Calcutta High Court (Appellete Side)
Ms. Kavita Jagatramka & Anr vs Union Of India & Ors on 21 June, 2023
Author: Moushumi Bhattacharya
Bench: Moushumi Bhattacharya
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
Present :-
The Hon'ble Justice Moushumi Bhattacharya
WPA 3607 of 2021
with
CAN 1 of 2023
With
CAN 2 of 2023
Ms. Kavita Jagatramka & Anr.
vs
Union of India & Ors.
For the petitioners : Mr. Sudip Deb, Adv.
Mr. Sumitava Chakraborty, Adv.
Mr. Riju Ghosh, Adv.
Mr. Aranyak Saha, Adv.
Mr. Arindam Paul, Adv.
Mr. Ipsita Ghosh, Adv.
For the SFIO : Mr. Vipul Kundalia, Adv.
Mr. Tapan Bhanja, Adv.
Mr. Anurag Roy, Adv.
Mr. Sounava Ghosh, Adv.
Ms. Uneaza Ali, Adv.
For the respondent nos. 7 & 8 : Mr. Rishav Dutt, Adv.
Mr. Rohit Bhattacharjee, Adv.
Ms. Shalini Bose, Adv.
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Last Heard on : 14.06.2023.
Delivered on : 21.06.2023.
Moushumi Bhattacharya, J.
1. The petitioners pray for a Mandamus against the respondent nos. 2 to 6 being the Serious Fraud Investigation Office (SFIO) and its Directors in relation to an ongoing investigation and seek compliance of sections 217 and 220 of The Companies Act, 2013. The petitioners have filed two applications being CAN 1 of 2022 and CAN 2 of 2023 for a direction on the respondents to file a Report of the investigation and for preservation of CCTV recordings made during the interrogation in the course of the investigation.
2. The order dated 17.5.2023 records that the judgment will decide on the maintainability of the writ petition and the two applications filed by the petitioners.
3. On the point of maintainability, learned counsel appearing for the respondent nos. 1 to 6 (SFIO) submits that the petitioners filed a writ petition before the Gujarat High Court for the same relief and that the Single Bench as well as by the Division Bench rejected the case made out by the petitioners. Counsel submits that the present writ petition is barred by the doctrine of constructive res judicata. Counsel places the judgment of the Division Bench of the Gujarat High Court to urge that all the points urged by the petitioners in the present writ petition have attained finality and 3 hence this Court ceases to have jurisdiction to hear the present writ petition on the same cause of action.
4. Learned counsel appearing for the petitioners opposes the contentions on behalf of the SFIO and submits that the writ petition before this Court was filed prior to that of the Gujarat High Court and that the relief claimed in both the proceedings are different. It is submitted that the petitioner no. 2 has preferred a Special Leave Petition (SLP) before the Supreme Court against the order of the Division Bench of the Gujarat High Court. Counsel points to other differences in the two proceedings including the array of parties.
5. Article 226(2) of the Constitution of India refers to the power conferred on a High Court under clause (1) of Article 226 and limits the power to the territories which are within the jurisdiction of the High Court and within which the cause of action arises either wholly or in part. The relevant pleadings in the writ petition show that part of the cause of action arose within the jurisdiction of this Court including a visit of a team from SFIO at the office premises of the petitioners at 22 Camac Street, Kolkata in January, 2021. There are documents annexed to the writ petition showing that correspondence was exchanged between the parties and the petitioners received some of the letters within the jurisdiction of this Court.
6. Hence, the fact that part of the cause of action arose within the territorial jurisdiction of this Court is established. It is also undisputed that the petitioners' writ petition in the Calcutta High Court is prior to that filed 4 in the Gujarat High Court. The proposition with regard to cause of action under Article 226(2) of the Constitution of India was decided in Navinchandra N. Majithia v. State of Maharashtra; (2000) 7 SCC 640 and Nawal Kishore Sharma v. Union of India; (2014) 9 SCC 329 and may be referred to in this context.
7. The only question which remains is whether the present writ petition is barred by the principle of constructive res judicata. The principle of res judicata/constructive res judicata pre-supposes that the parties in both the proceedings are the same and the issue has conclusively been decided in one of the proceedings. In the present case, apart from the difference in the array of parties, the petitioner no. 2 (the sole petitioner before the Gujarat High Court) preferred a Special Leave Petition before the Supreme Court from the order of the Division Bench of the Gujarat High Court. Moreover, while the prayers before the Gujarat High Court related to quashing of the investigation, the prayers before this Court concern the investigation being conducted within the bounds of law.
8. The principle of res judicata is found in Explantion IV to section 11 of The Code of Civil Procedure, 1908 which requires that any matter which might and ought to have been made in a former suit shall be deemed to have been a matter directly and substantially an issue in such suit. The word "such" is carried from section 11 and refers to the "subsequent suit". Therefore, the issue is whether the relief claimed in the present writ petition along with the two applications was covered by the writ petition filed in the Gujarat High Court. Since, the writ petition filed in the Calcutta High Court 5 pre-dates the writ petition filed in the Gujarat High Court, the principle urged by the respondents becomes substantially diluted. Even otherwise, the petitioners' challenge to the Division Bench judgment of the Gujarat High Court by way of the SLP also reopens the issues for decision once again. The decision of the Division Bench of the Gujarat High Court would also show that the relief claimed was not identical to the prayers of the present writ petition.
9. Devilal Modi v. Sales Tax Office, Ratlam; AIR 1965 SC 1150 has been cited on the principle of constructive res judicata where it was held that the doctrine is one of public policy. The Supreme Court also found that it was not open to the appellant to file a subsequent writ petition before the Madhya Pradesh High Court and urge that the impugned order which had been passed by the Assistant Commissioner, Sales Tax, was invalid for some additional grounds. In Daryao vs. State of U.P; AIR 1961 SC 1457, a 5-Judge Bench of the Supreme Court came to the same view in that where parties' prayer for issue of an appropriate writ had been rejected, the decision must remain binding between the parties unless it is attacked by adopting the procedure prescribed by the Constitution. M. Nagabhushana v. State of Karnataka; (2011) 3 SCC 408 dwelt on the abuse of process arising from the appellant attempting to re-argue the case which had finally been decided by the Supreme Court in the previous proceeding filed by the appellant. The Supreme Court held that the principle of constructive res judicata would apply to writ petitions. The aforesaid cases proceeded on the basis of an earlier decision which had not been challenged by the concerned party and 6 had hence reached finality. In the present case however, the petitioner no. 2 has challenged the Gujarat High Court Division Bench order before the Supreme Court.
10. By reason of the above discussion and the factual differences between the two proceedings, this Court is of the view that the present writ petition, being a prior proceeding within the required territorial jurisdiction, is maintainable. In view of the finding on maintainability, the Court proceeds to decide on the two applications filed by the petitioners.
11. CAN 1 of 2022 is for a stay of the investigation carried on by the SFIO until the SFIO submits a Report as required under section 212 of the Companies Act, 2013. CAN 2 of 2023 is for a direction on the SFIO for preservation of the CCTV footage and for compliance of the Order passed by the Supreme Court on 2.12.2020 in Paramvir Singh Saini vs. Baljit Singh; (2021) 1 SCC 184 directing the Union of India to install CCTV cameras and recording equipment in certain offices including the offices of SFIO.
12. The respondent no. 2 SFIO, through learned counsel, has contended that time limit can be imposed by the SFIO and further that an accused person cannot choose the mode or manner in which the investigation is to be carried out.
13. The investigation which is presently underway is under section 212 of The Companies Act, 2013 which provides for investigation into affairs of a company by the Serious Fraud Investigation Office.
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14. Learned counsel appearing for the petitioners submitted in the course of arguments that the only prayer which the petitioners now seek is for the investigation to be completed within a reasonable period of time. It was further submitted that the petitioners are willing to physically appear before the SFIO but subject to reasonable conditions.
15. The prayer for stay of the investigation which is presently being carried on under the provisions of the 2013 Act as well as the prayer for the investigation to be completed within a certain period of time cannot be granted for the following reasons.
16. Section 212 of The Companies Act, 2013 which deals with the investigation into the affairs of a Company by the SFIO under which the investigation against the petitioners are continuing, does not contemplate or provide for a time frame within which the investigation has to be completed . This was also the decision of the Supreme Court in Serious Fraud Investigation Office vs. Rahul Modi; (2019) 5 SCC 266 where the Supreme Court considered whether the period within which a Report is to be submitted by the SFIO to the Central Government under section 212 (3) as well as the scope and extent of the said stipulation. Paragraph 31 of the Report clearly holds that section 212(3) does not lay down any fixed period within which the Report has to be submitted and further that there is no stipulation of any fixed period for completion of investigation which the Supreme Court also found to be consistent with the principles under the general law including under The Code of Criminal Procedure. It was further held that section 212(3), which contemplates submitting of a Report by the 8 SFIO to the Central Government, does not entail any fixed period for completion of the investigation.
17. Section 212 (11) which envisages submission of an interim report to the Central Government is also not a mandatory requirement which would be evident from the words " Central Government if so directs...". Section 212(12) simply provides for submission of the Investigation Report to the Central Government on completion of the investigation; no time frame is mentioned. Section 212(13) allows for a copy of the Investigation Report to be obtained by any person concerned by making an application in this regard to the Court. Section 212(3) which provides for submission of Report to the Central Government within such period as may be specified in the order under section 212(1), also does not provide for any outer limit within which the Report must be submitted to the Central Government. The petitioners' reliance on section 212(13) hence, does not assist the petitioners.
18. The investigation commenced on 8.12.2018. By a communication dated 28.12.2018, the SFIO was directed to conclude the investigation within 6 months from the date of the communication. The period was further extended on 26.6.2019. The Official Liquidator has also taken a stand in his affidavit-in-opposition that all the records and documents of the Company which is being investigated is with the Official Liquidator. A mail dated 13.4.2023 of the SFIO with reference to CAN 2 of 2023 which has been placed before the Court indicates that it is not possible for the SFIO to 9 complete the investigation in the near future given the volume of data and physical documents collected during the investigation.
19. Although the statutory position with regard to absence of any outer limit for investigation is clear, the principles of equity and natural justice demand that the SFIO should at least indicate a reasonable time frame within which the investigation will be completed. Admittedly, 4 years have passed since SFIO was directed to conclude the investigation within 6 months. Hence, the petitioners would have a reasonable expectation that the investigation will see closure within a reasonable period of time.
20. Needless to say, the SFIO is under a statutory obligation to comply with the checks and safeguards enacted into section 212 including filing of a Report under section 212(3) and of an interim report to the Central Government under section 212(11).
21. Although the petitioners have not pressed the prayer for appearance through video link, it is expected that the SFIO will not harass the petitioners by demanding unnecessary and frequent physical appearances including travelling to a different city unless the petitioners' physical presence is required for the investigation. The SFIO must bear in mind that the investigation has been continuing for a long time.
22. The decisions cited on behalf of the SFIO do not strictly apply to the facts of the present case. In Arnab Ranjan Goswami, vs. Union of India; (2020) 14 SCC 12, the petitioner before the Supreme Court had requested for transfer of the investigation from the Police Station in Nagpur City to 10 another Police Station in Mumbai. The Supreme Court held in those facts that an accused person does not have a choice with regard to the mode or manner in which the investigation should be carried out. The Supreme Court had relied on P. Chidambaram vs. Directorate of Enforcement; (2019) 9 SCC 24 to come to this view.
23. Canara Bank vs. N.G. Subbarayan Setty & Anr.; (2018) 16 SCC 228 is for the proposition that an erroneous decision as to the jurisdiction of the Court in a former suit / proceeding will not operate as res judicata in a subsequent suit / proceeding between the same parties even if the issue raised in the second suit or proceeding is directly and substantially the same as that raised in the former suit or proceeding.
24. CAN 1 of 2022 is for a direction on the SFIO to record the proceedings and file a report and CAN 2 of 2023 is for video recording the proceedings in compliance with the directions of the Supreme Court in Paramvir Singh Saini vs. Baljit Singh & Ors. SLP (Crim) 3543 of 2020. The petitioners have also asked for preservation of the CCTV recordings. While the prayers which are outside the scope of section 212 of The Companies Act, 2013, cannot be granted as held above, the SFIO shall ensure that the directions of the Supreme Court are complied with including preservation of the evidence of the petitioners and the CCTV recordings.
25. The statutory position under section 212 of The Companies Act, 2013 and the decision of the Supreme Court in Rahul Modi, discourage passing of orders which would be contrary to law. The observations made in the 11 foregoing paragraphs with regard to the legitimate expectation of the petitioners for completion of the investigation within a reasonable time frame however remains. The SFIO is hence expected to act in terms of such legitimate expectation as well as the principles of equity and fair play with regard to completing the investigation within a reasonable time frame.
26. Since learned counsel for the petitioners seeks to press for the other prayers in the writ petition; counsel is given leave to mention before the appropriate Court for listing of the matter. CAN 1 of 2022 and CAN 2 of 2023 are disposed of in terms of this judgment.
Urgent Photostat certified copies of this judgment if applied for, be supplied to the parties upon fulfilment of requisite formalities.
(Moushumi Bhattacharya, J.)