedings under SEBI Act were pending, offence u/s 420
IPC, Sec 2(b) Chit Fund Act, and Section 3 of HPIDFE Act were
clearly made out from the bare perusal of the FIR and thus, it could
not be stated that provision of the I.P.C. & other Acts were not to be
invoked. He further submitted that the issue of applicability of IPC &
other special laws was to be decided by the concerned court at the
stage of framing of charges. Regarding maintainabil
maintainability
ity of the FIR in
the present case, he submitted that police was bound to register an
FIR on receiving a complaint regardin
regarding cognizable offence.
He concluded his arguments by submitting that the prayer made by
the petitioner was not maintainable specifical
specifically
ly when investigation
was in progress and till date the petitioner did not join investigation as
his presence could not be secured
red for one reason or another, while
the huge amount of the money collected from the investors which
was usurped by the petitioner,
pe was yet to be recovered
recovered.
Discussion
9. I have heard learned counsel for the parties and gone
through the paper book
book and I do not find much substance in the
submissions made on behalf of the petitioner.
Discussion regarding prayer for transfer to Special SEBI
Court
10. A perusal of the order dated 20.02.2023 passed by the
Hon'ble Supreme Court reveals that transfer petitions in these cases
were filed at the instance of State
tate of Punjab which were allowed by
the Hon'ble Supreme Court in the interest of justice as there was no
opposition from the other side as well and merits of the case as such
were never discussed at all. However, the present FIR and
investigation pertains to State of Haryana and the transfer of this
petition to the Special SEBI Court has been vehemently opposed by
the learned State counsel.
10.1 From a curious look of the case file, it is evident that the
statutory scheme in Haryana with respect to the present case and the
offences under which FIR has been registered are completely
different from the FIRs registered in the State of Punjab. Further,, the
orders passed by this Court, in the cases mentioned above by the
learned Counsel for the petitioner, were consented orders without
any discussion on the merit, so they cannot be made squarely
applicable in the factual circumstances of the present cas
case.
10.2 Learned Counsel for the petitioner is not in a position to
controvert the legal position that transferring the present petition to
the special SEBI Court is beyond the jurisdiction of this court as the
special SEBI Court is outside the territorial jurisdiction of this Court.
ourt.
This is settled preposition of law that H
High Courts,
ourts, while exercising its
inherent powers under Section
ection 482 CrPC, in general shall not
interfere with the investigation of a case and deciding the course of
action during investigation is the prerogative of the investigating
agency. Though,, learned Counsel for the petitioner tried to convince
this Court to exercise its extraordinary jurisdiction to direct the
respondent State
tate to adopt the same course of action as ad
adopted
opted by
the state of Punjab in the above mentioned cases
cases,, however, for the
reasons specified in the subsequent paras, this prayer cannot be
acceded to in the present case.
Discussion regarding inapplicability of provisions of IPC,
Chit Funds Act and HPIDFE ACT
11. There is no substance in the argument raised by the
learned counsel for the petitioner that offen
offences
es under the provisions
of the IPC, Chit Fund Act, or HPIDFE Act cannot be attracted in the
present case and that offence,
offen e, if any, would fall solely within the
provision of CIS Regulations. In the humble opinion of this Court,
"prima facie" applicability of the statutory provisions of the
aforementioned acts cannot be denied, though an in
in-depth
depth analysis
cannot be undertaken at this stage. Additionally, it is apparent that
the petitioner has raised this technical plea only to avoid investigation
in the present case, and the pleas taken by the petitioner are
inconsistent. This inconsistency is evident from the perusal of the
inconsistent.
petition as well as the complaint filed by SEBI before the special
SEBI Court (Annexure P-5), wherein, the petitioner has consistently
maintained that no offence
offen e is made out under the SEBI Act because
the schemes launched by his company are not covered unde
underr the
CIS Regulations.
11.1 Following paragraphs from the petition make this
apparent and are reproduced here under:
"***
6. That it is clear form the aforesaid documents and the
procedure followed by the company form application form till the
execution of sale deed, that the company is engaged in the business
of sale and purchase of land. There is no scheme which envisages
pooling of investment from the investors and investment of such
amount into common asset to be acquired in the name of any
scheme. Further
Further the company does not issue any unit, bond or
certificate which represents the investors undivided interest in the
common assets acquired in the name of scheme.
****
16. That in fact the police has wrongly registered the present case
for extraneous considerations,
considerations, though the main reason mentioned in
the FIR is that there were FDR's of the investors, but in fact the
petitioner company was not making any FDR's. investments of the
investors were in the real estate. However due to downfall in the
property rates, as well as the interference by the SEBI, the present
situation has arisen. ***"
Similar stance was also taken by the petitioner's firm in
the communication with the SEBI which can be seen from the
complaint filed by the SEBI and the relevant paragraphs from the
same is also reproduced hereunder:-
"9) In response to the said show cause notice, the Accused No.1
vide letter dated nil (received by SEBI on 18 18-03-2004) inter-alia
alia
stated that they do not fall within ambit of Section 11AA of SEBI Act,
as zone of their schemes satisfy the conditions laid down therein.
The copy of letter received
received by the Complainant on 18.03.2004 is
annexed herewith as Annexure C-4."C 4."
11.2 Additionally, a perusal of the records of the case clearly
establishes that, apart from violation of the provisions of the SEBI
Act, an investigation into the offences
offen es under Section 420 of the IPC
and the provisions of the Chit Fund
Funds Act and HPIDFE Act is
necessitated in the present case to unearth the modus operandi in
relation to these companies as alleged by the complainant. The
following circumstances further emphasize the requirement of an
appropriate investigation in this case:
i) As soon as SEBI directed the closure of operations for
one of the petitioner's companies, he incorporated another
company for the same purpose and continued his operations
without any hesitation.
hesitation. Therefore, a comprehensive
investigation is required, involving all the companies formed by
the petitioner, as another company of the petitioner has also
been mentioned in the complaint.
ii) In the complaint by the SEBI board, it has been
mentioned that no documentation has been provided by the
company. Instead, the company resorted to dubious
techniques, such as claiming that the entire record was burnt.
12. Further, this Court also does not find substance in the
interpretation given by the petitioner with respect to the provisions of
the SEBI Act. Section 26 of the Act only restricts Courts from taking
cognizance unless a complaint is made by the SEBI Board for any
offence
e punishable under this Act or any rules or regulations made
thereunder. There is no provision under the Act which restrains any
Court from taking cognizance of offen
offences committed under other Acts
A
or Regulations.
egulations. There is no express or implied repeal for the
provisions of IPC and the other enactments under the SEBI Act.
Rather, Section 26 does not begin with a non
non-obstante
obstante clause and
Hon'ble Apex Court in "State (NCT of Delhi) v. Sanjay."
Sanjay.",, reported
as (2014) 9 SCC 772, held that in the absence of non
non-obstante
obstante
clause, such provision is not a complete and absolute bar for taking
action by the police. Relevant paras from this judgment are
reproduced hereunder:
"58. Section 22 of the Act puts a restriction on the court to take
cognizance of any offence punishable under the Act or any rule
made thereunder except upon a complaint made by a person pers
authorised in this behalf.
59. It is very important to note that Section 21 does not begin with a
non obstante clause. Instead of the words "notwithstanding anything
non-obstante
contained in any law for the time being in force no court shall take
cognizance.....", the Section begins with the words "no court shall
take cognizance of any offence."
60. It is well known that a non-obstante
non obstante clause is a legislative device
which is usually employed to give overriding effect to certain
provisions over some contrary provisio
provisions
ns that may be found either in
the same enactment or some other enactment, that is to say, to
avoid the operation and effect of all contrary provisions.
61. In Liverpool Borough v. Turner Lord Campbell (1861), 30 L.J.
Ch.379, C.J. at page 380 said :-:
"No universal
universal rule can be laid down for the construction of statutes,
as to whether mandatory enactments shall be considered directory
only or obligatory, with an implied nullification for disobedience. It is
the duty of courts to try to get at the real intenti
intention
on of the legislature
by carefully attending to the whole scope of the statute to be
construed."
62. In Pratap Singh v. Shri Krishna Gupta, AIR 1956 Supreme Court
140 at page 141, the Supreme Court while interpreting the
mandatory and directory provisions of statute observed as under :- :
"We do not think that is right and we deprecate this tendency
towards technicality; it is the substance that counts and must take
precedence over mere form.
Some rules are vital and go to the root of the matter; they cannot be
broken; others are only directory and a breach of them can be
overlooked provided there is substantial compliance with the rules
read as whole and provided no prejudice ensues; and when the
legislature does not itself state which Judges must determine the t
matter and exercising a nice discrimination, sort out one class from
the other along broad based, commonsense lines."
63. The question is whether a statute is mandatory or directory
depends upon the intent of the Legislature and not upon the
language in which the intent is clothed. The meaning and intention
of the legislature must govern, and these are to be ascertained, not
only from the phraseology of the provision, but also by considering
its nature, its design, and the consequences which would follow from
construing it the one way or the other.
64. In Maxell on the Interpretation of Statutes 10th Edn. at page 381,
it is stated thus :-
:
"On the other hand, where the prescriptions of a statute relate to the
performance of a public duty and where the inva invalidation
lidation of acts done
in neglect of them would work serious general inconvenience or
injustice to persons who have no control over those entrusted with
the duty without promoting the essential aims of the legislature, such
prescriptions seem to be generally
generally understood as mere instructions
for the guidance and Government of those on whom the duty is
imposed, or, in other words, as directory only. The neglect of them
may be penal, indeed, but it does not affect the validity of the act
done in disregard of them."
the
65. In the case of State of U.P. v. Babu Ram Upadhya, AIR 1961
Supreme Court 751, while interpreting a particular statute as
mandatory or directory this Court observed ::-
"When a statute uses the word `shall', `prima facie', it is mandatory,
but the court
court may ascertain the real intention of the legislature by
carefully attending to the whole scope of the statute. For
ascertaining the real intention of the legislature the court may
consider, inter alia, the nature and the design of the statute, and the
consequences
onsequences which would follow from construing it the one way or
the other, the impact of other provisions whereby the necessity of
complying with the provisions in question is avoided, the
circumstance, namely, that the statute provides for a contingency of
the non-compliance
non compliance with the provisions, the fact that the non- non
compliance with the provisions is or is not visited by some penalty,
the serious or trivial consequences that flow therefrom, and, above
all, whether the object of the legislation will be def defeated
eated or
furthered."
66. Considering the principles of interpretation and the wordings
used in Section 22, in our considered opinion, the provision is not a
complete and absolute bar for taking action by the police for illegal
and dishonestly committing theft
theft of minerals including sand from the
river bed."
12.1 Contrarily, it is settled proposition of law that if an act or
o
omission constitutes an offence under two or more enactments, then
the offender can be prosecuted under either of those enactments,
and doctrine of double jeopardy would not be attracted in such cases,
cases
and there exists a logical basis for such a stipulation. While complaint
under SEBI Act
A for non compliance of its statutory provisions has to
be made by the SEBI board before a Special SEBI Court, whereas,
complaint under IPC and other related enactments can
cannot be made
by the persons who has been the victims of the fraudulent Act of
such companies. Additionally, while
hile the scope of Section 420 IPC is
broad, such an act can also be made punishable under a specific law
if it satisfies special additional considerations. During the trial, an
accused might succeed in claiming that the special llaw
aw cannot be
made applicable to their case because the special additional
considerations required are not satisfied. In such a scenario, the
accused must be prosecuted in accordance with general law. It would
be a travesty of justice if, on technical groun
grounds,
ds, it is held that
investigation or trial cannot be conducted under the regular
provisions specified under the CrPC. For example, in the present
case, during the trial before the Special
pecial SEBI Court, the accused
might succeed in his claim that his case is not covered under the CIS
regulations. In that eventuality, the Special
pecial SEBI Court would lose its
jurisdiction. However, the outcome on this point shall not have any
bearing on the proceedings before the trial court, where the petitioner
is also being prosecuted
pros for offences
es under the IPC (or other special
Acts/provisions). In view of the above discussion, it cannot be denied
that provisions of SEBI Act vis a vis provisions of IPC and other
related enactments applicable in this case are completely different in
scope, import and intent.
12.2 Under similar circumstances
circumstances,, a larger bench of Hon'ble
Apex Court in "Om Prakash Gupta v. State of U.P."
U.P.",, reported as
AIR 1957 Supreme Court 458 held that prosecution and conviction or
acquittal under Section 409 Indian Penal Code do not debar trial of
the accused on a charge under Section 5(2) of the Prevention of
Corruption Act, 1947 because the two offenc
offences
es are not identical in
essence,, import and content. Relevant paras from this judg
judgment
ment are
reproduced hereunder:
"28. We now proceed to consider whether the two sections are
identical in essence, import and content and in our opinion the
argument on behalf of the State carries much force when it is
suggested that by enacting the Amending Act of 1952 and creating
sub section (4) to Section 5 the legislature specifically stated that
sub-section
the offence under Section 5(1) (c) is different from any previous
existing offences
offences under any penal statute and there can, therefore,
be no scope for speculation about repel. The words used in sub- sub
section(4) "any other law" made the position quite clear and explicit.
Other law does not mean identical law in which case the word 'other'
'oth
will have no meaning. At an earlier stage of this judgment we have
already tabulated the different elements constituting the, two
offences and a clear comparison and contrast of these elements
would show that an offence cinder Section 405, Penal Code is i
separate and distinct from the one under Section 5(1)(c). ***
29. There can, therefore, be no doubt whatever that Section 5 (1) (c)
of the Prevention of Corruption Act creates a new offence called
"criminal misconduct" and cannot by implication displace the offence
under Section 405, Penal Code. In this connection it is useful to
compare Sections 5 (1) (a) and 5 (1) (b) with Sections 161 and 162,
Penal Code. As has already been referred to, these two sections are
aggravated forms of Sections 161 and 162, Penal Code and the
intention cannot be abrogate the earlier offence by the creation of
new offence. These two offences can co co-exist
exist and the one will not
he considered as overlapping the other. A course of conduct can be
proved when a person is arraigned un under
der Sections 5 (1) (a) and 5
(1) (b), but such a course is impossible to be let in evidence when
an offence under Sections 161 and 162 is being enquired into or
tried. Similary there are a number of elements, which can be proved
in an inquiry or trial under
under Section 5 (1) (c) that cannot be let in by
the prosecution when a person is charged for an offence under
Section 405. Penal Code. In Section 405, Penal Code the offender
must wilfully suffer another person to misappropriate the property
entrusted, but in Section 5 (1) (c) if he allows another person to
dishonestly or fraudulently misappropriate or otherwise convert for
his own use any property so entrusted, then it is an offence. There is
a vest difference between wilfully suffering another and allowing a
person to do a particular thing and in our view the word "allows" is
much wider in its import. Wilfully pre
pre-supposes
supposes a conscious action,
while even by negligence one can allow another to do a thing.
30. It seems to us, therefore, that the two offences are distinct and
separate. This is the view taken in "Amarendra Nath Roy v. The
State" (supra) and we endorse the opinion of the learned Judges,
expressed therein. Our conclusion, therefore, is that the offence
created under Section 5 (1) (c) of the Preventio
Preventionn of Corruption Act is
distinct and separate from the one under Section 405, Penal Code
and, therefore, there can be no question of Section 5(1) (c)
repealing Section 405, Penal Code. If that is so, then, Article 14 of
the Constitution can be no bar."
12.3 Relying upon Om Prakash Gupta's case (supra),
another larger bench of Hon'ble Apex Court in "State of Madhya
Pradesh v. Veereshwar Rao Agnihotri"
Agnihotri",, reported as AIR 1957
Supreme Court 592, held that if two offences are not one and the
same, there can be no objection to a separate trial and conviction.
Relevant para from this judgment is reproduced hereunder:
"6. In view of the above pronouncement, the view taken by the
learned Judge of the High Court that the two offences are one and
the same, is wrong,
wrong, and if that is so, there can be no objection to a
trial and conviction under Section 409 of the Indian Penal Code
even if the respondent has been acquitted of an offence under
Section 5 (2) of the Prevention of Corruption Act 2 of 1947. Section
403 (1) ofof the Criminal Procedure Code only prohibits a subsequent
trial for the same offence or on the same facts for any other offence
for which a different charge from the one made against an accused
person might have been made under Section 236 of the Criminal
Procedure Code, or for which he might have been convicted under
Section 237 when the earlier conviction or acquittal for such an
offence remains in force. It is obvious that Section 403 (1) has no
application to the facts of the present case, where there w was
as only
one trial for several offences, of some of which the accused person
was acquitted while being convicted of one. On this ground alone
the order of the High Court is liable to be set aside. The High Court
also relied on Article 20 of the Constitution for the order of acquittal
but that Article cannot apply because the respondent was not
prosecuted after he had already been tried and acquitted for the
same offence in an earlier trial and, therefore, the well
well-known
known maxim
"Nemo debit bis vexari, si constat
constat curice quod sit pro una et cadem
causa" (No man shall be twice punished, if it appears to the court
that it is for one and the same cause) embodied in Article 20 cannot
apply."
12.4 Contention raised by learned Counsel for the petitioner is
also not sustainable in view of Section 26 of the General Clauses
Act, 1977,
1977, which is reproduced hereunder
hereunder:-
"26.
26. Provision as to offences punishable under two or more
enactments.
enactments.--
Where an act or omission constitutes an offence under two or more
enactments, then the offender shall be liable to be prosecuted and
punished under either or any of those enactments but shall not be
liable to be punished twice for the same offence."
According to this section, it is more than evident that if an
act or omission constitutes an offen
offence
e under two or more
enactments, then the offender can be prosecuted under either of
those enactments, and the only relief available to him is that he shall
not be liable to be punished twice for the same offen
offence.
12.5 Relying
ng upon Sanjay's case (Supra), the Hon'ble Apex
Court in "Kanwar Pal Singh v. State of Uttar Pradesh"
Pradesh",, reported as
2020(14) SCC 331, not only rejected the contention that when there
is a special act dealing with a special subject, resort cannot be taken
to a general act,
act but also agreed with the interpretation of Section
ection 26
of the General Clauses Act that it permits prosecution for 'different
offences'. Hon'ble Apex Court also held that in case offence alleged
is a cognizable offence,
offence police can always investigate the same and
submit the chargesheet.
chargesheet. Discussion in this judg
judgment
ment is reproduced in
entirety as it is applicable squarely to the facts and circumstances of
the present case:-
case:
"6. This Court in Sanjay (supra) has cited several decisions wherein
the challenge to the prosecution on the ground that there can be no
multiplicity of offences under differen
differentt enactments was resolved and
answered by relying upon section 26 of the General Clauses Act,
which we would like to reproduce for the sake of convenience:
"26.
26. Provision as to offences punishable under two or more
enactments. Where an act or omission constitutes an offence
enactments.-
under two or more enactments, then the offender shall be liable to
be prosecuted and punished under either or any of those
enactments, but shall not be liable to be punished twice for the same
offence."
section 26 of the General Clauses Act permits prosecution for
'different offences' but bars prosecution and punishment twice for the
'same offence' under two or more enactments. The exp expression
ression
'same offence' has been interpreted by this Court in numerous
decisions viz., Maqbool Hussain v. State of Bombay, AIR 1953
Supreme Court 325 with reference to the provisions of the Sea
Customs Act and the Foreign Exchange Regulation Act, 1947; Om
Parkash
arkash Gupta v. State of U.P., AIR 1957 Supreme Court 458
and State of Madhya Pradesh v. Veereshwar Rao Agnihotri, AIR
1957 Supreme Court 592 with reference to Section 409 of the IPC
and Section 5(2)(2) of the Prevention of Corruption Act; T.S. Baliah v.
Income Tax Officer, AIR 1969 Supreme Court 701 with reference
to section 52 of the Income Tax Act, 1922 and Section 177 of the
IPC; Collector of Customs v. Vasantraj Bhagwanji Bhatia, (1988)
3 SCC 467,467, with reference to the provisions of the Customs Act
1962 and the provisions of the Gold (Control) Act, 1968; State of
Bihar v. Murad Ali Khan, (1988) 4 SCC 655 with reference to the
provisions of Section 447, 429 and 379 of the IPC and provisions of
the Wildlife (Protection) Act, 1972; Avtar Singh v. State of Punjab,
AIR 1965 Supreme Court 666 with reference to section 39 of the
Electricity Act, 1910 and the provi
provisions
sions of theft under the IPC; and
Institute of Chartered Accountants of India v. Vimal Kumar
Surana, (2011) 1 SCC 534 with reference to the provisions of the
Chartered Accountants Act, 1949 and offences under Section 419, 419
468 471 and 472 of the IPC. Elucidating on the provisions of Section
4 read with Sections
Sections 21 and 22 of the Mines Regulation Act and the
offence under Section 379 of the IPC, it was observed in Sanjay
(supra):
"69. Considering the principles of interpretation and the wordings
used in Section 22, in our considered opinion, the provision is not a
complete and absolute bar for taking action by the police for illegal
and dishonestly committing theft of minerals inclincluding
uding sand from the
riverbed. The Court shall take judicial notice of the fact that over the
years rivers in India have been affected by the alarming rate of
unrestricted sand mining which is damaging the ecosystem of the
rivers and safety of bridges. It also
also weakens riverbeds, fish breeding
and destroys the natural habitat of many organisms. If these illegal
activities are not stopped by the State and the police authorities of
the State, it will cause serious repercussions as mentioned
hereinabove. It will not only change the river hydrology but also will
deplete the groundwater levels.
70. There cannot be any dispute with regard to restrictions imposed
under the MMDR Act and remedy provided therein. In any case,
where there is a mining activity by any pers
person
on in contravention of the
provisions of Section 4 and other sections of the Act, the officer
empowered and authorised under the Act shall exercise all the
powers including making a complaint before the Jurisdictional
Magistrate. It is also not in dispute that the Magistrate shall in such
cases take cognizance on the basis of the complaint filed before it
by a duly authorised officer. In case of breach and violation of
Section 4 and other provisions of the Act, the police officer cannot
insist the Magistrate
Magistrate for taking cognizance under the Act on the
basis of the record submitted by the police alleging contravention of
the said Act. In other words, the prohibition contained in Section 22
of the Act against prosecution of a person except on a complaint
made by by the officer is attracted only when such person is sought to
be prosecuted for contravention of Section 4 of the Act and not for
any act or omission which constitutes an offence under the Penal
Code.
71. However, there may be a situation where a person wi without
thout any
lease or licence or any authority enters into river and extracts sand,
gravel and other minerals and remove or transport those minerals in
a clandestine manner with an intent to remove dishonestly those
minerals from the possession of the State, is liable to be punished
for committing such offence under Sections 378 and 379 of the
Penal Code.
72. From a close reading of the provisions of the MMDR Act and the
offence defined under Section 378 I.P.C., it is manifest that the
ingredients constituting the offence are different. The contravention
of terms and conditions of mining lease or doing mining a activity
ctivity in
violation of Section 4 of the Act is an offence punishable under
Section 21 of the MMDR Act, whereas dishonestly removing sand,
gravel and other minerals from the river, which is the property of the
State, out of the State's possession without tthehe consent, constitute
an offence of theft. Hence, merely because initiation of proceeding
for commission of an offence under the MMDR Act on the basis of
complaint cannot and shall not debar the police from taking action
against persons for committing the theft
ft of sand and minerals in the
manner mentioned above by exercising power under the Code of
Criminal Procedure and submit a report before the Magistrate for
taking cognizance against such persons. In other words, in a case
where there is a theft of sand and
and gravel from the government land,
the police can register a case, investigate the same and submit a
final report under Section 173 CrPC before a Magistrate having
jurisdiction for the purpose of taking co cognizance
gnizance as provided in
Section 190(1)(d) of the Code of Criminal Procedure."
(emphasis supplied)
7. As noticed above, in the written submissions the appellant has
relied upon Belsund Sugar Company Limited (supra), Sharat Babu
Digumarti (supra) and Suresh Nanda (supra) to contend that where
there is a special act dealing with a special subject, resort cannot be
taken to a general act. The said submission has no force in view of
the ratio in Sanjay (supra) as quoted above which specifically refers
to section 26 of the General Clauses Act and states that the offence
under Section 4 read with Section 21 of the Mines Regulation Act is
different from the offence punishable under Section 379 of the IPC.
Thus, they are two 'different' and not the 'same offence'. It would be
relevant to state here that the Delhi High Court in its decision
reported as Sanjay v. State, (2009) 109 DRJ 594 594,, which was
impugned in Sanjay (supra), had accepted an identical argument to
hold that once an offence is punishable under Section 21 of the
Mines Regulation Act, the offence would not be punishable under
Section 379 of the IPC. This reasoning was rejected by this Court
and the judgment of the Delhi High Court was reversed. The
contention relying on the same reasoning before us, therefore, must
be rejected.
8. We would also reject the contention raised by the appellant in the
written submissions that the alleged theft of sand is not punishable
under Section 379 read with Section 378 of the IPC as sand is an
immovable property as per Section 3 (26) of the Ge General
neral Clauses
Act. In the present case, sand had been excavated and was
thereupon no longer an immovable property. The sand on being
excavated would lose its attachment to the earth, ergo, it is a
movable property or goods capable of being stolen. {See
Exp
Explanation 1 to Section 378 of the IPC and Sanjay (supra) as
quoted above}
9. We would in the end refer to the judgment in Jeewan Kumar Raut
(supra) on which considerable reliance was placed by the appellant
at the time of the hearing. The said judgment was distinguished in
Institute of Chartered Accountants (supra) by observing that the
provisions of the Transplantation of Human Organs Act, 1994
('TOHO Act' for short) were different and were not similar to the
provisions of sub-section
sub section 2 to section 24A, 25 and 26 of the
Chartered Accountants Act as the TOHO Act is hedged with a non- non
obstante clause. We would like to further elucidate and explain that
in Jeewan Kumar Raut (supra) thisthis Court was examining the right of
the appellant therein to claim statutory bail in terms of sub
sub-section
section
(2) to Section 167 of the Code on the ground that the Central Bureau
of Investigation ('CBI' for short) had failed to file the charge
charge-sheet
sheet
within 90 days from the date of arrest. Relying on Section 22 of the
TOHO Act, which mandates filing of a complaint by a person duly
authorised by a competent authority, it was observed that the TOHO
Act is a special law which deals with the subjects mentioned therein,
there
viz., offences relating to the removal of human organs, etc.
Ordinarily, any person can set the criminal law into motion but the
legislature keeping in view the sensitivity and importance of the
subject had provided that the violations under the TOHO A Act
ct would
be dealt with by the authorities specified therein. Thereafter,
reference was made to Section 4 of the Code as cited above, to hold
that the TOHO Act being a special Act, the matters relating to
offences covered thereunder would be governed by the provisions of
said Act, which would prevail over the provisions of the Code.
Reference was made to clause (iv) of sub sub-section
section (3) to Section 13
of the TOHO Act which states that the appropriate authority shall
investigate any complaint of breach of any of the provisions of the
said Act or any rules made thereunder and take appropriate action.
There is no similar provision under the Mines Regulation Act i.e. the
Mines and Minerals (Development and Regulation) Act, 1957.
10. In Jeewan Kumar Raut (supra), it was noted that the CBI has
been designated as an appropriate authority under the provisions of
the TOHO Act and therefore entitled to carry on investigation. In this
context, it was observed that Section 22 of the TOHO Act prohibits
taking of cognizance except
except on a complaint made by an appropriate
authority and therefore the police report filed by the CBI was only a
complaint petition made by an appropriate authority in terms of
Section 22 of the TOHO Act. Consequently, sub sub-section
section (2) to
Section 167 of the Code would not be attracted as the CBI could not
have submitted a police report in terms of sub
sub-section
section (2) to Section
173 of the Code. Jeewan Kumar Raut (supra) was, thus, dealing
with a contention and issue entirely different from the one raised in
the present case. It is undisputed that decisions of the courts cannot
be blindly applied in disjunction of the factual circumstances and
issues of each case. The court decisions expound on the law as
applicable to the specific circumstances of each case and ssuch uch
exposition may not therefore be necessarily applicable to another
case given its own peculiarities. Therefore, the contention predicated
on the ratio in Jeewan Kumar Raut (supra) holds no merit.
11. We would again advert to the decision in Sanjay (supr(supra)
a) which
had overruled the decision of the Calcutta High Court in Seema
Sarkar v. State, (1995) 1 Cal LT 95 wherein the High Court held the
proceedings to be invalid and illegal as the Magistrate had taken
cognizance on the basis of a charge
charge-sheet submittedd by the police
under Section 21(2) of the Mines Regulation Act and Section 379 of
the IPC, observing that the cognizance was one that cannot be split
or divided. The High Court had further observed that a ass the
complaint was not made in terms of Section 22 of the Mines
Regulation Act, the cognizance was bad and contrary to law. We
have already noted the decision of the Delhi High Court which had
directed that the FIR should not be treated as registered under unde
Section 379 of the IPC but only under Section 21 of the Mines
Regulation Act. These decisions of the Calcutta High Court and the
Delhi High Court were reversed and set aside by this Court in Sanjay
(supra) after referring to section 26 of the General Clauses Act and
the meaning of the expression 'same offence', to observe that the
offence under Section 21 read with Section 4 of the Mines
Regulation Act and Section 379 of the IPC are different and distinct.
The aforesaid reasoning compels us to reject the contention of the
appellant that the action as impugned in the FIR is a mere violation
of Section 4 which is an offence cognizable only under Section 21 of
the Mines Regulation
Regulation Act and not under any other law. There is no
bar on the Court from taking cognizance of the offence under
Section 379 of the IPC. We would also observe that the violation of
Section 4 being a cognizable
cognizable offence, the police could have always
investigated the same, there being no bar under the Mines
Regulation Act, unlike Section 13(3)(iv) of the TOHO Act.
Act."
12.6 On the other hand, judg
udgment relied upon by the ld.
Counsel for the petitioner in Alka Shrivastava's case (supra) cannot
be made applicable in the present case
case. In the said case, complaint
was not filed by the victim(s) rather it was filed by a competitor and in
that eventuality, Court was of the view that offences under IPC are
not made
e out. While in the present case
case, allegations u/s 420 of IPC
are duly made out and accordingly,
accordingly investigation and subsequent trial
in pursuance of the same
sam cannot be curtailed at this stage.
12.7 The arguments raised by learned Counsel for the
petitioner that procedure as specified under HPIDFE Act for
registration of FIR has not been followed in the present case may be
taken by the petitioner during trial after substantiating the same but at
this stage no interference is warranted on this account as it h
has
as to be
determined by the trial court whether,
whether, in the facts and circumstances
of the present case, non compliance has resulted into an illegality or
merely into an irregularity..
Discussion regarding 'special law' takes precedence over a
'general law'
13. The other argument raised by learned counsel for the
petitioner that proceedings should only take place before the
petitioner--that
special SEBI Court because a 'special law' takes precedence over a
'general law' in case of any conflict--
conflict--is also devoid of merit. Apart
from the discussion already held in this regard, it can also be added
that firstly,
irstly, there is no conflict at this stage, as the nature and scope
of the enquiry/investigation under the SEBI Act compared to the
provisions of the CrPC for offences
offen es under the IP
IPC,
C, such as fraud, are
vastly different in their objectives and procedures. Secondly, in the
present case, the FIR has been registered under the provisions of the
IPC, Chit Funds
Fund Act as well as the HPIDFE Act, meaning the
statutory scheme governing this case is also different from cases
registered in Punjab. Thirdly, since provisions of other specific Acts
A
are also applicable, this is not a situation where a specific law takes
precedence over a general law;
law; rather, it is a case governed by two
specific laws. Lastly, it is also settled law that if in relation to a subject
matter, a new enactment need to override a
and
nd precede other existing
laws prevailing at that moment, then there has to be specific statutory
statutor
provision in this regard and in the absence of the same, in general it
cannot be presumed that it will override and precede other existing
laws. For these reasons, judgment
judgment in CIT's case (supra) cannot be
made applicable in the present case.
13.1 The parallel operation of provisions of SEBI Act/HPIDFE
Act/IPC can also be easily examined from the following point of view.
From
rom the purview of the scheme under the SEBI Act, it is apparent
that the primary focus is on documentary compliance with the
provisions
ons of the Act, rules, and regulations
regulations.. The probing techniques
adopted by SEBI, such as conducting audits, are not sufficient while
investigating cases of preplanned fraud. Only police agencies like the
Economic Offence Wing are equipped to conduct thorough
thoroug
investigations in such cases, uncover the entire truth, and expose the
mens rea behind their operations.
13.2 Learned
earned counsel for the petitioner specifically relied upon
up
the judgment passed by the Delhi High Court in Ashish Bhalla's
case (supra). However, there are several distinguishing factors.
Firstly, in that case, the Court was influenced by the fact that the
complaint forming the basis of
of the investigation by the SFIO and the
EOW was almost identical, and the complainant was the same
sam
individual in both cases. Secondly, Court was also conscious of the
fact that "fraud" in relation to the affairs of a company has explicitly
been defined u/s 447 of the Companies Act, 2013 and only
allegations were in relation to that and no victim ever made any
complaint in this regard. It can also not be ignored that the statutory
scheme governing the investigation and prosecution by the SFIO
under the Companies Act, 2013, is entirely different from the scheme
governing the SEBI Act. Additionally, the provisions of the
Companies Act, 2013, relating to investigation, ar
are not pari materia
with the provisions of the SEBI Act, especially considering Section
212 (and more particularly Section 212(2)) of the Companies Act,
where there are significant differences between the provisions.
13.3 Additionally, this Court in CRM
CRM-M-13400-2021 and other
connected matters, even in relation to investigation by SFIO and
EOW,
W, held that due to difference in nature, perio
period
d and scope of
Investigation by both the agencies, investigation by other agencies is
not completely barred. For the sake
e of brevity, the discuss
discussion
ion is not
being repeated here, but it holds the field in the present case as well.
Discussion regarding multiple FIRs not being maintainable
14. The final argument by the learned counsel for the
petitioner that multiple FIRs should not have been registered in
petitioner--that
these cases--is
cases is also without substance. When allegedly different
persons have been cheated at different times and places, it cannot
be said that
that only one FIR is maintainable, as these incidents do not
belong to the same transaction. Consequently, the case laws relied
upon by the petitioner are not applicable to the present case. The
Hon'ble Apex Court in "Narinderjit Singh Sahni And Anr vs Union
of India And Ors",
Ors", reported as (2002) 2 SCC 210 held to the
contrary that each
each deposit agreement must be treated as a separate
transaction due to differences in parties, amounts, and deposit
periods, and thus cannot be considered a single offence. The factual
tual
position in the above case was that accused was the Managing
Director of a group of companies and FIR was registered under
Sectionss 420/406/409/120B of Indian Penal Code, 1860 against the
company and its directors for accepting the deposits from large
number of people in different schemes and for failure to make
repayment in spite of repetitive requests. Another FIR was registered
alleging that the accused had defrauded and cheated the
complainant and other members of his family in accepting money in
various
arious schemes of the company and when the complainant asked
for the money, the post-dated
post dated cheques issued by the company were
dishonored since accounts were closed and resultantly total 250 FIRs
were registered throughout the country against th
the accused. In
n these
circumstances the Hon'ble Supreme Court held as under:
circumstances,
"63. As regards the issue of a single
single-offence,
offence, we are afraid that the
fact situation of the matters under consideration would not permit to
fact-
lend any credence to such a submission. Each individual deposit
agreement shall have to be treated as separate and individual
transaction brought about by the allurement of the financial
companies, since the parties are different, the amount of deposit is
different as also the period for which the deposit was affected. It has
all the characteristics of independent tran
transactions
sactions and we do not see
any compelling reason to hold it otherwise. The plea as raised also
cannot have our concurrence."
14.1 Under similar circumstances, in "State of Punjab And
Anr vs Rajesh Syal",
Syal", reported as (2002) 8 SCC 158, Hon'ble Apex
Court held
eld that the
the allegations against the respondent and the
Company involve distinct offences that cannot be merged, and there
is no legal provision to support the respondent's request for transfer
of case, with the High Court erroneously applying precedent without
justification. The
he factual position was that the respondent was a
former Director of M/s Golden Forest (India) Ltd and Company had
collected money from the general public for purchasing the lland
and and
had promised that the amount would be returned after expiry of the
maturity period fixed through cheques. When money was not repaid
and complaints were received by the State, the Vigilance Department
registered FIRs against the respondent as a co
co-accused
ccused in the case
registered against M/s Golden Forest (India) Ltd u/s 406, 420, 468,
471, 120B of Indian Penal Code, 1860. In the above factual
position, observations made by the Hon'ble Apex Court are
reproduced hereunder:
"7. In the present case, different
different people have alleged to have been
defrauded by the respondent and the Company and therefore each
offence is a distinct one and cannot be regarded as constituting a
single series of facts/transaction.
8. We are not convinced that as presently advised, tthat
hat there is any
provision which could be of assistance to the respondent in seeking
such a transfer. This is also not a case where the High Court has
sought to invoke its jurisdiction under Section 482 and transfer the
cases so as to prevent the abuse of the process of any Court or to
secure ends of justice. The High Court has mechanically followed
the order of this Court in V.K. Sharma's case even though the said
order states that the order should not be treated as a precedent."
Other considerations and Conclusion
15. Even otherwise, the High Court is vested with inherent
power under Section 482 Cr.P.C.,, either to prevent abuse of the
process of any court or to secure the ends of justice. However, if this
Court exercises its power as requested in the pet
petition,
ition, it would
undermine both purposes. Despite many individuals losing their hard-
hard
earned money after allegedly being misled by the petitioner and its
firm, and despite SEBI pursuing this matter since 2004, the complaint
in the present case was only filed by the SEBI Board
oard in 2016, and the
trial is yet to even commence with no respite to the investors
investors.. SEBI's
apathy towards individual investors while investigating the petitioner's
company is evident from the fact that a follow
follow-up
up letter requesting
documents related to the petitioner's company, dated 11.08.2004,
was only sent on 16.04.2010--six
16.04.2010 six years lat
later
er (as evident from
paragraphs 12 and 13 of SEBI's complaint). This tortoise
tortoise-paced
paced
proceeding by SEBI erodes the faith of common investors in the
system with all their hopes dashed thereby compounding their
problems and allowing individuals like the petiti
petitioner
oner to expand their
fraudulent activities. When an investor approaches investigating
agencies better equipped to unearth fraudulent mechanisms,
technicalities are often used to bypass the investigation. However,
this Court refuses to become a party to suc
such tactics,, there being
compelling reasons and need for broader investigation
investigation.
16. When the entire operations of the company in which
petitioner was a director, are vitiated with frauds and numerous
cases have piled up against them for money not being ret
returned,
urned,
then it cannot be simpliciter said that the present case only relate
relates
s to
violation of the provisions of SEBI Act
Act. If multiple schemes were
ere
launched by the petitioner's company to defraud the individual
investors it is not possible to hold
investors, ld that even such actions would be
outside the purview of criminal proceedings
proceedings.
17. In view of the discussion made above, th
this petition is
dismissed being devoid of any merit. It is further clarified that nothing
othing
stated hereinabove shall be construed as an expression of opinion on
merits of the case.
case
18. Pending miscellaneous application(s)
application(s), in any, shall also
stand disposed of.
26.06.2024
.2024 ( HARKESH MANUJA)
sanjay JUDGE
Whether speaking/reasoned? Yes/No
Whether Reportable ? Yes/No
