Judicial Limits Restored: Bombay HC Upholds Discharge in Decade-Old SFIO Case

In a significant ruling regarding the limits of revisional jurisdiction, the Bombay High Court has set aside orders that had previously revoked the discharge of Adani group executives in a longstanding fraud case. Justice R.N. Laddha, presiding over the Criminal Appellate Jurisdiction, reinforced the procedural boundaries of the Criminal Procedure Code (CrPC), emphasizing that an appellate body cannot conjure evidence or records that were never part of the trial court’s proceedings.

The Backdrop: A Decade of Legal Tussle

The case dates back to 2012, when the Serious Fraud Investigation Office (SFIO) filed a complaint against Adani Exports Limited (now Adani Enterprises Limited ) and its promoters, Rajesh and Gautam Adani. The allegations centered on purported violations of Sections 420 (cheating) and 120B (criminal conspiracy) of the Indian Penal Code, alleging that the company manipulated its own share prices through financial assistance to third-party entities.

Between 2014 and 2015, the Additional Chief Metropolitan Magistrate in Mumbai granted discharge to the petitioners under Section 245(2) of the CrPC , concluding the charges were groundless. This decision was challenged by the SFIO in the Sessions Court , which set aside the discharges and instructed the trial court to revisit the matter, citing an external investigation report. The petitioners then moved the Bombay High Court , challenging the Sessions Court ’s order.

The Arguments: Jurisdiction vs. Evidence

Senior Counsel for the petitioners, Mr. Amit Desai, argued that the SFIO lacked the jurisdiction to file a complaint for IPC offences under the repealed Companies Act, 1956. Furthermore, he contended that the Revisional Court committed a jurisdictional overreach by relying on an investigation report that was not part of the trial record.

Conversely, the Union of India , represented by the Additional Solicitor General, maintained that the investigation report was the foundation of their complaint and that the trial court was duty-bound to examine it. They argued that the spirit of the law allowed for investigation into corporate fraud and that collusion in share price manipulation caused irreparable financial loss to the public.

Legal Analysis: The Bounds of Revision

The High Court’s decision hinged on the clear distinction between the trial court’s power to discharge and the revisional court’s power to review. Justice Laddha noted that under Section 245(2) of the CrPC , a magistrate has the discretion to discharge an accused "at any previous stage" if the charge is groundless, without needing to evaluate extensive evidence.

Crucially, the Court held that a revisional court is strictly confined to the record of the trial court. By attempting to factor in an investigation report that was not on the record of the trial court, the Sessions Court acted outside its mandate.

Furthermore, the Court found a fatal flaw in the prosecution’s case regarding the charge of cheating: > "The complaint lacks any assertion from any member of the public alleging that they were deceived or induced, whether fraudulently or dishonestly, to part with their money or the shares... Merely by asserting that the accused has made a wrong gain without demonstrating the corresponding wrongful loss or deception suffered by a specific victim does not suffice to attract the offence of cheating."

Key Observations

• On Jurisdictional Limits: "These interferences and conclusions exceeded the revisional Court’s jurisdiction under Section 397 of the CrPC , and therefore, the impugned orders cannot be sustained."
• On Section 245(2) CrPC: "The Magistrate possesses the power of discharging the accused at any previous stage of the case... before such evidence is led... the Magistrate has to come to a finding that the charge is groundless."
• On the Absence of Deception: "A fundamental requirement for an offence under Section 420 IPC is the presence of an element of deception, which leads to the victim suffering from loss while the accused gains wrongfully."

The Final Verdict: Implications for Future Procedural Law

The Bombay High Court has categorically reinstated the discharge orders of 2014 and 2015. By doing so, the Court has sent a clear message to prosecuting agencies and revisional authorities alike: procedural integrity is paramount. Authorities cannot rely on external investigative findings to bolster a case on revision if those findings were not formally integrated into the trial court’s records. This judgment serves as a vital reminder of the protections afforded to the accused under the CrPC, particularly against "fishing expeditions" aimed at reviving groundless criminal allegations.

As the Court rejected the plea to suspend its order, the discharge remains effective and binding, effectively closing this chapter of the long-running dispute for the petitioners.