Bombay High Court
Manish Rangari And Ors vs Union Of India And Anr on 15 January, 2020
Author: A.M.Badar
Bench: A.M.Badar
(502)APLNo.942020.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO.94 OF 2020
Manish Rangari & Ors. ... Applicants
Versus
Union of India & Anr. ... Respondents
.....
Mr.Arvind Lakhawat with Dr.Sujay Kantawala , Mr.M.Fernandes, Mr.M.J.Sharma i/b. Vaish Associates, Advocate for the Applicants. Mr.H.S.Venegaonkar, Advocate for the Respondent No.1/CBI. Mr.R.M.Pethe, the Additional Public Prosecutor for the Respondent No.2/State.
....
CORAM : A.M.BADAR J.
DATED : 15th JANUARY 2020.
P.C. :
1 Shri Venegaonkar, the learned Counsel appears for
respondent No.1 and waives notice for respondent No.1. He submits that he will make preliminary submissions only for the purpose of ad-interim relief sought by the applicants and he is reserving his right to address the Court on issues involved in the application as he is not instructed in factual aspects of the matter due to paucity of time. This is so because the learned Counsel for Gaikwad RD 1/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 ::: (502)APLNo.942020.doc the applicants has pointed out that as the next date before the learned trial Court is on 20/01/2020, he is insisting for hearing the matter for grant of ad-interim relief only. The learned Additional Public Prosecutor waives notice for respondent No.2/State.
2 By the present application under Section 482 of the Code of Criminal Procedure (hereinafter referred to as "the Cr.P.C." for the sake of brevity), the applicants assail the Order dated 29/07/2019 passed by the learned Additional Sessions Judge, Mumbai (Court No.58), which I am informed is the Special Court constituted under the Companies Act, 2013, taking cognizance of offences under Sections 120B, 403, 420, 468, 471 and 477A of the Indian Penal Code, Sections 211, 209(5), 292(2), 372A, 628, 629, 227 and 233 of the Companies Act, 1956 (hereinafter referred to as the "1956 Act" for the sake of brevity) and Sections 449, 129 and 217(8) of the Company Act, 2013 (hereinafter referred to as the "2013 Act" for the sake of brevity) against the applicants and others on a complaint filed by the Serious Fraud Investigation Gaikwad RD 2/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 ::: (502)APLNo.942020.doc Office (hereinafter referred to as the "SFIO" for the sake of brevity).
3 Heard the learned Counsel for the applicants. He drew my attention to the impugned Order and submitted that as per Section 212(2) of the 2013 Act, the SFIO has jurisdiction to investigate the offences under the 2013 Act only. Hence, the SFIO's investigation in relation to alleged activities of the National Spot Exchange Limited (hereinafter referred to as the "NSEL" for the sake of brevity) and subsequent complaint for the offences under the Indian Penal Code and under the 1956 Act is without jurisdiction. Therefore, the impugned Order taking cognizance of the offences under the Indian Penal Code and the 1956 Act based on such a without jurisdiction investigation and complaint is illegal. He further submitted that the various offences under the 2013 Act of which cognizance has been taken came into force only with effect from 12/09/2013 (Section 449) and 01/04/2014 (Sections 129 and 217), whereas the underlying alleged violations at NSEL's exchange platform have all occurred on or before 31 st Gaikwad RD 3/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 ::: (502)APLNo.942020.doc July 2013 as per the averments made in Paragraph 4 of the SFIO complaint itself. That being so, prosecution of the applicants under the 2013 Act for such prior violations is impermissible under Article 20(1) of the Constitution of India which grants protection against ex post facto laws. He further argued that for the same underlying transactions arising out of the payment defaults at NSEL, applicant No.3 NSEL and others are already facing prosecution for offences under the Indian Penal Code before the learned MPID Court and the learned CBI Court, Mumbai. Similarly, for various violations under the 1956 Act discovered during inspection of NSEL by the Central Government, NSEL and others are already facing prosecution before the learned Metropolitan Magistrate, Girgaon, Mumbai on complaints filed by the Registrar of Companies. That being so, the subsequent prosecution of NSEL and others for the same underlying transactions is not permissible in view of the embargo against "double jeopardy" enshrined under Article 20(2) of the Constitution of India and Section 300 of the Cr.P.C. Gaikwad RD 4/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 :::
(502)APLNo.942020.doc 4 The learned Counsel for the applicants referred to the Order dated 28/10/2016 passed by the Central Government and pointed out that the same has been passed in "public interest". He argued that the SFIO is constituted by the Central Government by Notification dated 21st July 2015. He then referred to the Judgment dated 30th April 2019 passed by the Honourable Apex Court in Civil Appeal No.4476 of 2019 in the matter of 63 Moon Technologies Ltd. (formerly known as Financial Technologies India Ltd.) & Ors. v. Union of India decided on 30th April 2019 and pointed out that in Paragraph 59 thereof the Honourable Apex Court has held that there was no "public interest" involved in recovery of private dues of the traders who traded on NSEL's exchange platform and lost monies due to counter party defaults. Therefore, it is his submission that the entire jurisdictional basis of the SFIO investigation, which was ordered by the Central Government in the purported "public interest" vide its Order dated 28th October 2016, has ceased to exist.
5 As against this, Shri.Venegaonkar, the learned Counsel Gaikwad RD 5/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 ::: (502)APLNo.942020.doc for the Respondent No.1/UOI invited my attention to Section 436(2) of the 2013 Act and pointed out that under the said provision, the learned Special Court has the power to try offences under not only the 2013 Act, but also under other laws such as the Indian Penal Code or the 1956 Act. Therefore, the impugned Order is not erroneous on this count. He further submitted that as per Section 465(2)(j) of the 2013 Act, any pending investigation by the SFIO under the 1956 Act has been expressly saved. Hence, there is no error in SFIO investigating offences under the 1956 Act. He then submitted that the Order dated 28/10/2016 has been passed by the Central Government in exercise of its statutory powers under Sections 210 and 212 of the 2013 Act and therefore, the same cannot be assailed by mere oral arguments without any specific ground pleaded in the application.
6 In rejoinder, Mr.Lakhawat, the learned Counsel for the Respondent No.1 submitted that Section 436(2) of the 2013 Act only empowers the Special Court to try an offence other than an offence under the 2013 Act with which the accused may, under the Gaikwad RD 6/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 ::: (502)APLNo.942020.doc Cr.P.C., be charged at the same trial. According to him, Section 436(2) of the 2013 Act is only an enabling provision by which the Special Court has been empowered to try offences even under other laws should be occasions so arise due to joint trial of offences under the 2013 Act and other laws, as per prescribed procedure under the Cr.P.C, for example in case of the same underlying transactions are investigated by the SFIO for offences under the 2013 Act and by the concerned investigating agency for offences under other laws. He gave example of the Special Court under the Prevention of Money-Laundering Act, 2002 (hereinafter referred to as the "PMLA" for the sake of brevity) having the power to try the offences under the PMLA as well as the scheduled offences because as per the PMLA, the trial of even the scheduled offences is supposed to take place before the Special Court only. Therefore, he submits that Section 436(2) of the 2013 Act does not answer his submission that the SFIO does not have the power to investigate offences under laws other than the 2013 Act in view of the express provisions of Section 212(2) of the 2013 Act. He also relied on Section 212(17)(b) of the 2013 Act to support his Gaikwad RD 7/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 ::: (502)APLNo.942020.doc contention that even if SFIO stumbles upon any material that constitutes an offence under any other law, then the SFIO is supposed to refer the same to the concerned investigating Agency. On Section 465(2)(j), he submits that the same is not applicable in the facts of the present case because SFIO investigation in the instant case was directed on 28/10/2016 i.e. after the commencement of the 2013 Act and, therefore, it would not fall within the category of "pending investigation" under the 1956 Act which has been saved under the said Section. In respect of the challenge to the Order dated 28/10/2016 of the Central Government, he submitted that his oral arguments are supported by Ground A-4 at page 26 of the application in which the said Order has expressly been assailed based on the Honourable Apex Court's Judgment dated 30/04/2019 in the matter of 63 Moon Technologies Ltd. (supra).
7 I have carefully considered the rival submissions and perused the application and the documents placed on record by the applicants. Having done so, I am of the prima facie, view that Gaikwad RD 8/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 ::: (502)APLNo.942020.doc the contentions raised by the applicants have merit. Prima facie, it appears that while passing the impugned Order dated 29/07/2019 taking cognizance of offence against the applicants, the learned Special Court failed to take judicial notice of the following legal aspects which go to the root of the matter, thus rendering the impugned Order vulnerable.
(a) The various offences under the 2013 Act of which cognizance has been taken came into force only with effect from 12/09/2013 (Section 449) and 01/04/2014 (Section 129 and
217), whereas the underlying alleged violations at NSEL's exchange platform have all occurred on or before 31 st July 2013 as per SFIO's own complaint filed before the learned Special Court. Prima facie, therefore, prosecution of the applicants under the 2013 Act appears to be impermissible under Article 20(1) of the Constitution of India.
(b) As per Section 212(2) of the 2013 Act, prima facie it is seen that the SFIO has jurisdiction to investigate offence under the said Act only. Hence, the SFIO's investigation and subsequent Gaikwad RD 9/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 ::: (502)APLNo.942020.doc complaint for offences under the Indian Penal Code and under the 1956 Act prima facie appears to be without jurisdiction. A contrary interpretation would permit the SFIO to encroach upon investigating powers of other investigating agencies under other laws, which cannot be the intention of the legislature.
(c) For the same underlying transactions arising out of the NSEL payment defaults, the NSEL and others are already facing prosecution for offences under the Indian Penal Code before the learned MPID Court and the learned CBI Court, Mumbai. Similarly, for various violations under the 1956 Act discovered during inspection of NSEL by the Central Government, the NSEL and others are already facing prosecution before the learned Metropolitan Magistrate, Girgaon, Mumbai on complaints filed by the Registrar of Companies. This factual position has not been disputed by the other side. That being so, the subsequent prosecution of the NSEL and others for the same underlying transactions appears to be in breach of the Gaikwad RD 10/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 ::: (502)APLNo.942020.doc embargo against "double jeopardy" under Article 20(2) of the Constitution of India and Section 300 of the Cr.P.C.
(d) Further, prima facie, I find merits in the submission of the learned Counsel for the applicants that once the Honourable Supreme Court, vide its Judgment dated 30/04/2019 in Civil Appeal No.4476 of 2019 in 63 Moons Technologies Ltd. (supra) has held that there is no public interest involved in recovery of the dues of the traders who allegedly lost monies due to counter party defaults on the exchange platform of the NSEL, the entire jurisdictional basis of the SFIO investigation, which was ordered by the Central Government in the purported "public interest" vide its Order dated 28th October 2016, has ceased to exist. In view thereof, the SFIO Investigation Report dated 31st August 2018 and the subject complaint filed by the SFIO before the learned Special Court, appear to be without jurisdiction. Impugned Order, as such, becomes vulnerable, at least prima facie, case for consideration is, as such, made out.
Gaikwad RD 11/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 :::
(502)APLNo.942020.doc 8 In view of the above, I find prima facie merit in the application. As such, I am inclined to grant ad-interim relief. 9 Stand over to 6th February 2020 to enable respondents to file written submissions, if any.
10 In the meanwhile, there shall be interim relief in favour of the applicants in terms of prayer clauses (b) and (c) of the application till the next date.
11 Parties to act on authenticated copy of this Order.
(A.M.BADAR, J.) Gaikwad RD 12/12 ::: Uploaded on - 16/01/2020 ::: Downloaded on - 17/01/2020 01:03:23 :::